A sprawling two-story home with a water view, a killer wardrobe chock-full of designer labels, lavish vacations in far-flung destinations—what more could a girl hope for when dreaming about the future? An unlimited latte budget and early retirement, perhaps. While all of these goals are totally worth manifesting on your vision board, being able to attain them really boils down to one thing: your financial wellness.
It’s a catchy phrase, for sure, but to gain some better insight into it, we spoke with Holly O’Neill, President of Retail Banking at Bank of America, who thinks financial wellness is an important aspect of your overall health and wellness. “Just as you schedule checkups with your doctor or therapist for your physical and mental health,” says O’Neill, “it’s important to check up on your finances on a regular basis.” She defines financial wellness as being able to maintain your current financial obligations, feeling secure in your financial future, and being prepared to handle whatever curveballs life might throw at you, whether it’s unexpected car trouble or a last-minute trip to see family.
Being in control of your finances can help you navigate tricky situations, O’Neill explains, without jeopardizing your broader lifestyle or your goals for the future. Not to mention, it can also reduce the amount of stress in your life and give you the freedom to enjoy more of life’s little luxuries (you know, like paying extra for guac). Lucky for us, she’s spilling the tea on alllll the right money moves that will help you actively improve your financial wellness. Read on for her expert tips and find out how to not only reach your money goals this year but also set yourself up for a rosy future.
1. Prioritize paying off debt
Sure, credit cards play a role in building your credit and can even come in clutch in certain situations (oh hello, unforeseen vet bill). But having excess debt can be a major source of stress, and it can limit your ability to set aside savings. That’s why paying off your debt is a crucial step on the path toward achieving better financial wellness. Although it might seem like climbing Mount Everest would be an easier task, O’Neill assures us there are a couple of tried-and-true methods you can utilize to help get yourself out of debt and on a healthier financial path:
- The “snowball” method: This entails listing out your debts from the lowest balance to the highest one. When it’s time to pay your monthly bills, you make the minimum payment on all of your debts and apply any extra money you have toward the debt with the smallest balance. “Do this each month until you’ve paid off your smallest debt,” advises O’Neill. “As you continue moving down your list, the amount you’re able to pay to each balance continues to grow and grow, creating a snowball effect.”
- The “high-rate” method: This involves tackling the debt that has the highest interest rate first and moving your way down towards the lowest interest rate. You make the minimum payment on all of your monthly debts, explains O’Neill, and then focus on sending as much extra money as you can to the debt with the highest interest rate. Continue until all of your debts are paid off.
2. Create a budget—and stick to it
Life comes with its fair share of expenses—rent, wifi, those can’t-live-without staples from Trader Joe’s, and the once-in-a-lifetime concert tickets you scored for Taylor Swift’s Eras Tour. In order to maintain good financial wellness, O’Neill says it’s important to create a spending plan for yourself. “A good rule of thumb for your budget is to use the 50/30/20 method,” she advises. For all of us non-finance wizzes, here’s how that looks in terms of your monthly bills:
- 50 percent of your income should cover needs like rent, utilities, car payments, and groceries
- 30 percent should cover wants, like coffee runs, streaming subscriptions, or that new Sézane sweater you’ve been eyeing
- 20 percent should go into savings, which is good to have for a possible financial emergency
Sticking to a budget does not mean that you have to live a life of deprivation. It just means that you have to be mindful of how much money is coming in each month, where that money is going, and making sure you’re not overspending. If you find that you are stretching yourself a little too thin in the “wants” category, prioritize what’s most important to you and cut back on the others. If you’re a glam girlie and getting lash extensions every month makes you feel like a queen, make space for that in your budget, even if it means canceling that little-used gym membership to offset the cost.
3. Build up an emergency fund
If there’s one certainty in life, it’s that not everything will go according to plan. Surprises will pop up, like three of your besties unexpectedly getting married in the same year, leaving you with the financial burden of having to pay for multiple bridesmaid dresses and attend bachelorette parties in three different cities. It’s important to set aside money in a separate account so that when these kinds of financial anomalies do occur, you’ll have the funds to cover them—and you won’t have to charge them to a credit card.
O’Neill recommends automatically transferring a portion of each paycheck directly into a savings account. “That way, you’re not tempted to spend the money,” she says. And by automating the process, you’ll be making consistent contributions each month, which will continue to build over time. Having at least three months’ worth of your living expenses saved up will help keep your financial wellness intact and prevent you from going into debt when any unforeseen curveballs arise.
4. Keep a close eye on your finances
Once you have the systems in place to pay off your debt, automate your savings, and practice smart spending, the key is to consistently monitor your money to make sure those systems are working for you. “Maintaining your financial health takes time, effort, and intention,” explains O’Neill, so get in the habit of regularly checking on your finances. If this sounds like a dreaded chore to you, it may help to reframe your mindset from a thing that can be stressful to an act of self-care, similar to how you might view journaling or your nighttime routine.
The good news is there’s an app for just about everything these days, and she believes it’s easier than ever to monitor your financial health with the tap of your finger. “For example, Erica®, Bank of America’s virtual financial assistant, can help you manage your finances by providing you with a weekly snapshot of your month-to-date spending,” she says. “It can also let you know about recurring charges, refunds, and duplicate charges.” By keeping a close eye on your finances, you’ll be able to catch anything that’s amiss, and you’ll have a clear picture of whether you’re actually on track to reach those dreamy goals on your vision board.
5. Secure your future
It’s easy to assume that saving for the future is singularly focused on your retirement, but it’s actually more than that. By all means, you should definitely be saving for your retirement each month, such as through a company 401k or a Roth IRA (individual retirement account). But beyond retirement planning, securing your future also means saving for that dream vacay in Santorini, finally paying off a student loan, or buying your dream house. O’Neill looks at financial wellness as a lifelong journey, not a destination, and developing positive financial habits will make it easier to reach both your short- and long-term goals along the way.
She also advocates for educating yourself about finances and increasing your financial literacy. “Finances don’t need to be a taboo topic,” she says. “Women tend to feel more comfortable talking to other women about finances, so don’t be afraid to reach out to your girlfriends.” Feel free to start a group chat and fire off whatever questions you might have for your besties about their strategies for retirement, investments, or wealth-building, and then compare notes. By empowering yourself with financial knowledge and being in greater control of your finances, you’ll not only increase your financial wellness, but you’ll also set yourself up to enjoy life without the added stress of worrying about money, and you’ll have greater peace of mind about your future.
