5 Ways to Improve Financial Health

Amid all the resolutions and self-improvement prompts that come with a new year, it can be intimidating—and just plain exhausting—to think about money.

We'll let you in on a little secret: You don't need resolutions, and you don't need to be wealthy to be smarter about your finances. All you need is a little financial-wellness training.

What is financial health?
Financial health refers to your overall financial standing. It takes into consideration things like credit score, debt accumulation, overall savings, monthly expenses, retirement plans and more. It's a way to look at how your income and spending habits affect your health, happiness, needs and wants.

Why is financial health important?
Taking control of your financial health means different things to different people. For some, it means affording the things they want, like a new house, a long vacation or starting a family. For others, it simply means peace of mind—the joy of not having to worry about money.

Regardless, financial health should be treated just like physical and mental health—check it out regularly and make adjustments as necessary.

How can I improve my financial health?

1. Start saving. This is so important—even if it's just a few dollars per week at first. Look for savings accounts that work best for you in terms of fees, benefits and access.




2. Pay off your debt.Take steps to pay off debt as quickly as possible. Consider the snowball method—rank all your debt in order of interest rate, highest to lowest. Then prioritize the debt with the highest interest rate while still paying the minimum on all your other debts.




3. Stick to a budget. The most successful budgeters are aware of every dollar that goes in and out of each account. Once you have an idea of where your money is going, create a plan for how to spend less and save more. Start by using grocery lists, canceling underutilized memberships, and tracking your purchases.




4. Plan for what-ifs. Be ready for life's surprises to vastly improve your overall financial health. Most adults fear an unexpected expense wreaking havoc on their financial accounts. If you're not prepared for that medical bill, home repair or job change, it could set you back months. Take an afternoon to create a strategy that will prevent such a scare.




5. Dream big. On a more optimistic note, set lofty goals for your overall financial health. This will help you get where you want to go. Understanding why you're spending less now to benefit yourself later takes the pressure off and makes it easier to stand up to life's temptations.