When we generally talk about health, we refer to physical wellness—how caring for our bodies and minds can help us feel at, or close to, 100 percent. But a more nuanced discussion can also include things that contribute to health, like exercise, sensible eating and... good money management?
Yes, money management. A recent study by BlogHer and Chase Slate found 94 percent of respondents felt their wellbeing was directly linked to their financial health. Half of the women surveyed said they experienced health issues due to financial stress. And 98 percent said they wanted to improve their financial health this year.
If you’re among this 98 percent and want to take better control of your finances, the good news is it doesn’t have to be difficult. Below are five simple steps to help bring you closer to feeling financially healthy.
It can be intimidating to check it, but knowing your credit score is the first step to improving it.
“Your credit score is a measure of your credit worthiness and is calculated based on the information in your credit report,” said Mical Jeanlys, General Manager of Chase Slate. “It can determine your candidacy for a loan, the type of loan you qualify for, how much credit you qualify for and what your interest rate will be.”
Though a lot of factors contribute, your payment history accounts for 35 percent of your credit score.1
“Missing credit card payment deadlines or paying less than the minimum payment requirement can negatively impact your score,” Jeanlys said.
But paying the minimum doesn’t mean you should max out your cards; the amount of credit you use each month also has a significant impact on your credit score. Over one third of your score is determined by what’s known as your credit-to-debt ratio, or the amount of money you put on your card in relation to your credit limit. Experts recommend a credit-to-debt ratio of 30 percent or less—so, if your credit limit is $10,000, try not to spend more than $3,000 on that credit card.2
Just as you should visit the doctor every year, checking your credit report regularly is important for your financial health.
That’s because your credit report shows the history of all your credit and loan accounts, including on-time payments, duration of accounts and credit usage. Since all of these components impact your credit score, it’s important to ensure your report is accurate. And it’s always a good idea to see if there’s any fraudulent activity or incorrect information, which can affect your credit status.
Under federal law, you are entitled to three free credit reports every year—one from each of the three major credit reporting bureaus—so taking advantage of those free benefits can help you better understand your credit score. And if you notice an error, you can dispute it online or by mail.
Contrary to popular belief, creating an emergency fund does not mean you need to set aside hundreds of dollars at once.
Jeanlys said an emergency fund should be able to cover three to six months of expenses.
“Focus on costs, not income,” she added. “All you need is a basic calculation of items you absolutely need to pay for, plus what it might cost for medical insurance or expenses if you lose coverage that came from your job.”
Once you settle on a monthly dollar amount based on this calculation, contribute to your emergency fund every week until you hit your goal. This can help you feel more financially secure in the long run.
Knowing exactly where your money is going can help you minimize unnecessary spending and set aside more cash for your savings.
Though many mobile budgeting apps provide instant access to your account activity, it’s also important to review copies of your statements provided directly from your bank.
And as you review your spending, keep an eye out for those frequent $5 to $10 charges, such as pricey lattes and cab rides. Understanding how frequently you make these types of purchases can help you decide where to cut spending—and can have a significant impact on your savings.
Setting goals when it comes to your finances is only the first step. To make a real impact, you need to see these goals through, which is often easier said than done. So find ways to hold yourself accountable.
“People are far more likely to stick to savings plans when they announce them,” said Thasunda Duckett, CEO of Chase Consumer Bank. And that doesn’t mean announcing it on social media. “Tell a trusted girlfriend about your plans, so that you have someone to cheer you on.”
From understanding your credit score to setting goals and holding yourself accountable, making a concerted effort to improve your money habits may be the first step toward bettering your financial self and feeling empowered to build your credit, save, and spend (wisely).
Read more from JPMorgan Chase here.