Recognized each January in an effort to spotlight the importance of financial well-being among Americans, Financial Wellness Month is upon us again. And since it lands right after the (often financially challenging) holiday season and at the beginning of a new year, the observance offers a timely opportunity to add improving our financial habits to our New Year’s resolutions.
Of course, by making your financial well-being a priority, you can reduce your money-related stresses and be better prepared to handle unexpected expenses when they arise. And by achieving these two things, you can lead a happier life with fewer financial worries.
So this Financial Wellness Month, resolve to put yourself and any other members of your household on a better financial footing in the future. Consider instituting these seven financial habits that can have positive impacts on your wallet, your financial wellness and even your overall mindset:
- Check your credit reports — Having a good credit score can deliver a range of benefits for consumers — and of course, the information contained in our credit reports can have a big effect on our credit scores. And even for those who pay all of their bills on time and practice good financial habits, errors in credit reports can lead to lower credit scores.
This is all a big part of the reason why, by law, Americans who request it are entitled to a free copy of their credit report once a year from each of the nation’s three major credit-reporting agencies, Equifax, Experian and TransUnion. To keep a closer eye on your credit reports (and to better enable yourself to catch and fix any credit-reporting errors), visit annualcreditreport.com and fill out an online request form to receive your free report(s).
- Scrutinize your spending — Before you can successfully build a budget (more on that below), you’ll need to examine and understand your spending habits — which can help you strike a healthy balance between your income and your expenditures. Fortunately for modern-day consumers, there is a long list of apps and software available to help you better track and evaluate your spending. Whatever avenue you take to achieving this, try to get a good grasp of what your regular income is, what your recurring expenses are and what areas you may be splurging in — and try to identify areas where you may be able to cut back on spending and start saving more.
- Build a budget — Once you’ve analyzed your income and spending, you can use this info to build a household budget. The first step here is to calculate your monthly household income. You’ll then subtract your fixed monthly expenses and other spending to get an idea of how much flexible/nonessential spending and unallotted funds you have to work with each month — these are your areas of opportunities for saving and paying down debt. From there, set realistic goals for the amounts you’d like to put toward paying down debts (eliminating interest-accruing debts should be a top priority) and into various savings accounts each month. Then, put your plan into action and do your best to stick to your budget.
- Decrease your debts — As mentioned above, it’s important to prioritize paying down your debts, especially any that may be accruing interest. A good place to start here is by focusing on the credit card debts, loans and other outstanding debts with the highest interest rates. By eliminating any outstanding debts that are accruing interest, you’ll improve your financial standing and save money over the long haul.
- Anticipate the unexpected — To be better prepared for unexpected expenses such as auto repairs, home repairs or medical bills, or an unanticipated gap in income due to a job loss or similar, try to establish or bulk up a household emergency fund. A good rule of thumb here is to aim to have enough money set aside in savings to cover three to six months of living expenses.
- … and prepare for the predictable — Of course, it’s also important to regularly contribute as much as possible to typically longer-term financial goals such as building up retirement savings or setting aside funds for your kids’ college education. In each of these areas and beyond, the benefits of compounding interest can work in your favor to substantially increase your savings amounts — especially over the long haul. So the sooner you can start contributing to these funds, the better.
- Pursue professional guidance — Finances and financial products can be intimidating for many of us, but expert help is readily available. If you’re having trouble establishing or maintaining any of the healthy financial habits outlined above (or any others), consider working with a financial advisor to help put your household on the path (or to help it stay on the path) to financial well-being. Such advisors have the know-how and experience to help you create a plan to reach your financial goals.
At The Southern Bank, we pride ourselves on offering friendly, personalized service to all of our customers — and that includes providing guidance when you have questions about any of our banking services. To learn more about our Personal Banking services ranging from Personal Checking and Personal Loans to Savings & Money Market, Certificates of Deposit (CDs), Mortgages and more, check out the Personal Banking page on our website or visit one of our local branches for friendly, in-person service with a smile.