How to Achieve Financial Wellness
The term wellness refers to practicing healthy habits every day to improve both physical and mental health, allowing you to thrive rather than just get by. Understanding wellness helps highlight its close connection to overall health. Instead of healing your body and mind to get back to a state of health, it’s about taking care of yourself to stay healthy.
When you stop and consider that financial stress can affect physical and mental well-being, the idea of financial wellness becomes essential for achieving balance, reducing stress, and improving overall quality of life. Improving your financial wellness involves a conscious effort to practice better financial habits and working towards achievable financial goals.
Practicing financial wellness involves day-to-day efforts and long-term financial planning. The Rate App can guide you through these steps, and we’ll break them down for you below.
Financial wellness defined
Financial wellness is the ability to maintain a healthy financial life, giving you the power to manage your current and future financial health. You can boost your financial wellness by improving different areas of your personal finances.
While one aspect of financial wellness is about having a sustainable relationship with money throughout your life, it’s also about your ability to manage your emotions around your finances.
What are the elements of financial wellness?
Financial wellness is all about feeling secure and having the freedom to make choices with your money. Right now, that means being in control of your day-to-day finances—covering your expenses without stress—and having enough flexibility to enjoy life’s little moments, whether it’s a night out or a weekend getaway.
Looking ahead, financial wellness also means being prepared for whatever life throws your way. It’s about having a cushion for unexpected expenses and staying on track to meet your bigger goals, like buying a home or saving for retirement. By finding that balance between today and tomorrow, you can build a more secure and stress-free financial future.
We can achieve these goals through these four categories:
Short-term financial goals
Successfully managing your short-term finances starts with creating and sticking to a budget. It’s important to understand your household’s income and expenses so you can make informed decisions and live within your means.
Gradually increasing your income, whether through career growth or side hustles, can also boost your financial health. If budgeting feels overwhelming, working with a financial professional can be a great way to get organized and build a solid foundation for your short-term financial goals.
Long-term financial goals
While handling your day-to-day finances, it’s crucial to set aside money for long-term goals. This includes saving and investing for major milestones like purchasing a home or securing a comfortable retirement. Part of managing long-term finances involves regularly reviewing your assets, liabilities, and financial plans.
Improving current finances
One of the key benefits of managing your finances is gaining a sense of where you stand now and your current financial wellbeing. When you take control of your income and expenses, you reduce stress and feel more secure in your ability to meet your needs. Financial literacy is a big part of this, but it’s also about feeling confident that you’re spending in alignment with your values and goals.
Tracking your habits and making adjustments where necessary can ensure your spending reflects what truly matters to you.
Achieving future financial freedom
Future financial freedom comes from following through on your long-term financial plans. This might include retirement planning or other goals that require disciplined saving and investing.
Achieving future financial freedom doesn’t happen overnight—it’s a long game, the result of consistent effort and making smart financial decisions over the course of many years. By committing to long-term habits like saving regularly and investing wisely, you can build a financially secure future.
How to improve my financial wellness
Making sure that you’ve set yourself up for healthy financial living begins with improving your financial literacy. By understanding key principles of managing money, you can start building a solid foundation for your future while feeling more secure in your present. Whether you're just starting out or looking to fine-tune your approach, these steps can help you gain control over your finances and work toward long-term financial stability.
Create a budget
Creating a budget is your first and most important step toward financial wellness. A budget helps you understand where your money comes from and where it’s going, allowing you to live within your means while setting realistic financial goals. Make sure to include all essential expenses like housing, utilities, and groceries, as well as discretionary spending such as dining out or hobbies. This financial roadmap is crucial for staying on track.
Build an emergency fund
Once you’ve established a budget, focus on building an emergency fund. Aim to save at least three to six months’ worth of living expenses. This fund will serve as a safety net for unexpected events like job loss, medical emergencies, or urgent home repairs. Having a solid emergency fund in place can provide peace of mind and reduce financial stress.
Protect your assets
While an emergency fund helps with smaller, short-term financial challenges, insurance is essential for more significant risks. Auto, home, health, and life insurance protect you against major losses like a car accident, property damage, or health issues. These protections ensure that you won’t be derailed by life’s bigger challenges. They also support long-term financial security.
Reduce or eliminate debt
Debt can stand in the way of your financial goals, making it harder to save and invest. Start by assessing all your debts and creating a strategy to reduce or eliminate them. Pay down high-interest debts first to improve your financial position and boost your credit score. Reducing debt frees up more resources to focus on your financial future.
Save and invest
Once you’ve minimized your debt, start building your savings. Explore options like high-yield savings accounts or money market funds to grow your funds more efficiently. As you accumulate savings, adopt a long-term perspective by investing in growth-oriented assets and contributing to retirement accounts like a 401(k). If your employer offers a matching contribution, take advantage of this "free money" to boost your retirement savings.
Plan for retirement and long-term goals
Planning for retirement and other long-term goals is crucial to achieving future financial freedom. The earlier you start, the more you can benefit from tax advantages and compound interest. Explore retirement savings options such as IRAs, annuities, and Social Security to build a comprehensive plan. Working with a financial advisor can help you fine-tune this plan and ensure you're on track to meet your long-term financial objectives.
Start on the path to financial wellness with the Rate App
The Rate App is designed to support both your financial and personal well-being. It offers helpful tools for managing your budget, tracking expenses, and saving for future goals, all in one place. By providing easy access to information on paying down debt, saving for a home, or planning improvements, the app helps you stay on top of your financial health.
In addition to financial resources, the app also includes a variety of free fitness and nutrition videos, offering a way to de-stress and focus on overall wellness. With financial tools and personal wellness content, the Rate App is there to help you navigate your finances and your well-being.
Why is financial wellness important?
Financial wellness is essential because it impacts nearly every aspect of your life, from your mental and physical health to your ability to achieve personal goals. Being financially healthy means having a good plan, budgeting wisely, saving for your long-term goals, and building an emergency fund.
It provides peace of mind, knowing you're prepared for both everyday expenses and life’s surprises. Financial wellness empowers you to make choices that align with your goals and values, ensuring that you’re not just getting by, but thriving.
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