Financial wellness might seem out of reach if you’re currently experiencing financial hardship or are struggling to rebuild your credit after an unexpected life event. But achieving financial wellness — and accomplishing some long-term financial goals — is entirely possible. It just takes some time, planning, and perseverance.
There’s no set standard for financial wellness. What one person might consider a state of being financially healthy could be different from how someone else defines it.
If you’re ready to regain control of your financial health and start building to a point where you feel comfortable with your financial situation, here’s how to do it.
Although financial wellness means something different to everyone, the general concept is roughly the same. Simply put, financial wellness is a state of financial well-being regarding money.
Oftentimes, financial wellness also means seeing positive growth in your income and an overall reduction in bills. Once this happens, you can also start setting and achieving your immediate and long-term financial goals. These could include things like creating an emergency fund, saving up for a down payment on a house, or building up your credit.
Financial wellness — or financial well-being — is about achieving financial peace of mind. But it’s also about avoiding major financial pitfalls that keep you from accomplishing your life goals.
It might help to consider financial wellness as a journey rather than a destination. Throughout your journey, you can fine- tune your mindset and financial habits into a financially sound lifestyle that minimizes stress and prepares you for unforeseen emergencies.
You might still have difficulties on the way — like when you need to use a 401(k) emergency loan or another loan. But you’ll also become more prepared over time until you reach your version of peak financial wellness.
Financial wellness is tricky to quantify, so the Consumer Finance Protection Bureau (CFPB) created a scale designed to help people measure their financial well-being. The scale does not ask questions about your income or credit score. Instead, it asks how you feel about your present and future financial security and freedom of choice.
If you’re not sure where your financial health is at right now, but you know it’s not where it needs to be, consider these core elements below.
One of the biggest aspects of achieving financial wellness is having a healthy mindset regarding money. You might feel like you’re in a state of unwellness, especially if you’re having financial troubles or cannot get approved for a home loan or other financing you need. But you can still come out ahead even during the toughest times.
The first thing you should do is evaluate your views on money. The goal here is to develop a healthy relationship with money and your ability to manage your finances. After all, your financial situation should be a source of individual strength, not confusion or stress.
Getting to a healthy mindset and letting go of any unhealthy views about money is easier said than done. Even so, you can start building up the confidence and motivation you need by doing the following:
Some people end up spending more than they should, especially when they’re stressed. But this can lead to taking out direct lender payday loans — or other personal bad credit loans — to pay for things like emergencies, furniture, or monthly bills. If you’re not careful, you could end up with more debt than you can manage.
So, while it’s okay to splurge now and then, sometimes the best thing you can do is cut back on spending. That way, you can start paying off what you owe, keep up with regular expenses, and reduce financial stress.
Start by looking at where your money goes. Even if you do not have a budget, review your bank statements and see how much money is going in and out of your accounts each month.
Also, write down any debts you have that require regular monthly payments. These could be health insurance payments, grocery bills, car loans, entertainment budgets, investments, life insurance payments, or rent. Some loans come with monthly or one-time payments — like loans for bad credit (e.g., bad credit online loans like payday loans). Calculate those, too.
Once you have written down all your expenses — loans and otherwise — you can add up your total income. You can then use this information to create a personal budget. If you find yourself overspending in certain areas, try to redirect that money to your other bills.
Reflect on the things that are causing you the most financial stress. From there, you can prioritize your spending — and savings — based on what will help you feel more financially stable again.
Having a budget is a great way to set the foundation for financial wellness, but you also need a financial plan. Fortunately, you do not need to be rich to make a plan. Your financial plan is essentially the roadmap that gets you to where you want to be. It consists of milestones based on your priorities and a timeline that works for you. Here’s what your plan should include:
Several life factors can challenge your financial health, including your cash flow, the money in your bank accounts, and your credit score. Some of these factors might appear suddenly, while others might creep up on you. Whatever the case, you can work with these factors to achieve financial wellness.
Understanding your cash flow is one of the most critical steps to achieving financial wellness. You need to know what yours is before you can truly accomplish your financial goals.
Cash flow is essentially the amount of money coming in and going out every month. You can use your cash flow to predict your future expenses and income. In life, you might experience positive, negative, and neutral cash flow. Positive cash flow occurs when you have more money for things you want and need.
Negative cash flow is when you’re spending more than you have and are possibly incurring debt — such as when you lose a job or have sudden bills. Neutral cash flow is when you have exactly the right amount for your regular expenses — no more, no less. Having either negative or neutral cash flow can cause a lot of financial stress.
Once you know your cash flow, you can use it to create a budget. You can also decide whether to focus on improving your income, take out a cash loan to help in a pinch, or ask for help.
Your bank account might play a greater role in your financial wellness than you realize. It’s not just about having a secure place for your money. It’s also about the type — or types — of accounts you have. For example, most checking accounts do not earn much interest. But a high-yield savings account can help you build up your savings or emergency cash for when you need it. This can also help with long-term planning for things like retirement, taking a family vacation, or buying a house.
It’s also good to have a savings account in addition to a checking account. If you can transfer some of your paycheck to your savings account each month, it can grow and help prevent overspending.
Other types of accounts can also help you achieve financial health and bigger savings or investment goals. These include certificates of deposits (CDs) and money market accounts.
Your credit score — from Equifax, FICO, or Vantage Score — is a three-digit number based on your financial habits, particularly regarding loans and other types of credit. Things like making on-time payments and keeping your account balances low can help you build credit.
As your credit score improves, you could qualify for better financing options like unsecured personal loans online or other online loans. Loan requirements vary by state and lender, but you’ll typically need good credit for the best rates and terms.
