In today’s world, being financially savvy will not only give you a leg up; it’s essential in order to keep your finances in check. Whether you are recently entering the workforce or just want to secure your financial future, understanding key concepts such as savings, loans, managing debt, and financial planning can make a big difference in reaching your financial goals and becoming self-sufficient. It is also just as important to create good financial habits that help you accomplish those goals. Luckily, this blog will explain important concepts and provide helpful tips to build good habits.

Key Concepts of Financial Wellness:

Savings

One simple but important financial literacy tool is a savings account. You can grow your savings and earn interest when you keep your money in this account. To earn even more look for a high yield savings account where you can earn higher interest. 

Loans

Knowing how and when to take out loans is very important. Whether you are buying a car, paying an emergency bill, or paying for college you may need a loan to help fund the purchase. Before taking out a loan, make sure to speak with a trusted expert like a TruChoice Financial Service Representative, to make sure it’s the right loan type and the right amount for your needs. One of the most important things to know about your loan is the APR, which stands for annual percentage rate. The APR tells you how much interest you will be paying on your loan. Each time you make a payment, some of it will pay towards the interest on your loan, and some on the principle, which is the amount you borrowed.

Managing Debt

This is a critical aspect of financial wellness. Debts like mortgages or student loans could be considered as an investment in future wealth, but others could be financial burdens like high-interest credit card debt. It is important to manage your debt effectively. Prioritize repayment and find a strategy that works for you.  A great tip is to pay more than the monthly minimum payment. Automating your payments is another easy way to make sure you never accidentally miss a month. Avoid borrowing more than you can afford to pay back, and if you feel overwhelmed by payments, you can also consider consolidating debt.

Financial Planning

This is very important as it can act as a roadmap for reaching your financial goals. Planning allows you to set objectives, take a close look at your current financial situation, and develop a strategy to achieve your goals. A solid financial plan considers factors such as income, expenses, savings, investments, and retirement planning. It serves as a tool to track progress, adjust as needed, and stay focused on long-term financial stability.

Building Better Financial Habits: A Path to Financial Freedom

Part of building financial wellness involves identifying less effective financial habits and working to improve them. It is important to address and change unhealthy financial habits if you are looking to achieve financial freedom and security. Whether you’re dealing with debt pile up, not saving enough, or overspending, here are some solutions to help you take control of your money and set yourself up for a healthier financial future. And remember – everyone is at a different point in their financial wellness journey.  Try tackling the changes that will make the biggest difference for your finances, and don’t worry about getting everything done all at once.  As your financial partner, we at TruChoice are here to support and assist you in reaching all your goals. Accomplishing even one of these goals is a step in the right direction!

Evaluate Recurring Costs

Review charges that happen on a regular basis, such as subscriptions and memberships. These expenses quickly add up and drain your funds. Determine which subscriptions you no longer find yourself using or subscriptions that don’t significantly improve your life, then cancel them. This is a quick and easy way to free up funds that could be used for more meaningful financial goals. Apps like Rocket Money can be a resource to use for this as it will identify your subscriptions and can cancel them for you, making the process hassle-free. Just make sure to read the fine print and understand any charges that these apps may charge.

Refine Your Budget

It is crucial to regularly review and adjust your budget. Ask yourself, “Is it realistic? Am I overspending on things I don’t need?” When your income or expenses change, revisit your budget to ensure essentials like rent, utilities, and groceries are covered.  Make sure you budget at least a small amount for fun things like events, travel, or entertainment. Sticking to your budget helps control unnecessary spending and builds financial discipline.

Set Specific Savings Goals

Setting goals is important for all aspects of life, and making sure your financial goals are solid can help you reach your other goals as well. Start by defining specific saving goals, whether it’s for an emergency fund, a down payment on a home, or retirement. Then, factor in your income, expenses, and determine a timeline to create a budget. Setting specific goals will help you prioritize your savings and stay motivated to achieve them.

Tackle Debt Accumulation

A major barrier to financial security might be debt. It can rack up quick and become overwhelming. Take an honest look at how much debt you have and create a plan to pay it off. Prioritize high-interest debt because paying off your priciest debts will reduce the amount you’ll pay in interest in the long run. While you are doing this, keep making at least the minimum payments on others until you are in a good position to start paying more. In the long run, decreasing debt will free up funds for investments and savings.

Utilize High-Interest Accounts

Want your money to do more? Make your money work harder for you by exploring accounts with competitive interest rates, such as high-yield savings accounts or certificates of deposit (CDs). TruChoice is currently offering the InCheck account with 8% APY until the end of the summer! This is a great opportunity to help grow your funds faster, providing a cushion for emergencies or future investments.

You can build strong money habits and move toward financial stability by making financial wellness part of your daily routine. Always keep in mind that little adjustments can have a bigger impact later. Taking charge of your money early paves the way for a more promising and secure financial future.

TruChoice is committed to providing personalized service and financial advice to all our members. We can help you create a reasonable budget in line with your goals by getting to know you and your needs. We also provide free credit score analyses to all members as part of our all-inclusive support to make sure you have the necessary knowledge to make wise financial decisions. TruChoice is here to offer you the resources and expertise you need to succeed, whether you’re navigating current challenges or planning for the future.