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3 Ways to Improve Your Financial Health

Whether you are just entering adulthood or well into middle age, it is important to consider your overall financial wellness. Do you find yourself deeply in debt? Would you like to free up some more money each month for specific purposes? Does it feel unlikely your monetary situation is going to ever improve from its current state?

While taking action toward improving your financial health might seem overwhelming, there are three areas where you can make a great start. Even if the funds at your disposal are minimal, you still have options. By implementing the strategies below, you can be well on your way to creating a solid plan to better your financial situation.

1. Build Your Credit

A person’s credit score can provide or deny access to numerous opportunities. Being approved for a home or vehicle loan might seem like a daunting prospect for someone with a bad or limited credit history. Thankfully, there are approaches almost anyone looking to improve their credit can use.

Taking out a credit card is a fantastic way to prove to lenders that you are capable of responsible spending and making reliable payments. True, taking out a credit card might temporarily cause your credit score to drop. However, your score will steadily improve the longer you hold the card and stay on top of your payments. 

But what if your credit score is nonexistent or so damaged that you are unlikely to be approved for a traditional credit card? For most people, there is still the option of taking out a secured credit card. These cards usually require an initial deposit to lessen the issuer’s risk in cases of non-payment. By keeping your balance consistent and low and making full payments, your credit should see an improvement.

If you need to boost your credit quicker, you may have to take more drastic action. While they can be somewhat costly, credit repair agencies are available to help you communicate with credit bureaus. They can also negotiate with banks and other institutions to request late penalty removals and correct errors on your credit report. 

Such agencies are often able to provide a comprehensive action plan for repairing your credit and a tentative timeline for achieving your target score. Before hiring an agency, however, be sure to do your due diligence. Research your options and confirm that the agency you choose is credible.

2. Create and Follow a Budget

If you sometimes feel like you have no idea where your income is going, make a budget. The first step in developing a budget is to start tracking where you are currently spending your money. It can be a huge wake-up call to see the grand total of each expense category on a monthly basis. 

After you track your normal spending for a couple of months, see where some expenses might be cut. Do you go out to eat three times a week and find yourself constantly throwing away uneaten leftovers in the fridge? Try to set a spending limit on restaurant dining and groceries that takes your monthly total down by about 30%. 

If you are able to accomplish this fairly easily, you might see whether you can trim expenses further. Do all your various satellite and streaming services total almost $200 a month? Check into cheaper options for accessing the shows you watch and unsubscribe to services you don’t use. It is amazing how many subscriptions can be set up on autopay and pass unnoticed and underutilized each month.

The most important thing in budgeting is to diligently track where your money is being spent. You are far less likely to follow your budget if you can’t see the hard data that validates your success. There are a multitude of free and paid budgeting apps available, many of them compatible with your mobile device. 

While it might feel like tedious penny-pinching at first, think of budgeting as a way to move your spending to more important priorities. Keeping the end goal in mind is essential in sticking to your plan and working toward future success. 

3. Start Investing 

When most people think of investing, they imagine financial wizards who are experts in day trading. These master investors are hunched over laptops, moving hundreds of thousands of dollars through cyberspace. They cheer when their gambles pay off and smash their antique coffee tables when they lose everything. 

While these scenarios probably happen somewhere in the world, your investment strategies don’t need to be nearly as stressful. Even if you have very limited funds, the best investment advice is to start as early in life as possible. With time on your side, your investments have longer to grow. 

Let’s say you are looking at an investment fund that averages 10% growth annually. If you invest $1,000 per year beginning at age 25, you will have about $64,000 by age 45. Let’s say you wait until age 35 to start investing. You will need to contribute $3,500 per year to reach the same amount of $64,000 by age 45. So even if you can only sporadically throw $100 into an IRA or an employer-sponsored 401(k), the earlier you begin, the better.

Speaking of employer-sponsored 401(k) plans, make sure to take advantage of employer matches available to you. With pension plans quickly becoming a thing of the past, more employers have moved to defined contributions plans. These plans usually offer, on average, an employer match ranging from 2%-6% of the amount contributed by the employee. Choosing not to participate in such a plan, if offered, is tantamount to turning down free money.

Another great investment strategy is to contribute as much as possible to a health savings account (HSA). But wait, aren’t HSA accounts just for medical reimbursement? While they can certainly be used for that purpose, HSA funds can also be invested and grow over time. Unlike other retirement accounts, the best part is the fact that the money is both contributed and distributed pre-tax. No other type of retirement account offers that benefit. 

If you are enrolled in a high-deductible health insurance plan, you can contribute up to $3,600 (individual) or $7,200 (family) in 2021. If you want to take advantage of this strategy, make sure you have the ability to invest where your HSA is held. Many banks do not allow HSA investing, and you may need to take your funds elsewhere.


Financial health is a combination of your current financial status and your plan for the future. Taking appropriate steps to prioritize the best uses of your money and understand the resources available to you is key. With careful planning and dedication to executing your plan, you will be amazed at how quickly you can see results.

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