Have you ever heard the term financial health? It refers to the state, or “health”, of your finances and a lot goes into it. Including savings, what you’re putting away for retirement, and more. Your health refers to how good your practices are and how well you’re managing your overall money situation. If you don’t have financial health you’re proud of, there are ways to improve it.
Financial health is a good way of thinking about your money an if it’s in poor health it could lead to overwhelming debt.
You look at your health in every aspect of your life, you should consider your finances in terms of how “healthy” they are as well. There’s a lot that goes into determining your financial health and it’s not just income flow. Likewise, there’s also many ways to improve it if you find yourself looking at an unhealthy financial situation.
Below are some facts about financial health and some ways to improve it if you find yourself with poor financial health.
Though financial health is dependent on a lot of things, there are some key parts of your finances that play into determining your financial health. Your income flow, changes in expenses, returns on investment, and cash levels. If you have a steady income flow, few changes in expenses, good returns on your investments, and health cash levels, these are all signs of good financial health.
How to Measure It
Even if you can say you think you have good financial health, how exactly do you measure it? There are some questions you can ask: how prepared are you for unexpected expenses and emergencies, what is your net worth, what percentage of your debt is high interest, what is your retirement savings plan, and do you have insurance benefits? Putting the answers to these questions together helps paint a picture of your financial health.
How to Improve Financial Health
Budgeting is always a good place to start. You’ll also want to set money aside for an emergency fund and pay down on your debt as efficiently as you are able. Your emergency fund should be 3-6 months’ worth of living expenses in case of job loss or other unforeseen event. You should also prioritize paying off your small debts before working towards larger ones.
What Are Some Good Practices?
Automating your bill payments is always a good place to start. It can greatly help your budgeting. Also, look for free checking and savings accounts. You can also make sure you invest appropriately by putting 10-15% of your income directly into retirement.
How Do I Set Up a Budget?
One great rule of thumb is the 50/30/20 rule. You should spend 50% of your income on your needs, 30% on your wants, and put 20% of it into savings.
If you need help determining your financial health or know you need further help getting it back on track, don’t be afraid to talk to a bankruptcy lawyer and start your path back to financial stability.
It’s easy to lose control of your finances. Even if you have healthy financial habits, there are factors, at times, out of our control that can lead to financial straits. If this is the case, and you are facing an overwhelming amount of debt, personal bankruptcy may be an option.
Hines Law has been helping residents throughout Massachusetts with debt relief for 20 years. No matter what your debt issues, we are committed to safeguard your interests and future by providing the right bankruptcy solution for your case. We specialize in Chapter 7 and Chapter 13 filing as well as help our clients with a plan to rebuild their finances and future. Call our Bankruptcy Law Firm today and schedule a Free case evaluation!