Try these five strategies to gain financial health.
Being financially healthy looks different for everyone and every life stage. But what almost everyone can agree on are the benefits of creating positive habits to improve the health of your finances over the long term.
Before you can get to these 5 steps, you need to have a clear picture of your Vision, Values, and Goals. Vision can be a misapplied word, as not all of us are motivated by what we see. It could be what you hear or what you feel. It is more of a sense of knowing where you want to end up. Your values are the rules you will use to reach your vision. Knowing what you are willing to do to have what you want is very important. The next step is to establish 3,5-and 10-year goals. Make sure each goal is important, specific, obtainable, and you have the resources to pursue it. After you have completed this work, evaluate your progress every year to see if you are on track or need to make some changes. This is the starting point where financial advisors will begin.
Next are the 5 steps to figure out your “how.”
1. Evaluate Your Expenses
You may have a general idea of your regular expenses, but it’s a good idea to look at your bank statements to get a better picture of exactly how much money you spend.
Having accurate numbers of what you spend can help you identify areas where you could be spending too much and can afford to cut back. For example, you know approximately how much you spend eating out for one meal, but do you know how much that adds up to over a month? Put your actual expenses into focus.
2. Increase Your Net Income
Everyone wants to make more money, but unfortunately, that’s not something you have a lot of control over. Increasing your net income isn’t only about earning more – it’s also about spending less.
After you take a good look into your finances, find areas where you can cut back. There may be some areas of your finances where you’re spending money unnecessarily. Instead, use these funds for more practical purposes like paying off debt, creating an emergency fund, or saving for retirement.
3. Pay Off Debt
Paying off your debt can have a significant impact on the health of your finances. Of course, having debt is often unavoidable, but the kind of debt that overwhelms your life is not financially healthy.
Reducing your debt will only serve you in the long run. Use methods like the snowball or avalanche method to get your debt under control. Once you’re no longer paying the principal and interest on your debt, you’ll have room to do with your money what you want.
4. Create a Financial Buffer
A financial buffer can come in the form of a designated emergency fund or adding to your existing savings account. What matters is that you have funds for the unexpected, whether that’s a repair, a bill or a loss of income. Creating a buffer is about having some wiggle room within your finances.
An easy way to start saving is to set up automatic transfers. Most financial institutions can help you set up internal transfers so your money moves from your checking to your savings account without you having to think about it.
5. Start Saving for the Future
The hardest part about saving for retirement is getting started. There are more exciting ways to use your money than putting it into an account and not spending it for 30 years. But starting to save now will better serve you in the future.
Putting money towards your retirement is about focusing on the future and your long-term financial goals. So put your freed-up funds to good use and start investing for retirement.
Improving your financial health isn’t a process that happens overnight. It’s a journey that will take time but will be worth it. If you would like to start understanding your Vision, Values, and Goals, text “let’s get started” to 423-267-6858, and we will send you a link to the exercises. Also, if you need more help or need additional strategies to improve your financial health, text “calendar” to 423-267-6858, and we will send you a link to schedule a time to chat.
Securities and advisory services are offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a broker-dealer
and registered investment adviser. Cetera is under separate ownership from any other named entity. All investing involves risk, including the possible loss of principle. There is no assurance that any investment strategy will be successful. Information is provided by George Vieth and written by FMG Suites, a non-affiliate of Cetera Advisors Networks LLC.