fianancial well beingIf you have been reading our blogs regularly, you should already have prior knowledge about how you can boost your financial health. We gave you tips on improving financial health in our previous blogs. But for those who didn’t visit our site earlier and since times have changed since our last post on boosting your financial health, we are going to give you 10 more tips on improving your financial health as a review of our old methods. Even if you try just one or two of the suggested methods, it can make you a healthier person financially.

What is financial health?

First let’s look at what it means to be financially healthy. As you can guess, a financially healthy person will have no money troubles. He pays his bills on time, has a nice shiny car, lives in a good house, and has a job that provides enough money to put bread and butter on the table. That is the general idea. But a financially healthy person must also have a good bank balance, an impeccable credit history, and a low asset to debt ratio. It is also crucial to have a retirement plan and emergency money saved on the side in case some unforeseen circumstances arise.business-15721_1920

Financial health, by definition, shows a person’s overall financial state of being. It shows the overall financial aspects of an individual that includes your net worth, the amount of money you owe, the amount of assets and savings you have, how much you make, and how much payment you must make out of your pocket to cover your daily expenses. Your financial health depends on how you plan your future and how well you manage your money.

The top 10 financial aspects

We interviewed several financial experts to get the best advice on financial health and got the opinions most commonly agreed upon by them. Below we listed all the important aspects that came up in the discussion. The top 10 important aspects of a financially healthy person are as follows:

1. Saving

2. Emergency fund

3. Paying bills on time

4. Good credit score

5. Assets

6. Paying off your debts

7. Plan your expenses

8. Invest

9. Grow your income

10. Plan for retirement

 

1. Saving

moneybox-158346Saving money might sound difficult for many individuals. It is one of those tasks that is often easier said than done. We all know that we should save money, but very few of us have gotten in the habit of saving money. Saving money requires a lot more than just wanting to spend less; it requires planning your finances. Make a list of things you need to make payments on, budget your expenses, and figure out what you have left that you can put into savings. Cross off the things on your list that you don’t necessarily need. Things like your credit card interest, your mortgages, and your car payments can pile up and hurt your finances in the long run. Saving comes from making more money than you spend. If you find out that after budgeting your expenses you still aren’t able to save much, find ways to increase your income. Your savings will originate easily once you have made the most out of your money and spent it on things that matter.

2. Emergency fund

Saving is necessary for everyone no matter how much you make. Having an emergency fund is just as important. If you haven’t already started an emergency fund, experts suggest that you start one now, even if you’re only able to put away a little bit of money towards it every week. If you already have one, then chances are you don’t have enough money saved for emergencies. The single most important thing you can do to your financial life is to increase your emergency fund right now. “I think the single most important thing someone can do right now for their financial life is to make sure they have an adequately funded emergency fund,” says Jim Wang, blogger at Bargaineering.com.

3. Paying bills on time

free-37557_150Are you on top of your bills? If you are, then you are in good financial shape. Getting behind on your bills can pile them up and further damage your finances. All debts are not created equal, so you need to prioritize your debts and pay off the ones with the highest interest. If you keep getting buried in debt, you might consider consolidating your credits, and get out of debt fast before it’s too late. Paying your bills also increases your credibility and improves your credit score.

4. Good credit score

Credit score and credit history is very important if you want to benefit from lenders and creditors in the future. If you want to buy a home, refinance your home, buy a new car, buy some new stuff for your home, or go on your dream vacation, you will need to use your credit card and credit line. Creditors will look at your credit score that tells them the likelihood of you returning the money when they lend it to you, so having a good credit score will increase your chances of qualifying for a loan.

5. Assets

Evaluate all your tangible and intangible assets such as your car, house, bank balance, building-295215_1280etc. that make up your net worth. The more assets you can accumulate throughout your life the better it will result in having a better life when you retire and will increase your net worth.

6. Paying off your debts

You will be able to increase your net worth and be financially healthier if you pay off your debts quicker. Make plans to pay off your highest interest debts first. Pay more than the minimum payment and reduce the amount of interest you will have to pay. The quicker you pay your debts off, the more you will save on interests.

7. Plan for your expenses

Develop a monthly spending plan. If you need to make a big purchase, plan ahead of time. Add all your income and expenses for the month and plan what you will do and buy each month so that there will be no surprises. A monthly spending plan will allow you to budget your expenses better.

8. Invest

Just like you should save a portion of your income, you should also invest a portion of your income to make more money. This should be in addition to any life insurance policies or fixed deposit plans that you have bought. Investing in the stock market could be a good idea and profitable if you know what you are doing. You could easily earn a residual income. Make sure that you are financially fit and free from debts before you invest any money in businesses that have a significant amount of risk involved.

9. Grow your income

There are many ways you can grow your income. Keep an extra retirement deposit that will give you a good amount of interest in which your money will grow while you save for retirement. Finding ways to grow your money is very important as you get closer to your retirement age.

10. Plan your retirement

roof-terrace-354906_1280Finally, your retirement plan is the most important plan that you will ever make in your lifetime. It is never too late to plan for your retirement. The best way to start planning for your retirement is to start early. Have a significant amount of money saved every month towards your retirement plan. Also, get a good understanding of your retirement plan and avoid mistakes that can cost you a lot of money if you don’t pay attention.

Your financial health depends on how you plan your expenses and savings over a long period of time to give you the right amount of money for retirement. It also depends on how well you manage your money and your debts. Getting out of debts as quick as possible will save you a lot of money in interests. The more you save, the better you will be at the time you retire.

Hope you found our tips on finances helpful and beneficial for you. Please leave a comment and let us know your thoughts on this article.

Source: Balanced Life Team

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