4 Smart Behavioral Changes for Financial Wellness

An older woman looks happily at her phone knowing that the changes she has made to her behavior have affected her finances.

The key to establishing financial wellness is to build good habits. This often means making some behavior changes in your life. It isn’t always easy to make adjustments in your life, but with some planning you can take small steps toward achieving your goals. Here are 4 ways to start.

Be SMART with Your Goals

We all have biases that can steer us toward goals that aren’t as important or pressing. Perhaps your rich friend let you borrow her fancy sports car this summer and you fell in love with it so much you decided you needed to buy one. Zooming down the highway in a Maserati is a blast, but spending $100,000 on a car means you might not be able to save as much for retirement or increase your emergency fund. Identifying specific financial goals can often be challenging. Here are few steps to creating realistic goals:

  • Figure out what goals matter most to you. Put everything on the table, even that Maserati.
  • Sort your goals into three categories 1) Goals that are possible now. 2) Goals that will take a little time to achieve. 3) Goals that require a long-term strategy.
  • Apply a SMART- goal strategy by making sure your ambitions are Specific, Measurable, Achievable, Relevant and Timely. 
  • Create a realistic budget. Find out exactly how much money is coming in and what’s going out, then write out a budget to keep your spending on track.
  • Put any leftover money from your budget into a savings account dedicated to long-term goals. 
  • Monitor your progress. Stay on top of your budget and make any adjustments based on changes in your income or life events.

When setting goals, consider working with a professional who can offer you unbiased advice and help you prioritize goals that matter most to you and will help you achieve financial stability.

Track Your Monthly Expenses

Get in the habit of tracking your spending on a regular basis, so you know where your money is going and figure out where you may be overspending. Make sure to:

Review your accounts

Looking at your accounts will help you identify where you’re spending money and will help you to pinpoint problems.

Sort your expenses

Break down your expenses into fixed and variable categories. Fixed expenses are things like mortgage or rent, utilities, insurance and credit card payments that stay the same from month to month. Variable expenses are costs that will likely change every month, such as food, clothing and entertainment.

Try a budgeting app

Budgeting apps can help you better manage your money. Apps allow you to gather all of your accounts and bills in one place so you can conveniently manage your finances from one dashboard and easily create budgets.

Don’t Let Emotions Rule Your Money Choices

From anxiety and stress, to embarrassment, to feeling overwhelmed, your financial situation can cause you to throw logic out the window and make bad financial decisions. It’s better to take some time to cool off and weigh practical options before acting emotionally. If emotions and money often mix in your life, take the time to understand your own attitude toward spending and investing so you don’t continue making impulsive decisions. If you can’t separate emotion and money, think about seeking some professional help to deal with the underlying problems you might have. There’s no shame in asking for help. Finding less destructive ways to deal with life’s emotional swings is not only good for you financially, it’s good for you mentally.

Ask for Support

Don’t be afraid to ask for advice when it comes to improving your finances. Talking to some money-smart friends and family members or even working with a financial professional1 may be right for you.

It’s easy to forget that when it comes to money, your actions and mood can be just as important as the numbers. Try exploring some of these changes to your behavior to see how they can help you achieve financial wellness.

1.The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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