How is your Financial Health?

Checking in on your Financial Health

Yes, you read that right. Your FINANCIAL Health. It has vitals just like your physical, spiritual and emotional health. Today I want to challenge you to look at them and improve upon them.

Income Vs. Expenses
Notice I did not say income vs. debt. This is important, so pay attention. Your income needs to cover your monthly bills, living expenses, savings, AND your debt. So the first vital sign to check is your income to expense ratio.

A.) I make more than my monthly expenses- Great proceed to Vital Sign 2
B.) I make just enough to cover my monthly expenses- Look at where you can cut costs or gain a few extra dollars so your monthly income is higher than your expenses
C.) I do not make enough to cover my monthly expenses- First don't panic, I am sure this is not the first time you are realizing this. But if it is. just don't panic. The simplest thing to do is to figure out how much the negative balance is and start chipping away at expenses. Food, spending, magazine and cable subscriptions can easily cost you $100's a month OR SAVE YOU $100's a month, your choice. If you still can't knock out enough to produce an excess of income then it is time to start thinking about a 2nd job, a job change, or a raise.

Savings Account Balance
I have a different philosophy than a lot of the more famous personal finance guru's. I believe you should pay your monthly expense before yourself. I believe this because you have committed to paying for the services and products made available by those expenses. If you don't pay them because you are saving then you will do more damage to your credit and financial health in the long run.
I do believe that if you add savings to each budget you great it will start to become a priority. When you prioritize it and start seeing the money build up, other money habits will start to change because the security of having a savings is better than any $4.00 Starbucks or $80.00 cable show.

A.) I can cover my monthly expenses plus add to savings each month- Your vitals are looking good. Go to Vital Sign 3.
B.) I save when I can it is not a priority- stop thinking savings is not a priority and set a select amount of money back each month in a savings account. Commit to doing this for 6 months, making sacrifices if need be. Come back and tell me if it is not a priority anymore.
C.) I can't cover my monthly expense let alone add to a savings account- I understand, we were there! In this case, you have to take a really long and hard look at every single expense. Are you house poor? Is your debt just too much? Do you spend needlessly? IF you are reading this then you want to start living financially free, that means some sacrifices have to be made.

Debt Repayment
You have made it this far! Testing your debt repayment can hurt so just be prepared.
To this point you have looked at expenses and savings, Paying back debt can feel like the slowest processes of all. It can easily be compared to losing those last 10 lbs. It can seem worse if you are only paying the minimum payment. Again, I have been there! While it may be painful to test, just accept it and make a plan to chance it.

A.) I am paying my monthly expenses, saving each month and paying extra on my debt- YOU ARE A HEALTHY FINCNIAL ROCK STAR!
B.)I am paying my expenses, saving as I can, and paying minimum debt payments- Great!! I bet if you look a little harder you can find $10-$25 extra dollars a month to pay on your lowest credit balance. That could be the difference between $100-$200 and 1-3 years!
C.) Seriously? I couldn't make it past question 1.- It's okay, I would highly recommend you reading How to Create a Zero Based Budget and The Budget Diet. If you still need help I offer Budgeting Consultations just fill out the Contact Form and I will be in touch! Thank you all so much for checking your financial vitals! If I could meet each of you in person, I would give you a Lollie pop and sticker. You were the best patients.


Checking in on your Financial Health
Want more?
My #1 Savings Tip
FREE Financial Goal Worksheet

No comments:

Post a Comment