With that in mind, in this content we will better explore the concept of financial health, its importance for a better life and what are the best practices to develop it fully and consciously. Good reading!
What is financial health?
Even with so much information on any subject accessible to a few clicks, including personal finance, talking about money still seems like a taboo for many Peoples.
To some extent, such behaviors reflect an already impaired financial health, which ends up unfolding in the way each of us feels. It is in this sense that financial health can be understood as the way we handle our money.
And this doesn’t necessarily have to do with just saving or keeping things up to date. Of course, these are important steps, but being in good financial health also means being able to make good decisions, feel secure about them, and be able to use the money in favor of your financial goals.
How important is financial health?
The lack of financial health has an almost immediate impact on your quality of life and often even on those around you, whether at home or at work. To prevent this from happening, let’s highlight some points that can help you improve this.
Is spending sleepless nights thinking about how to close the month’s bills a common situation for you? This is an example of how poor financial health directly affects mental and physical health. It’s natural for those who are going through financial problems to feel more burdened.
On the other hand, reducing this type of affliction brings good results in improving symptoms such as anxiety and sadness, at times when the financial issue comes to mind. This improves well-being, productivity and the quality of interpersonal relationships, as well as reducing the chance of mental disorders, weight gain or even cardiovascular problems.
A source of anxiety in financial life is always being afraid of making the wrong decision, either because of the cost it may have, or because of the feeling that there are better opportunities that you didn’t know how to find.
In addition, keeping your financial health up to date also allows you to feel secure about the future, even in the face of some unforeseen event that compromises your finances or even your main source of income.
With good decisions involving your money, your purchases will certainly be more accurate. They will be guided mainly by their real needs and even possible desires, but never by the impulse to satisfy something momentary.
This also reduces the feeling of guilt at each new expense and helps you realize which expenses in your budget are totally superfluous without having to give up all the small pleasures of everyday life.
How to develop a healthy financial life?
Of course, no action can change the situation of your finances overnight, much less the way you handle money. However, with patience and discipline, it is possible to develop a healthy financial life and maintain steady progress.
1. Identify unnecessary expenses
One of the most common financial mistakes among those who do not have full control over their finances is not knowing where their money goes each month. Therefore, the first step to get around this is to list each expense incurred, no matter how small.
In the opposite direction, also write down all the money that comes in. From the comparison between income and expenses, it is easier to see what can be cut or reduced and how big the cut will have to be to make the month fit within the salary.
2. Equate the debts
Debts are one of the main symptoms of financial lack of control and one of the main villains in the development of a minimally healthy financial life.
Therefore, when putting these steps into practice, put your debts on paper and make a list of priorities to pay them off. Prioritize those with higher interest rates and try to negotiate higher-value debts.
3. Learn more about finance
It’s okay to admit that you don’t know about a certain subject. On the contrary: acknowledging this is an important step towards change. And luckily, when it comes to finance, the content available to increase your knowledge level is practically limitless.
Websites, blogs (like this one here), videos and various other materials can serve both as an introduction and as a basis for you to delve into ways to better manage your money and be more secure with each decision you make.
4. Have an emergency reserve
Forming and maintaining an emergency financial reserve is one of the most efficient ways to increase your peace of mind about the future. The accumulated money will be useful in different situations over which we do not have much control, such as illness or unemployment, for example.
Allocate part of your monthly earnings to this financial reserve, choose an investment to guarantee some return on money and use the accumulated values wisely.
5. Make an investment plan
Assess your financial goals and what your investor profile is to find out which investments are best for you. There are different degrees of risk and the same term, which means that each choice needs to be analyzed carefully, within a well-prepared investment plan.
The ideal financial applications to have the money to buy a car are different from those recommended for those planning a retirement, for example. In other words, there is no foolproof recipe.
Finally, always remember never to see financial health as an end, ok? It must be the way for you and your family to have a prosperous and peaceful trajectory as far as possible, achieving all the desired goals.