How to Improve Your Financial Wellness
September is self-improvement month,
and many Ohioans feel they could stand to improve their financial wellness.
In an Ohio Credit Union League 2018 consumer survey, respondents were asked to rate
their financial wellness on a scale from one (lowest) to five (highest). The
average response was 3.48. And a majority of respondents, 88.08 percent, admitted
to having financial weak spots.
Ohio isn't far from
national trends. According to the U.S. Bureau of Consumer Financial
Protection's "Financial Well-Being in America" survey
, U.S. adults on average rate their
financial well-being as a 54 on a scale from zero to 100.
The study found
Americans with less income reported lower levels of financial wellness. Scores
of 50 or less tended to come from respondents with a high probability of
experiencing material hardship, meaning they struggle to afford basic food and
shelter. On the other hand, respondents who could easily afford the basics
tended to give themselves financial wellness scores of 61 or more.
credit also contribute to a person's sense of financial wellness, according to
the same study. Someone who has been denied
credit or who had been contacted by a debt collector will likely score
themselves as having a lower level of financial well-being.
feeling financially unwell can affect more than consumers' wallets. In a study from the American Psychological
, nearly 72 percent of American adults reported
feeling stressed about money at least some of the time and nearly a quarter
said they experienced "extreme stress" about their financial situation in the
Stress at that
level isn't healthy. Chronic stress can cause headaches, weight gain, and even
heart disease, according to the Mayo Clinic
American Psychological Association also pointed out research that shows stress
associated with financial problems strains cognitive abilities, meaning the
person feeling financially unwell is more likely to make decisions that
continue to lead them into unfavorable financial situations.
But there's a
silver lining. Regardless of income or credit score, the Bureau Consumer
Financial Protection's study found people who seek training and become
financially literate tend to give themselves higher financial well-being
scores. Here are some tips to help improve your financial wellness score.
- Create a
plan. Decide where you want your finances to take you and compare that to
your current financial situation. Write down all the steps to reach your
financial goal and assign a time period
to achieve each one. Reward yourself periodically as you come closer to your
savings. It's a lot easier to resist spending money if you never see it hit
your checking account. Set up an automatic transfer each paycheck from your
checking account to savings. Experts suggest aiming to set away six months' worth of income for emergencies.
It's also wise to put about 10 percent of your income toward retirement.
cash. Swiping a credit or debit card can make spending money feel a little
too easy. Pulling out dollars for each purchase forces you to be more aware of
how much you're spending. Take out only a set amount of money each week to help
stay within your budget and cut down on impulsive spending.
your credit score. A poor credit score will hold you back financially, even
if you've cultivated healthy budgeting and spending skills. Pay off lingering
debts and be sure to pay off all new expenses promptly
to improve your credit score. You may want to consider setting up automated
bill pay, so you don't accidentally miss
financial literacy. You can't be financially well if you don't know how to
be. Consider utilizing podcasts, books, articles, and shows that teach
financial concepts. For a more hands-on approach, research financial literacy
events or classes hosted by credit unions or other financial institutions in
your area. Several credit unions in Ohio have certified financial counselors
who are trained specifically to help improve financial wellness.