Doing a financial health check is a great way to check what could be causing you to bleed financially and whether you are still on track with your financial goals. After all, finances are a balancing act that requires a constant check-in so that you don't lose your balance.
Before we begin
This is a general guideline and not seen as advice. Although these points are great starting points, speaking to the relevant financial institutions or advisers will make your journey to finding a healthy solution to grow and maintain your finances easier.
The good
Start building good habits when it comes to your finances, and you will be rewarded. Consistency is key. Here are some good habits to add to your financial planning checklist:
Be goal orientated. If you haven't set financial goals, it is better to start doing so. Think of your goals in terms of short and long-term goals. But a goal will remain just that if you do not have a plan in place. Therefore, make sure that you have realistic and measurable goals to keep you going.
Cut back where necessary. Most health advice is knowing what and where to cut back. The same goes for your finances. Having an honest conversation with yourself on what you can reduce and habits that need to be stopped to help you boost your finances is crucial.
Invest in yourself. Let your money work for you instead of the other way around. The best way to do that is to make sure your savings and investments, as well as retirement fund contributions, are planned for and deducted before receiving your net income. Only utilise and spend what is left after saving.
Save for a rainy day. The pandemic has revealed that many of us (85% of people) were not prepared financially to face unexpected financial curveballs. The key to preparing for rainy days is being prepared while it is still sunny. Have an emergency savings fund that you contribute to regularly to soften the blow that comes with unexpected expenses. It is usually ideal to have these automated so that you do not forget.
The bad
Avoid being an enemy of your own progress. You know your triggers that can undo all your hard work. Set boundaries that will be beneficial for you in the long run and avoid places and things that make you bleed financially. It will be hard at first but remember it is possible. Celebrate the small wins.
Not reducing debt. There is good debt and there is bad debt. Avoid taking on more debt but focus on reducing your debt. Consistency is key with debt, no matter how much you contribute each month to help reduce your debt, it will play a part in the long run.
Comparison kills your finances. Your financial situation is not the same as the next person, even if you are earning within the same tax bracket. Find what works for you. Speaking to a financial advisor can also help you map out a path that is sustainable for your growth. Remember that there are no quick fixes when it comes to building something that will last.
Skipping financial literacy.
The best way to learn from our financial mistakes is to learn. Skimping on financial knowledge can leave you financially exposed. Knowing the basics of financial literacy can help you make better financial decisions. Always check that the information you are getting is from a reliable source before adapting it to your situation.
