Being financially healthy is a crucial component of our mental health. When we feel financially stable, we’re less likely to feel stressed in the moment or about our future, but what does financial wellness look like? It involves putting aside money for retirement and savings.

How to Improve Your Financial Wellness This Year

The road to financial wellness must be taken in several steps, usually in order. In this article, we’ll give you some tips on how to reduce overall spending to improve your nest egg.

1. Improve Your Financial Education
The single best thing you can do for your financial wellness is to take a course about how to manage your finances. 65% of Americans have no idea how much they spent last month, which can lead to impulse spending, overspending on necessities (groceries), and missed bills.

Although it isn’t possible for everyone, you can bring down your debts slowly by paying close attention to your finances. Reducing your student loans by $100 each month is better than $50, no matter how insignificant it may seem. You need to budget to meet your financial goals.

2. Switch to Public Health Insurance
Health insurance is a major cost that will eat into your savings every month, but you still need it. Consider switching to a public health plan to reduce your administrative costs and co-pay.

When you compare private and public health insurance, you’ll notice that public healthcare is less expensive. However, public health insurance providers have strict eligibility requirements, meaning people who aren’t US citizens or have pre-existing conditions won’t qualify.

However, if you can manage to get on a public plan, you can save thousands of dollars per year, depending on the nature of your coverage. Keep in mind the paperwork is pretty expensive.

3. Lower Your Monthly Student Loan Payments
There are only two ways to successfully pay down your student loans: make more money or reduce your payments. We recommend reducing your payments until you make enough to pay more than the minimum per month. This will give you one less bill payment to worry about.

You can lower your student loan payments by applying for repayment plans. For example, an extended payment plan allows you to repay your loan over a period of 25 years. Enrolling in automatic payments will afford you an 0.25% interest discount and overall peace of mind.

4. Pay Yourself First With Automatic Payments
It can be hard to set up a savings account and stick with monthly payments. Between expenses and bills, you may feel like you have to go without when you pay into your rainy day fund. The trick is to take money right off the top, so you won’t see it before it’s transferred out.

Start by transferring money you would have spent on lunches or coffees over a two-week period. As your savings account grows, consider putting some of this money towards retirement accounts, a home, an emergency fund, investments, childcare, college, and much more.

5. Consider an Annuity Instead of a 401(k)
It’s understandable why young people don’t want to invest in a 401(k). Not only will that money be unavailable to them for several years, but they may die before they can even use it.

Fortunately, we’re living longer and longer. The average life expectancy in the United States is 79 years, but many health seniors could live well past 80. Is a 401(k) a good idea? Maybe not. It depends on how much you invest, your tax bracket vs. the withdrawal, and how long you live.

Instead of a typical retirement plan, consider an annuity. An annuity is guaranteed lifetime income paid out through equal intervals, like a pension or insurance payment.