Financial health: are you okay?
This term is a bit unusual for us, and it means that everything is fine in your personal financial affairs.
Key Signs of Financial Health:
- Financial stability.
- A steady stream of income. & nbsp;
- Having a constantly growing income from investments.
- Rarely increasing expenses.
- Constant growth in the total amount of funds.
This is the ideal state to strive for. However, financial health is a fickle quantity. In the world periodically there are some economic events, inflation, crises, your salary may decrease, or you will lose your job. Therefore, you should always have the resources to maintain a normal standard of living for at least 3 months.
To gauge your current financial health, ask yourself simple questions:
- Do you have an “airbag” in case of unforeseen circumstances?
- Do you have everything you need for life or do you deny yourself something?
- A do you have enough money for your desires?
- Are you in debt? At what percentage? Do you have an insurance policy?
- Do you have a planned financial goal that you are successfully moving towards?
Answer these questions honestly to see the real picture.
The next step is budgeting. Robert Kiyosaki has a payroll in the Cash Flow educational game that includes liabilities, assets, savings, expenses, etc.
A very handy tool. Search the Internet for a template and fill in according to your current situation. I warn you that many surprises await you. Sometimes it turns out that the balance goes negative. This is shocking. But don’t worry: everything can be fixed, and you ALREADY do it. Assess the situation and start working on improving it. Download the mobile app for budgeting, there are a lot of them now. They can be synchronized with a mobile bank, so that expenses on plastic cards would be directly in the right section. It is very convenient and saves a lot of your time. Remember to budget every transaction. Bought snickers – write it down. We went to the movies – write it down. At the end of the month, you can look at the entire list and draw a conclusion: where does your money go, what you might not buy from what you bought, what unnecessary expenses are repeated from time to time, and so on.
Divide the budget into expenditure items: groceries, obligatory payments on loans, utilities, recreation, etc. There is an interesting method of envelopes: allocate one envelope for each item of expenditure and put money there. You pay expenses from the envelope only with the amounts that are there. You cannot take on vacation from an envelope to repay loans. I think the point is clear. It will discipline.
The most important thing in budgeting is consistency and control. If you have unplanned money (bonus, additional income, gift), resist the urge to spend everything at once. Better to set aside this amount. Make a rule to set aside always at least 10% of any income, and preferably 30%: for your “safety cushion”, for insurance, for investments. In our country, there is no habit of insuring yourself and your property, but in vain. You cannot hope for chance. Anything can happen, and insurance is your guarantee to stay afloat.
List your global financial goal and steps to achieve it. It can change depending on your current position, but you must keep the target in focus at all times. For example, first pay off debts, then buy a car, then buy a house. The clearer the idea of the goal and the way to achieve it, the easier it will be for you to achieve it. The goal is your “heart”, your main source of life and inspiration.
Let’s look at loan payments separately. If you have a very high credit burden, you can compare it to a serious illness: until the source is cured, it is useless to get rid of the symptoms. For starters, don’t take out new loans to pay off old ones. This is the road to nowhere. It is better to write down all your loans on a separate sheet. Then there are two strategies. The first from Robert Kiyosaki: take priority on the loan with the highest interest. And send all the free money to pay this debt. The more you deposit, the faster you pay off and the less the overpayment will be. After that, switch to second duty, and then follow this scheme.
There is an alternative method called “snowball”. You start increasing your minimum debt payments. Once it is cleared, move on to the second, and so on. There is an important psychological point here: the faster the debt is paid off, the easier you feel. Choose any method and take action.
To maintain physical health, we need vitamins, exercise, good nutrition and good habits. Your financial health should also be under your constant control, you need to monitor it and make adjustments to your current action plan in time.
Some more tips for maintaining it:
- Try to automate your standing payments as much as possible.
- Do not ignore discounts, promotions, bonuses: nobody canceled the “saved + earned” rule. & nbsp;
- As soon as possible start investing. The formula for wealth is the same: income – expenses = delta. This “delta” needs to be constantly increased.
Take these tips from Amir Capital for the rules and be financially healthy!
