Many are looking toward the end of this year and the beginning of the next with better financial health. And every New Year people decide to become healthier and vow to improve their physical health, so they start exercising and eating healthier. And then others decide that they want to be healthier financially and want to improve their financial health, but do not know quite how to go about it. A financial checkup may be in order.
If you are taking better care of yourself, you are probably exercising and know what your blood pressure and cholesterol numbers are. Therefore, it stands to reason that if you are trying to be healthier financially, you would need to know things like what your assets and liabilities are. How can you better manage your finances without knowing what your finances look like?
Similarities of Financial Health and Physical Health
On the surface, there are striking similarities between your financial health and physical health.
Both can affect aspects of our life and require collecting information, evaluating alternatives, and taking some risks. However, it seems health issues have received a lot more attention than financial issues.
There are dangers of focusing on a single aspect of your finances.
Tending to retirement savings without dealing first with high credit card debt is perhaps equivalent to treating high cholesterol while ignoring high blood pressure numbers.
If you want to be healthy, financially, and physically, you cannot get by with just a healthy right leg or a well-managed retirement plan. The whole system must be healthy. But while many of us are willing to undergo regular health check-ups, many people never undergo a financial check-up.
Achieving Better Financial Health
The first step in better financial health is to have an accurate snapshot of just what shape your finances are in. By having a good sound understanding of both your assets and liabilities, you can start planning a healthier financial lifestyle.
Next is to track your spending. Knowing where your money is being spent; where your money is going, is paramount in managing your finances better and improving your financial health.
Your assignment for the next month or so is: 1. pull together your assets and liabilities to get an accurate picture of your finances, a balance sheet or net worth statement, 2. Track you’re spending so you can see where your money is going.
My number one financial tip is that you cannot effectively manage your finances without knowing where your money is going…track your spending.
So, start today because today is the first day of the rest of your life. Only you can make the most of it. Take charge of your financial health. The key to your future is in your hands, not your employer’s and not your family’s. Comment below. I would love to hear from you.