Taking Care of Your Financial Health & Wellbeing

The link between finances and health.

There is a direct correlation between income and health.  In fact, the National Center for Health Statistics found that the greater one’s income, the lower one’s likelihood of disease and premature death.  So it is safe to say, that one of the ways to improve your personal health is to develop a plan to improve your personal financial situation.  This article will provide things to consider in regards to your financial health.

Financial health, just like physical health is a long-term commitment.

First, you need to understand that you can’t build financial wealth overnight.  Just as with physical health, your strong financial health is the result of small deliberate choices you make over the course of your life.  And like physical health this takes discipline and often requires us to have a long-term vision for the future.

Putting together a monthly budget helps you plan for the month and the future.

Just as you should have some form of plan or routine to keep your body in optimal health, you also need a regular plan to help secure your financial health and wellbeing.  According to Forbes.com, it is important to stop “ignoring your finances and leaving them to chance” and put some effort into “a bit of number crunching” each month. This can “help you evaluate your current financial health and determine how to reach your short- and long-term financial goals.”

According to Dave Ramsey, personal finance expert, and nationally syndicated radio host, the easiest way to develop your monthly budget is: (1) write down your total income for the month, (2) list all your expenses, (3) subtract expenses from income to equal zero, and (4) track your expenses throughout the month to keep on track.  

Successful prioritization is key to financial success now and in the future.

This is another step that requires extreme personal discipline.  Sometimes the line between what you really need and what you really want can become blurred, but it is important to be honest with yourself regarding your needs.  Forbes.com counsels consumers, “Your needs should get top priority in your personal budget. Only after your needs have been met should you allocate any discretionary income toward wants. And again, if you do have money left over each week or each month after paying for the things you really need, you don’t have to spend it all.”

Avoid unnecessary consumer debt.  

To maintain our physical health we all need to consume food, but we also need to make sure we do not overindulge ourselves, otherwise, we may suffer later in life as a result.  Overindulging financially is as much an epidemic in America as are our expanding waistlines from obesity. A 2017 American Household Credit Card Debt Study found that Americans’ total credit card debt had grown nearly 6% in the past year, with the average household carrying credit card balance of $15,432.  Not all debt is bad, after all, we all need a roof over our head, and most of us out of necessity need a vehicle to drive, and the reality is, those things are quite expensive and for the average person that requires a loan.  However, we need to make sure that we are not over indulging ourselves financially in the fruitless effort to keep up with the Jones’. So if you need to go into debt, do so wisely, because chances are that your neighbors who you are trying to keep up with are most likely contributing to the sad statistics listed above.

Plan for emergencies!

Most of us understand the value of good health insurance, particularly when little Jimmy crashes on his bike unexpectedly and breaks his wrist.  That health insurance acts as a safety net for unintended medical expenditures. Likewise, each of us should have an adequate emergency fund for unexpected expenses that do and will arise in our lives.  However, if you are an average American, you don’t have an adequate amount money, if any at all, have saved for such emergencies. The USA Today reported that “the average American has less than $4,000 in savings, while 57% of U.S. adults have less than $1,000 to their names.”

Just as in our physical health, financial emergencies will arise, and if we have not planned for them they have the ability to set us back significantly.  However, those who are prepared have less stress when they do arrive and recover much quicker financially.

Keep working out your financial muscles.

Just as each of us needs to keep using our bodies to keep them in optimal shape, we need to keep working out our financial muscles as well.  Once you have mastered the steps above you can move on to more advanced financial strategies. For additional information and financial tips please visit 360 Degrees of Financial Literacy, a free resource provided by the American Institute of Certified Public Accountants.

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