HOW TO IMPROVE YOUR FINANCIAL HEALTH

Your financial health is the condition or state of your personal or family finances. It has been proven that your wellbeing in life is inextricably connected to your financial health. In case your financial health is damaged by some financial decisions in the past or currently, here are some ways you can improve it.

·        Prepare Your Personal Budget And Stick To It: The first step to fix your financial problem is by budgeting your money. Your budget is a statement of your expected incomes and expenses. It helps you to identify the things you are spending most of your money on. Until you start budgeting your money, you would not know where your money is going. I have always heard people complain that they had money but never knew how the money got finished. The budget will help you to unravel the mystery of where your money is going, and to take step to control such expenses.

·        Pay Down Your Debt: If you are in huge debt, take some proactive steps to pay down you debts. This will give you some breathing space and help to improve your networth as an individual. There are two methods you can use to pay down your debts: Snowball method and bullet payment method. In snowball method you start paying from your smallest debt to the largest one. While in the bullet payment method, you first pay down your biggest debt first and then move to pay the smallest debts. The method you choose will largely depend on your current income and cash flows. Whichever method you choose, I strongly advise that you should be consistent and make sure your debts are greatly reduced to a management level.

·        Cultivate Savings Habit: Without savings you can not build wealth! So, you must build your savings and keep saving money. Before you can save, you must learn how to spend less than your income. Savings mean spending less than you earn and setting aside the remnant for investment. In fact, you must determine the percentage of your income that you want to save and set it aside before you start spending the rest of your money. It is advisable to save at least 20% of your income: this percentage is not cast in a stone so you can increase it to 40%, depending on your financial goals that you what to achieve.

·        Increase your Investments: Saving money alone would not make you wealthy; you must invest your savings to grow wealth. Start investing your savings if you have not been doing so. The value of your money decreases if you keep it in a savings account, but it increases if you put it into investment. You can start with simple investments such as money market mutual funds and bond funds if you are new to investing. These investments have exceptionally low risk but provides returns that are above the interest you will earn on savings account.