The 4 Parts of Financial HealthUpdated: March 28, 2018

The Consumer Financial Protection Bureau recently released a report on financial health and well-being based on research, expert testimonies and interviews with consumers of all ages from around the country. The most interesting thing about the report is that it details four measures for financial health, all observed in the most financially secure participants and attainable by most Americans. So you don’t have to read the entire report, we’ve taken each measure and broken it down into what it means, as well as the habits and tools you can use to achieve it. To learn what steps you can take to improve your financial health, keep reading below.

Control over day-to-day and month-to-month finances

Managing your money, and not letting your money manage you, is a key part of financial health. This includes being able to cover your needs and pay your bills on time, as well as not having to worry about getting by in life. Developing a budget and reviewing your statements every month are great ways to gain more control over your finances, as these practices will let you see exactly where your money is going and what your unconscious spending habits are. Following that, you can work to develop better habits, which will likely involve restricting your spending in certain areas. If you have trouble with compulsive spending, you could get a secured credit card with a low limit to help you restrict yourself. Secured cards are backed by a security deposit you make when you take the card out, which covers your debt in case you can’t pay the bill and usually determines your credit limit, and they’re available even if your credit scores are low. Not sure which cards are the best? Here are some of our top-rated secured credit cards:

Discover it Secured card

4 Parts of Financial HealthHands down the best secured credit card we’ve reviewed, the Discover it Secured card offers something rare for a secured credit card: cash back with no annual fee. This card will earn you 2% cash back at restaurants and gas stations, up to the quarterly maximum (currently $1,000/quarter), and 1% cash back on all other purchases. At the end of your first year as a cardholder, Discover will then match your cash back, effectively doubling your first year cash back rate, meaning you’ll earn 4% on gas and dining out for the first year! You will also get free social security number monitoring when you sign up, which analyzes risky websites to see if your social security number has been compromised. This card has a minimum security deposit of $200 and a maximum of $2,500 to establish your line of credit, which also works as your credit limit. The Discover it Secured card shows up on your credit reports as a credit card — merchants also won’t know it’s a secured card — and the card reports to all three credit bureaus, giving you the chance to improve your credit scores with responsible card use. It is available to applicants with poor (usually considered a credit score below 580) or no credit. Additionally, Discover will start reviewing your account starting at 8 months to see if you can be transitioned into an unsecured line of credit, which isn’t something all secured cards do.

Capital One Secured Mastercard

4 Parts of Financial HealthThe Capital One Secured Mastercard is a simple secured credit card with no annual fee. While it may not have cash back like the Discover it Secured card, it has low minimum deposits, letting you secure it with deposits of $49, $99 or $200, depending on your creditworthiness. This makes it perfect for curtailing discretionary spending, as you can give yourself a tight financial leash for the month. This card’s activity shows up on credit reports as a credit card and reports to all three credit bureaus, so if your credit scores aren’t doing so great, this card can help you improve them. The Capital One Secured Mastercard is available to applicants with poor (usually considered a credit score below 580) or no credit.

Capacity to absorb a financial shock

If you experienced a financial emergency that cost you $1,000 tomorrow, could you handle that? According to a recent survey, most Americans couldn’t, which is alarming because almost everyone has to deal with a big emergency expense at some point in their lives. Part of financial health is having the ability to draw on resources, which can take the form of an emergency fund, insurance policies or a social support system, when you need them. Having ready access to credit, such as a personal loan or low APR credit card, can also help you avoid greater loss down the road. For example, if you need a car to get to your job, and your car breaks down, using credit to get it repaired will let you minimize losses from missing work.

Financial freedom to make choices to enjoy life

It’s important to afford the necessities, but life is about more than just surviving. Financial health includes being able to afford your wants as well, whether that’s splurging on shopping, traveling the world or being generous toward your community. Because enjoying life can mean so many different things to different people, it’s difficult to recommend specific courses of action for this step, but one thing that may help you is to get a good rewards card. Rewards cards will let you earn points or miles as you use them to make your necessary purchases, and every once in a while you can use them to do something you enjoy, like pay for a trip or trade in your rewards for items you can give as gifts. There are cards that earn rewards at the grocery store, gas station, travel and everything in between. These are a couple of the best rewards cards we’ve reviewed that earn you flat rates on all purchases:

Capital One Venture Rewards Credit Card

4 Parts of Financial HealthThe Capital One Venture Rewards Credit Card is one the best travel cards we’ve reviewed, earning 2 miles per $1 spent on all purchases with an average flight and hotel value of $2.40 for every $100 spent, according to our Travel Rewards Credit Card Analysis. To make the good even greater, you’ll earn 10X miles per $1 spent on travel booked through Hotels.com/Venture (note that this offer expires on Jan. 31, 2020). There’s also an intro bonus of 50,000 miles — worth $500 in travel — that you can earn after spending $3,000 on purchases in the first 3 months of card membership, and no foreign transaction fees. The only downside to this card is its annual membership fee of $95, though your membership fee is waived for your first year and if you use the card often enough, your rewards will more than cover the annual fee. The Capital One Venture Rewards Credit Card requires good to excellent credit (usually considered a credit score of 700 or higher) to qualify.

Wells Fargo Cash Wise Visa Card

4 Parts of Financial HealthFor a cash back rewards card with no annual fee, a nice intro bonus and some unique perks, the Wells Fargo Cash Wise Visa Card is a great option. It earns an unlimited 1.5% cash back on all purchases, and if you spend $1,000 in the first 3 months, you’ll get a $200 intro bonus. Additionally, for the first 12 months of card ownership, you’ll enjoy a 0% APR on purchases and balance transfers (with an intro balance transfer fee of 3% for the first 12 months, then it’s 5%), and you’ll earn 1.8% cash back when you use mobile wallets Google Pay or Apple Pay to make purchases in the first year. As a unique bonus, if you use the Wells Fargo Cash Wise Visa Card to pay your mobile phone bill, you’ll receive $600 of cell phone protection against damage and theft with two claims available every 12 months. There’s a $25 deductible per claim, but this one-time fee is likely much cheaper than what you’d pay your phone provider for protection. The Wells Fargo Cash Wise Visa Card requires good to excellent credit (usually considered a credit score of 700 or higher) to qualify.

Want to learn more about these cards and see some other top options? Visit our reviews of the best rewards credit cards to find the perfect addition to your wallet.

On track to meet your financial goals

Setting at least one financial goal can give all of your good money habits meaning, and will encourage you to keep working on them. Your goals can be anything, though behavioral science dictates that they should be specific, forgiving and realistically attainable given your opportunities. Examples of goals that meet this criteria include paying off your credit card debt, saving $1 million for retirement or buying a new car. If you don’t have a goal already, you can get started by picking something that you could reasonably achieve within the next five years, and then opening a savings account to start building your fund for it. While you can opt to open a savings account with a brick-and-mortar bank, your money will likely go further in an online savings account. That’s because many online savings accounts let you set up free, regular transfers, and earn more annual interest than savings accounts from brick and mortar banks. Check out our online savings reviews to see if this is the right solution for you.

Just like with physical health, improving your financial health can help you feel better and give you a more positive outlook on life. For more tips on shaping up your wallet, follow our personal finance blog.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.