Good credit can be helpful if an emergency arises and you need a quick loan and money now. There are loans for people with bad credit, too, like pawnshop loans or payday loans. But these can be expensive or come with short repayment terms that make them challenging to pay back. You should also look out for potential financial scams.
If you’re just starting, you might be one of the 26 million Americans who are credit invisible — people who have no credit score or extremely limited credit history. In that case, you might consider getting direct lender installment loans for bad credit or secured personal loans.
These loans can still come in handy if you need cash fast, but they have more relaxed loan requirements. This makes them easy loans to get. Some direct online lenders even report to the credit bureaus, which can help you build credit over time.
Wherever you’re at in your credit and financial journey, getting started now can help you along the path to financial wellness.
Not everything goes according to plan, so establishing an emergency fund as soon as possible is a good idea. One way to do this is to set up small automated deposits into a savings account. Over time, the money in that account will add up and be there for when you need it. Shoot to have 3-6 months’ worth of expenses saved up, but try not to overextend your budget.
Several strategies exist to consolidate debt, but two of the most common options are:
As you start paying down your debts, you’ll have more cash flow for other things — like creating an emergency fund or preparing for retirement.
Missing payments could damage your credit score and lead to expensive late fees. If you’re worried about making payments on time, setting up automatic payments could help. This can help you keep up with anything from online installment loans to utility bills.
Before setting up automatic payments, ensure your bank account has enough money to cover them. Otherwise, you could end up with overdraft fees. And if the payment does not go through, you might have to pay additional late fees on that account.
An alternative to automatic payments is to set reminders for when your bills are due. This can help, especially if everything is not due simultaneously.
With so many different budgets, it can be challenging to find the right one for you. Fortunately, these tips can not only help you create a reasonable budget but also help you stick to it.
If you see something you’d like but do not need, sleep on it for a couple of days. This can help you determine whether it’s a good idea to splurge on it. And, if you no longer want the thing as much, it’s probably better that you did not get it.
Living below your means is not always easy, but it can help you achieve financial wellness and eliminate unnecessary stress. For example, you might consider biking to work, finding free gifts, or working from the library instead of a local cafe. Even if you find yourself with some extra cash, try to save it or use it to pay down debt rather than spend it on entertainment. Many people live at the top of their budget and have no emergency cash left over.
According to one study, around 39% of adults said they would have trouble covering a $400 surprise bill. Living below your means allows you to save up for emergencies rather than turn to cash advances or payday loans.
Even if you qualify for a higher credit limit, that does not mean you should use it. The same goes for installment loans online or personal loans online — you should only borrow the amount you need. Otherwise, you could end up with more debt and higher monthly payments than you can handle.
A common budgeting challenge is the “no-spend” challenge. This is where you do not spend anything beyond what’s absolutely necessary. You could do this for a week, a month, or even longer. Whatever the case, you could end up saving a lot more money for when you need it.
Make budgeting more interesting by doing it with a friend or family member. You can keep each other accountable and reduce spending at the same time. Plus, if you set some goals together, you could both benefit in the long run.
Before you go shopping, whether it’s for food, clothes, electronics, school supplies, or something else, make a list. Having a list can make it easier to stick to your budget and limit overspending. Also, take advantage of sales, discounts, and coupons.
Monthly subscriptions to things like Netflix or Amazon Prime can add up quickly when you’re not looking. Review your active accounts and see if there are any you’re not using. If there are, cancel them for some extra wiggle room in your budget.
It might be hard to treat yourself, especially if your income is limited, but it can help your mental and emotional well-being. Create a separate category within your budget for things you want if possible.
Even a small amount — say, $20 or $50 a month — can help keep you motivated and stay on track with your budget. Say, for example, you just finished paying off a fast loan from an online installment loan direct lender. Instead of taking that monthly payment and using it for another loan or expense, splurge one time.
Achieving financial wellness requires some planning and a shift in mindset. But you should not rush to get it right. The most important thing is to get started on the journey and take the time you need to get to where you need to be.
Of course, you might still need a loan or other financial help even with a solid budget and financial plan. If you’re experiencing hardship, consider completing an online loan app for an installment loan. With a direct lender installment loan, you could cover unforeseen expenses like medical bills, sudden work layoffs, or other emergencies. Depending on the lender and loan type, you could also set up a repayment plan that works for you.
An installment loan may not be suitable for everyone or all situations. Before you apply for one, there are several things to consider. Ask yourself a few questions, such as:
Many online lenders are out there, but not all are created equal. When choosing a lender, consider the following factors.
Now that you know the main things to look for in a lender, the next step is finding the right one. If you’re still considering your options, Jora could help.
Here are the main reasons to choose Jora Credit:
You may be wondering what an installment loan is, how these quick loans online work, or how they can help you get back on your feet during tough times.
An installment loan is a type of loan that you pay back over a set period — usually over several months or years. Each payment will typically include the principal balance, interest, and any lender fees. The monthly payment amount is generally fixed, meaning it does not change from month to month. Common types of installment loans include auto loans, personal loans, mortgage loans, and emergency loans.
You can use a direct lender installment loan — like the ones from Jora — for many things. Since the time to funding is usually quick, installment loans can be a helpful tool when you need extra cash fast for emergency expenses. These loans are also helpful for other costs, including:
If you’re interested in getting one of these online loans with Jora, the application process is easy. Here’s how it works:
No matter where you are in your journey to financial wellness, remember that it’s okay if you need help sometimes. As you work toward your long-term goals, remember that you can apply for an online loan if needed. And, if you’re ready to get started, apply for an installment loan through Jora now!