When I was in college, I interned in the marketing department of a financial services firm. One of my internship assignments was to create a presentation on the importance of financial wellness. This was back when the concept of wellness was just starting to become commonplace, but instead of focusing on yoga or meditation, my research centered on financial education as a wellness tool. The big takeaway was that study after study showed that financial stress is unbelievably damaging and negatively impacts our health, careers, and relationships.
This realization ignited a passion in me for writing about financial advice that can help people take control of their financial lives and wellness. As a result, I’ve picked up a lot of helpful money tips over the years, and I want to share them with you now.
1. Build your credit before you need it
It can take years to build up a strong credit score, and having a good credit score can greatly impact many areas of your life. Not only does having a good credit score make it easier to qualify for lending products like mortgages and auto loans, but it also helps you gain access to better interest rates, borrowing amounts, and loan terms. Your credit score can also affect how easy it is to rent an apartment, qualify for utilities, or access favorable insurance prices. On top of all of that, if your career involves handling money, some employers will run a credit check before hiring you to make sure you have a good history of managing credit.
It’s important to start building credit as soon as you can. It may seem like if you don’t have a credit card or any debt you need to pay off that you can’t hurt your score by missing payments, but not taking out credit can stop you from building a credit score at all. You need credit to build credit. It’s important to take out a mix of credit and use it responsibly so you can improve your score by showing you have a history of making on-time payments. Once you open a credit account, it takes at least six months to generate a credit score.
If you’re struggling to qualify for credit because you haven’t had a chance to build any (fun, right?), you can take out a secured credit card. With a secured credit card, you deposit money onto the card and use it more like a debit card. You can’t spend more than that limit, but when you make on-time payments to that credit card, you will start to build your credit history. Double check that your secured credit card issuer is reporting your payments to the three main credit bureaus, Experian, TransUnion, and Equifax.
2. Practice intuitive budgeting
I write about how to create budgets a lot, and there are plenty of helpful budgeting methods out there that can work for a lot of people. That being said, budgeting is a lot of work and that’s why so many people struggle to stick to a budget. It’s easy enough to sit down and figure out how much you can afford to spend each month on categories like living expenses, food, transportation, and entertainment. Where people struggle is with tracking their spending and being aware of whether or not they are sticking to their budget each month.
Over the years, I’ve found that learning how to budget intuitively is much more important. You still need to create a budget so you know how much you can afford to spend after covering your basic expenses like rent and car payments. Once you know what you can afford to spend on purchases that ebb and flow more (clothing, dining out, etc.), you can practice intuitive spending.
Before you make a purchase, do a gut check. Chances are, you know whether or not it’s a good use of your remaining funds. If you aren’t sure if the purchase fits within your budget, hold off on making it until the end of the month once you see how much money you have left. That way, you can start to develop that gut sense of what types of miscellaneous purchases you can truly afford to make. If at that point you no longer want to make the purchase, you’ll also start to train yourself to avoid making unnecessary impulse or emotional purchases. Once you build those good spending habits, sticking to a budget will be easier and won’t require much active effort.
3. Think about paying debt as a wellness tool
Circling back to wellness, paying down your debt is one of the best wellness tools in your arsenal. When we’re feeling stressed out, it’s very tempting to order takeout, book a spa day, or splurge on a fun treat. But did you know that debt can impact not just your mental health but also your physical health? Anyone struggling to pay down debt knows how mentally taxing it can be, but they may be surprised to hear that a 2021 study from the University of Missouri found that the stress of carrying card debt through adulthood is linked to poor health and ailments such as joint pain or stiffness that make it harder to complete and enjoy daily activities.
A 2017 study by AICPA found that 31% of people admit to worrying about their debt in general, 18% worry about it while at work, and 25% stress about debt at bedtime. The stress stakes are high here. When you’re tempted to blow off steam by spending money, consider making an extra debt payment instead. Making extra payments will help you save money on interest and having less debt on your plate will make it easier to relax.
4. Pay the principal first
Speaking of extra payments, did you know that if you make an extra payment toward debt such as student loans, you need to specify that you want that extra payment to go toward your principal balance and not the interest owed? If you don’t specify this, the lender will use your extra payment to pay off interest and you’ll make no to little extra progress on paying off your balance, which will then continue to accrue interest. Make sure your extra payments are helping you and not your lender.