Financial Wellness Starts With Knowing Where You Stand

Earl Johnson
May 21
5 min read

Educational content only. This resource is for informational purposes and does not constitute professional financial, legal, or tax advice. Your financial situation is unique, please consult a qualified financial professional before making any decisions. For personalized guidance, visit lexuswealth.com.

You don't need to have it all figured out. You don't need a high income, a perfect credit score, or a finance degree. Financial wellness begins with one thing, an honest look at where you are right now. That is the starting point for everything LWM Foundation was built to help you build.

Most of us were never taught how money actually works. Not in school, not at home, and certainly not by the systems designed to profit from our confusion. So if you feel behind, overwhelmed, or unsure where to start, you are not alone and you are not the problem.

According to the Consumer Financial Protection Bureau, 44% of U.S. adults say their finances "control their life" always or often. That number is not a reflection of personal failure. It is a reflection of how many people are navigating financial decisions without the knowledge or tools to feel in control. Financial wellness is learnable. And it starts here.

What financial wellness actually means

Financial wellness is not about being wealthy. It is about feeling secure, informed, and in control of your money, regardless of how much you have. It means understanding what comes in and what goes out, having a plan for the unexpected, and making decisions that reflect your values and your goals.

Research from the Financial Planning Association found that only 38% of people have both the financial health and the sense of control and confidence that together define true financial wellness. The good news is that both are improvable. And improving one tends to improve the other. When you understand your finances better, you feel more in control. When you feel more in control, you make better decisions. That is the cycle LWM Foundation exists to help you start.

"Financial wellness is not a destination, it is a practice. And like any practice, it gets easier the more consistently you show up for it. Start small. Start honest. Start now."

Step 1 — Know your numbers

Before you can improve anything, you need to know where you stand. This means getting honest about three things: what you earn, what you spend, and what you owe.

Your income

Write down your total monthly take home pay, the amount that actually lands in your account after taxes. If your income varies (freelance, hourly, tips), use an average of the last three months. This is your foundation.

Your expenses

List every regular expense, rent or mortgage, utilities, phone, groceries, transportation, subscriptions, and anything else you pay consistently. Then look back at the last 30 days of bank or card statements and note anything you missed. Most people are surprised by what they find.

Your debt

List every debt you carry, credit cards, student loans, auto loans, medical bills, personal loans. For each one, write down the balance, the interest rate, and the minimum monthly payment. This is not about judgment. It is about having the full picture.

According to a 2025 survey by Schwab, only 31% of U.S. households had a documented financial plan — and among those without one, 43% said lack of money was the reason. But a plan is exactly how you find the money.

Step 2 — Build a spending plan

A budget is just a spending plan, a decision made in advance about where your money goes. It doesn't restrict your freedom. It creates it. When you know your money is handled, everything else feels lighter.

A simple starting framework is the 50/30/20 rule:

Needs — 50% of take-home pay. Rent, utilities, groceries, transportation, minimum debt payments. The essentials your life depends on.
Wants — 30% of take-home pay. Dining out, entertainment, clothing beyond basics, subscriptions. Things that add quality to life.
Savings & debt payoff — 20% of take-home pay. Emergency fund, retirement contributions, and extra payments toward debt. This is where your future gets built.

This is a starting point, not a rule. If your needs currently take up 70% of your income, that is where you are. Knowing that is not a failure, it is information. And information is what you use to make a plan.

Step 3 — Build your emergency fund first

Before you focus on investing, paying down debt aggressively, or any other financial goal, build a cushion. An emergency fund is money set aside specifically for the unexpected: a medical bill, a car repair, a job loss.

According to Bankrate and the Federal Reserve, 43% of Americans could not cover a $1,000 emergency expense from savings in 2025. Without a cushion, one unexpected expense can derail months of financial progress.

Start with a goal of $500 to $1,000 is enough to handle the most common emergencies without going into debt. Once you have that, work toward one month of living expenses, then three, then six. Keep this money in a separate savings account so it is not mixed with your spending money.

Even $25 a week adds up to $1,300 in a year. The amount matters less than the habit. Start where you can and build from there.

Step 4 — Understand your credit

Your credit score is a number between 300 and 850 that tells lenders how reliably you pay back money you borrow. It affects your ability to rent an apartment, buy a car, get a mortgage, and in some cases get a job.

Five factors determine your score:

Payment history (35%) — Paying on time, every time, is the single most important factor.
Credit utilization (30%) — How much of your available credit you are using. Keep this below 30%.
Length of credit history (15%) — How long your accounts have been open. Older accounts help.
Credit mix (10%) — Having different types of credit (cards, loans) can help, but don't open accounts just for this reason.
New credit inquiries (10%) — Applying for several new accounts at once can temporarily lower your score.

You are entitled to a free credit report from all three bureaus — Equifax, Experian, and TransUnion once a year at AnnualCreditReport.com. Check yours. Look for errors. Dispute anything that doesn't look right.

Step 5 — Start thinking about the future

Once you have a spending plan, a small cushion, and an understanding of your credit, you are ready to start thinking beyond this month.

If your employer offers a 401(k) with a matching contribution, contribute at least enough to get the full match, that is free money added to your retirement savings. If there is no employer plan, look into an Individual Retirement Account (IRA). You can open one with as little as $1 at many brokerages.

Generational wealth does not begin with a windfall. It begins with small, consistent decisions made over time, a budget followed, a debt paid off, a savings account started, a retirement contribution made. Each one compounds. Each one matters.

"When one person in a family learns to build financial wellness, the whole family rises with them. That is how generational wealth actually works." — LWM Foundation

Where to go from here

This guide is your starting point. LWM Foundation has free resources on every topic covered here, budgeting tools, credit guides, investing basics, home ownership, debt management, and more. All free. All designed for people who are ready to start, regardless of where they are right now.

Below are three resources we recommend exploring

next.

How to build a budget that actually works for your life
Understanding your credit score and how to improve it
What generational wealth means and how to start building it

And if you are ready for personalized financial guidance from a licensed professional, Lexus Wealth Management, the firm behind LWM Foundation is here for that. Visit lexuswealth.com to learn more.

The information in this article is for educational purposes only and does not constitute professional financial, legal, or tax advice. LWM Foundation is not responsible for any outcomes resulting from use of this information. Please consult a qualified financial professional before making financial decisions. For personalized guidance, visit lexuswealth.com.