Published on January 7, 2026 | 6 min read | Webster Bank
Do you believe you have to be a financial genius to manage your finances? Financial knowledge may seem like a lot to handle, and you don’t need us to tell you that. But we are here to tell you that financial wellness is much more about simple steps than advanced financial strategies. In fact, when it comes down to it, three steps may take you a long way, which are budgeting, saving, and using credit wisely.
Whether you’re just getting started or are further along in your financial wellness journey, these three steps may help you.
Budgeting may help you manage your money and help you avoid overspending. If you don’t have a budget, it may be very difficult to manage your money. Without a budget, it is too easy to spend more than you should, which might leave you in debt. We suggest you get into the budgeting habit if you aren’t already.
The most complex budget in the world is of no use to you if it isn’t working for your current financial situation. That’s why it is very important that you design a budget that works for you and your family.
A budget is a spending plan. By sitting down and creating a budget, you organize the money you need for all your most important expenses. These expenses include housing, utilities, food, transportation, and everything else you need to pay for. A budget also helps you figure out how much money you may set aside for savings, paying off debt, and other goals and wants.
Start with a list of your income sources. Write down how much money you earn in a year. This may include your salary, self-employment income, side-hustle money, or other sources of regular income (such as child support, for example). If your income is seasonal or irregular, you may need to go back a year or two to get an accurate picture of your average income.
Budgets are usually created on a month-to-month basis, although you may use any time frame you like. You may want an annual budget to plan for your big-ticket expenses and a monthly budget to better monitor your cash flow.
Write down your expenses for the year. This includes everything you spend money on, even things that don’t happen every month. These expenses might include car insurance, holiday gifts, property taxes, or professional dues. For variable expenses, such as utilities, you may take last year’s total and divide it by 12 to calculate the monthly average.
Compare income and expenses. You should have a clear picture of how much money you have coming in and going out. If your expenses exceed your income, you need to find a way to get your budget back on track to live within your means. This may mean increasing your income or lowering your expenses. If you have leftover funds, you may decide how to save or invest that money.
Set some financial goals for yourself and your family. While a budget may help you cover your monthly expenses, a proper budget is helpful for your future savings goals and dreams. Do you have plans to save up for a vacation, or would you like to start chipping away at your debt? Put your savings and debt-reduction goals into your budget to make sure you’re on track with them.
A budget is a key tool to help you avoid overspending and to help you have money for the things that are most important to you. Once you understand where your money is going, you may make smarter financial decisions. It also may give you confidence knowing you are managing your finances.
Saving is another fundamental aspect of financial wellness. Think of saving as your financial safety net. Emergencies and life’s big moments happen, so it is important to save for emergencies, large purchases, and retirement.
Life is full of uncertainties, and there’s no way to tell what might happen tomorrow or next year. For instance, one day you might have a flat tire on your car, or you may need to visit your doctor or dentist unexpectedly. If you don’t have savings to rely on, you may need to borrow money, use your credit card, or take out a loan to pay for it. But if you have money in a savings account, you might easily access that money and cover the cost of your emergency expenses.
Saving money is also essential when you have big-ticket purchases on your mind. Things like buying a new car, a home, or paying for college are all big purchases you likely need to save up for in advance. Retirement is also another big event for which you should start saving early. The more you save early in life, the more money you might have in the long run.
Start with an emergency fund of at least three to six months of living expenses. This is the money to use for unplanned events, such as a medical emergency, job loss, or home repairs.
One of the easiest ways to save is to automate your savings. Set up automatic transfers from your checking account to your savings account. This way, you won’t even have to think about it, and your savings balance could steadily grow over time. If you have specific savings goals, such as buying a car or taking a vacation, you may set aside money every month for that specific goal. Divide the amount you need to save into smaller portions, and save a little bit each month.
If you aren’t used to saving, start with a small amount. Even saving $20 per month may help you establish a savings habit, which could build over time.
There’s a fine line between using credit and using too much credit. If you do it wisely, it is possible to use credit to your advantage and make large purchases while building a positive financial history.
Credit refers to the money a lender allows you to borrow to purchase items. You then agree to pay the lender back the borrowed amount, plus, sometimes, interest. The better your credit history and credit score, the easier it could be for you to borrow money when you need it.
Pay your bills on time. And don’t borrow more than you are able to pay back. Credit cards aren’t free money, so only charge what you know is affordable for you when you get the bill. Paying your credit card statement balance by the due date usually means you do not pay any interest.
Keep your balances below 30% of your total credit limit on all of your accounts. It is also important to avoid “maxing out” any one account. Try to keep your credit card balances below these limits to help your credit score.
Check your credit report annually. You should get a free copy of your credit report each year from AnnualCreditReport.com. By checking your credit report, you know all the information is accurate.
Pursuing financial wellness isn’t about being rich, or perfect, or even smart. It’s about being careful with the resources you have and making financial decisions for your future. Be sure to check out our financial wellness checklist to get off to a decent start. Access the checklist here.
This article was prepared by WriterAccess.
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