Whether you are young or old, everyone dreams of the stability of financial well-being. What exactly are you dreaming about? Financial well-being can be described as having the financial freedom to make the choices that allow you to enjoy life, the ability to withstand a financial shock, and being on track to obtain your financial goals while managing day-to-day and month-to-month finances.
Achieving Financial Well-Being by Making Healthy Financial Choices
How do you achieve this ever-elusive financial well-being? It’s actually easier than you think. Anyone, including you, can achieve financial well-being by making healthy financial choices. All you have to do is follow a few simple rules. By making small changes like creating a budget, starting a savings plan, paying off high-interest debt, only borrowing within your limits, and protecting all your assets, you’ll be well on your way.
Create a Budget/Spending Plan
Budgeting is the most basic tool available to help you understand and manage your money. Creating a budget or spending plan will help you track your monthly expenses. Once you’ve identified where your money is going, you can adjust your spending habits to match your budget. Learning to the budget will be the most helpful tactic towards learning to make healthy financial choices. Your goal is to spend less than you earn. Remember, just because you can afford to buy something doesn’t mean you should.
In addition to individuals, businesses also seek the help of agencies to manage their debt and improve their financial planning. Firms like Creditsafe provide valuable insights and tools that assist businesses in creating effective budgets, managing expenses, and addressing credit risks. It’s important to ensure that neither individuals nor businesses are at risk of accumulating debt. Seeking help from financial experts, such as advisors or accountants, could provide valuable guidance in managing finances efficiently.
Protect What You Have
An extremely healthy financial choice everyone should be making is protecting or insuring what you already have. It is vital that you not only insure yourself but also protect your property, your income, your investments & your health. There are many insurance types that can help you protect your assets, family & your self. You should reach out to your life insurer to start exploring the options available to you.
Save
If you’re not already saving money, you should definitely start now. You need to have money saved up for emergencies and retirement. Ideally, you want to have enough money in your savings to cover at least 6 months of expenses. It’s never too late to start saving. The earlier you start the better because getting a late start means you will have to set more aside to have a comfortable retirement. There’s no one right way to save money.
Pay Off Debt and Stay Out of Debt
Paying off your debts can do wonders for your finances. You should start by focusing on the debts with the highest interests like loans and credit cards. As you pay them down, you must be strong enough to avoid the temptation to purchase something new. Once the high-interest debts are taken care of, focus on paying off your car and mortgage. Making extra payments here and there can knock years off of your payments and save you thousands of dollars in interest.
Only Borrow What You Can Afford
If you’re reading this, it’s likely you already know the pressure and stress having too much debt can cause. Losing the ability to enjoy life, and constant pressure from debt collectors while trying to manage your finances can take years off of your life. Before borrowing, be sure you can afford to add the new monthly payments for that loan on top of your existing bills. Always take time, read the small print, and sleep on it before making big financial decisions that will increase your debt.
Be mindful of the amount of debt you incur and look for signs that you have too much debt. Some indicators are:
- not knowing how much you owe
- missing payments or making late payments
- being refused credit
- overdrawing your checking account 3 or more times a year
- borrowing money to pay other debts
- only able to make the minimum payment due on bills
- debt collectors calling
If you find yourself doing some or all of this, it might be time to seek credit counselling. There are many nonprofit and government agencies that can offer assistance.
Remember, the everyday financial choices you make will play a role in the amount of stress and happiness you experience. No one can predict what will happen tomorrow. When an unexpected financial crisis does happen, it will be less stressful if you have the financial security to deal with it. This is not an all-inclusive list of actions you can take, but these choices will definitely get you moving in the right direction. The important thing is to make the conscious decision to take action, and no matter how small the progress, keep moving forward.
