Financial Health is Achievable…Step by Step

With everything going on in our lives, financial health is often the last thing any of us think about. Often, we are consumed with immediate day-to-day financial concerns such as paying the mortgage, insurance or other monthly bills. Although our finances are an integral part of our daily lives, we may give little thought to our overall financial health.

However, there are four steps you can take right now that can help improve your financial health. They all involve understanding where you are financially and where you want to be in the future.

Step 1: Follow the Money

Start by taking a realistic look at your finances. Make a list of regular income received in one column and bills you are responsible for in the other. This can be an eye-opening exercise in understanding what you have coming in and going out in terms of income. It is also a great opportunity to see where you can trim or renegotiate costs.

Step 2: Review Assets and Debt

Then make a list of the most recent balances of your savings, investment and retirement accounts and estimate the values of any property, jewelry or vehicles you may own. Follow this with a list of the outstanding balances on mortgages, loans and credit cards. Now you have a clearer picture of how much you have in assets as compared with how much you owe.

Step 3: Create a Budget

It may sound painful but it really isn’t. Now that you have a clearer picture of your finances you can better determine a realistic budget that works for you. Some of your monthly costs are fixed, such as monthly mortgage or rental payments, but other costs may be more flexible such as how much you spend on restaurants or entertainment.

If you have credit card debt, determine if you can pay more than the minimum to reduce the time you take to pay it off, thereby saving money on interest charges. Also, set up automatic deposits from your checking account into your savings account to help build an emergency fund for those unexpected expenses. Creating a budget will give you much better control over how you spend and save your money.

Step 4: Take a Long-Term Perspective

Saving for retirement is extremely important because we may spend 20 to 30 years as retirees. Contribute as much as you can now to a retirement account such as a 401(k), 403(b) or IRA. It will serve you well in the long term so that you can be financially healthy in retirement.

Now is also the time to think about your legacy and any charitable giving plans you may have. Are there charities, causes or institutions that you would like to contribute to? With a clearer financial picture, you can determine what you can do now and in the future to give back to the community and causes you care about.

Find a Trusted Advisor Who Relates to You
You don’t have to do any of this alone. At Jemma Financial, our knowledgeable financial advisors can help you create a plan to meet your financial goals.