8 Simple Tips for Financial Health - Edge of Wellness

8 Simple Tips for Financial Health

When we think health we tend to think diet and exercise, but what about financial health? Whether we realize it or not financial wellness plays a large role in our overall health. Meaning, when we are spending beyond our means our health ultimately will pay the price as we face the stress of having more debt than we can afford and feeling hopeless in the though of never being able to afford to retire.

The good news is you can begin making your financial health a priority. The first step is simply to start. Remembering that you can take things slow and start small, just start somewhere!

8 Simple Tips for Financial Health

Tip 1: Determine Your Cashflow 

The first step toward financial health is to figure out your cash flow, meaning how much money are you making each month. For example, after taxes, $2,000 hits your bank account every two weeks. So monthly your cash flow in is $4,000. This means that you have $4,000 to work with each month. Tip 1 is very simple for most of us – so awesome job you are already one step closer to better financial health!

Tip 2: Spend Under Your Means

Once you know your cash flow in plan to under spend every single month. This means that you should not aim to blow through $4,000 every month just because you can. You have heard the expression, “Live within your means” scratch that. Live below your means. Having “leftover” money at the end of the month is great!

Tip 3: Set a Budget and Stick to it

This tip is a bit more work, however, there are super simple ways to construct your budget. You can find apps that link to your bank account and credit cards to make it even simpler. To set your budget you will input your cash flow first. From there you will begin to add your expenses like rent/mortgage, insurance, utilities, etc. After you add in all of your “must have” expenses you will then add in non-essential buys like entertainment, shopping for clothes etc. If you are already saving or investing money regularly this will also be added to your budget.

A general rule for your budget,  follow the 50/30/20 rule, which breaks down as:

  • 50% on needs: This includes all essential expenditures like rent or mortgage, utilities, groceries, insurance, healthcare, and minimum debt payments.
  • 30% on wants: These are non-essential costs like dining out, entertainment, travel, and other lifestyle choices.
  • 20% on savings and investments: This portion is for your financial future, which includes building an emergency fund, saving for retirement, and investing.

Once you begin using a budget stick to it.

Tip 4: Invest

Now that you are following a budget it’s time to think about investing some of your hard earned cash to make it work for you. This is how the wealthy think, “Make your money work for you.” An easy way to do this is by regularly investing some of your cash flow in a safe stock like the S&P 500. To begin investing you will need to open a brokerage account. This can be done easily through Robinhood, Charles Schwab, Fidelity Investments, Vanguard, WeBull, Sofi, etc.

Tip 5: Pay Off Your Debt

This may not be possible for many of us as we may have more debt than we know what to do with. Financial advisors vary in their recommendation of paying off all debt first then investing, but as a non-financial advisor, I would recommend doing your best to pay down debts while still allowing some funds to be invested. Finding a happy middle ground to be paying towards both.

Tip 6: Limit Non-Essential Purchases

This may seem like a no-brainer, but for so many of us we have a hard time saying no to things that are not essential. If you are daily coffee drinker and can’t live with your latte from a local coffee shop, stop and do the math. These coffee drinks will cost at least $4 and that is on the very low end. $4 x 365. You just dropped $1,460 in a year on coffee. Think about what you could have done instead with that cash.

Stop and think. Do you need it or is it just a nice to have? Go a step further and calculate the cost out like we did above. In the long run, whatever you are contemplating most of the time will not be worth the spend.

Tip 7: Reuse

You may not realize how fast the savings can add up if you begin reusing items you normally would not have. For example, a reusable water bottle is an absolute no-brainer. In the US clean drinking water is almost every where so why on earth would you spend a minimum of $1 on a bottle of plastic water. Other examples of reusables to save you some cash:

  • Cloth napkins and paper towels which can be washed and reused hundreds of times over the course of numerous years. The average family will spend $57 on napkins each year.
  • Lunch box, so you can stop eating out for lunch and pack your own each day. The average meal dining out costs at least $10 (on the low end), that is $2,600 spent on eating out when you could pack your own.
  • Dryer balls, which can save you $60-$120 per year on dryer sheets.

These are just a few examples on how switching to reusable items can save you money in the long run.

Tip 8: Maintain Good Credit

If your credit is not so great, bounce over to our article, “How to Improve Your Credit Score,” first. Now that your credit is in a good place you can focus on maintaining and constantly striving to improve your score. This is done by using a credit card and paying it off each month. Do not put more on a credit card than what you could actually pay cash for. Every month your credit card should have a balance of zero. This not only improves credit, but also helps you avoid paying interest on purchases.

Important Note: Edge of Wellness and it’s authors are not financial advisors and none of what Edge of Wellness and it’s contributors publish is to be taken as financial advice.