Have you ever felt anxious or overwhelmed just thinking about your budget or debt? You’re not alone. Studies show that 77% of Americans feel nervous about their money situation, and 65% say it’s their biggest source of stress. The good news? Taking small, steady steps can lead to long-term financial wellness—and better credit.
Here’s your guide to mastering the 8 key habits that support financial stability and help you build strong credit.
1. Spend Less Than You Earn
Your journey to financial wellness starts with spending less than your income. If you find yourself putting everyday purchases on credit cards and struggling to pay them off, it might be time to evaluate your spending.
Why it matters: Overspending keeps you in a debt cycle and makes it difficult to save or improve your credit. The less you rely on credit cards, the better your credit utilization ratio—a key factor in your credit score.
Get started: Review your monthly expenses and identify areas to cut back. Prioritize essentials and reduce spending on non-joyful or unnecessary items. Even trimming small expenses can free up cash for savings or debt repayment.
2. Pay Bills On Time and In Full
Late payments can cause a domino effect on your finances and your credit score. Missing even one payment on a credit card or loan can lead to fees, interest hikes, and a lower credit rating.
Why it matters: Your payment history makes up 35% of your credit score. Timely payments are critical to building and maintaining good credit.
Get started: Automate your bills whenever possible and create reminders for due dates. If you're struggling, reach out to your providers to explore alternative payment options.
3. Build a Short-Term Emergency Fund
An emergency fund acts as a financial cushion during tough times. Without one, you may be forced to rely on high-interest debt to handle unexpected expenses.
Why it matters: Avoiding last-minute loans or credit cards keeps your credit score intact and gives you peace of mind.
Get started: Start small—set aside $5 to $10 a week in a separate savings account. Over time, aim to build up three to six months’ worth of expenses.
4. Save for Long-Term Goals
Retirement and future savings often take a back seat, but they’re vital for financial independence.
Why it matters: Investing early reduces reliance on future credit and helps you build wealth.
Get started: If your employer offers a 401(k), contribute regularly—especially if they match your contributions. No 401(k)? Open an IRA and set up recurring deposits. Starting small is better than not starting at all.
5. Keep Debt at a Manageable Level
Carrying too much debt leads to stress and can damage your credit.
Why it matters: A high debt load increases your credit utilization ratio, making you appear risky to lenders.
Get started: List all your debts, including balances, interest rates, and due dates. Prioritize paying off high-interest debts first or consider making multiple smaller payments each month. Align your due dates with your payday for better cash flow.
6. Boost Your Credit Score
If your credit score is below 660, you may face higher interest rates and fewer loan options. Improving it should be a top priority.
Why it matters: A good credit score (typically 670 and above) qualifies you for better rates and more financial opportunities.
Get started: Pull your free credit report from AnnualCreditReport.com and review it for errors. Consider becoming an authorized user on a responsible friend or family member’s credit card. Use a credit builder app like Ava Finance to report on-time payments and steadily build a positive credit history.
7. Get the Right Insurance Coverage
Insurance protects your assets and saves you from financial ruin in emergencies.
Why it matters: Without adequate coverage, unexpected events can drain your savings and force you to rely on credit.
Get started: Review your insurance policies (health, auto, home, renters, life) to ensure proper coverage. Look into group discounts through your employer and adjust policies to match your needs and budget.
8. Plan Ahead with a Budget
Living without a budget is like driving without a map—you’ll always feel lost.
Why it matters: Budgeting helps you allocate funds for savings, bills, debt, and future goals. It gives you control over your money.
Get started: Choose a budgeting method that works for you—whether it's an app, spreadsheet, or pen and paper. Include fixed expenses, variable costs, seasonal purchases, and one-off events. Track spending and adjust monthly. Automate savings and build sinking funds for larger purchases.
Final Thoughts
You don’t have to tackle all eight habits at once. Start with the one that will have the biggest impact on your financial situation, and work your way through the rest. These steps will not only help you improve your finances but also support healthy credit growth.
If you're looking for a smart and simple way to build your credit, consider Ava Finance. Ava is a credit builder app designed to help you establish a positive credit history with on-time payments and personalized financial tools. Begin your journey toward better credit and financial wellness with Ava today.
