When it comes to health, people often set goals to improve their fitness or boost their mental well-being. However, financial health is also important, and you should make finances a priority. Luckily, everyone can learn good financial management skills and boost their savings. Here are three steps to improve your financial health today!
Step 1: Learn to budget
Budgeting is essential when it comes to good financial health. Failing to budget will make it extremely difficult to monitor your spending and build your savings. With that in mind, you must create (and stick with) a weekly or monthly budget. To determine a realistic budget, you must identify your incomings and outgoings. Calculate how much you need to spend each month on expenses like rent, mortgage repayments, groceries, utilities, and so on.
You should also factor in some ‘fun money’ to spend on things like socializing with family and friends. Use this information to create a monthly budget. You should monitor spending throughout the month and try to avoid going over your allocated budget. There is a fantastic selection of financial apps that you can download to make budgeting easier. According to thebalance.com, the best budgeting apps of 2020 include Mint, GoodBudget, and PocketGuard.
Step 2: Create a savings plan
Setting savings goals is another key component of good financial health. Creating a detailed savings plan will help you get your finances under control and save more each month. Start by looking at your budget to determine how much you can save.
For instance, if your monthly salary is $3,000 and your average expenses are around $2,000, then you should be able to put $1,000 into savings each month. This means that you should be able to save at least $12,000 in a year. It is a good idea to open a separate savings account and set up an automatic transfer at the beginning of each month.
You can also build your savings more quickly by identifying ways to reduce your outgoings. For instance, switch to cheaper store-brand food products or use a Sephora promo to save money on beauty products.
Step 3: Build an emergency fund
Improving your financial health should also involve creating safety nets so that you don’t suffer financially in emergencies. According to moneyunder30.com, “most financial experts recommend that you have three to six months’ worth of basic living expenses in your emergency fund.” This money can be used to cover you in an emergency (i.e. if you become ill and unable to work or are made redundant). Having a healthy emergency fund will minimize your risk of getting into financial difficulties later. Ideally, you should transfer some of your income into an emergency savings account each month.
Your financial health is extremely important and can affect your physical and mental well-being. Fortunately, there are lots of ways to improve your financial health. Learning to budget, creating savings goals, and building an emergency fund will help ensure that you are financially secure now and in the future.