How Can You Improve Your Financial Health?

Improving your financial health is, in some respects, similar to improving your physical health. If you want your body to be fitter and stronger, then you need a two-pronged approach – you need to engage in exercise as part of an active fitness regime and you need to fine tune the food you eat to fuel your lifestyle. Financial health-wise, those two prongs involve improving your existing money ‘diet’, while also developing and implementing a new money-making ‘regime’ to boost your earnings.

Target your debt

Debt is akin to financial junk food. Convenient and attractive but it leaves a long-term legacy for you to shift if you’re not careful. Whether you have loans or credit cards, holding a lot of debt is bad for you and it’ll mean that you need to divert your hard-earned cash into interest payments that merely service this debt.

If you have a lot of debt then you might feel that clearing them is a daunting task. However, that’s where the snowball method comes in handy. As Dave Ramsey demonstrates, this involves four steps:

  1. List your debts from small to large
  2. Make the minimum repayment on all of them, barring the smallest
  3. For the smallest one, pay as much as you can to clear this
  4. Once the smallest is cleared, work your way up the list

This will ensure that you can see some light at the end of the debt tunnel, keeping you motivated as you pay off what you owe.

Bills, bills, bills

When improving your diet, you also need to look at healthier alternatives – ways you can adapt recipes, control portion sizes and switch ingredients to improve the food you eat. When it comes to your financial health, this translates as a need to cut your bills. It’s easy to assume that your bills just ‘have to be paid’ and not check that you’re actually getting a fair deal. Not only that, but people often assume that it’s hard work too.

That’s where bill negotiation services come in. Send a text or email of your bills over to a company such as BillSnip and they’ll call around your service providers to negotiate discounts on your behalf. It takes the hassle out of the process and can save you up to 25 per cent off your bills – putting you in a much healthier position.

Strive to earn more

So, what about your new ‘regime’? This is where you need to develop a plan to boost your earnings. Whether it’s asking for a long-overdue raise at work – or establishing a plan for how you can earn yourself one – or maybe looking at ways to earn more outside of your job, any way of boosting your incomings will increase your financial health.

There are so many ways to do this – freelance work at the weekends, renting out a spare room, selling unwanted goods online – that there’s no excuse for not at least giving this a go.

Save up for a rainy day

Earning more is one thing, but you need to be able to fall back on sound financial foundations to be in a healthy position – the equivalent of building up a base level of fitness and stamina through daily stretches and exercises as part of your fitness regime.

This means establishing a savings habit. Make sure you save something out of every pay check – no matter how small – as this will build up in time and leave you with something to fall back on in case of emergency. Treat it as ‘paying yourself’ and try to see this in the same light as your other financial commitments. If it helps, set yourself a weekly or monthly goal to break this down into smaller targets.

By getting your house in order – cutting your debts and reducing your bills – and then looking at ways to earn more money in the first place and build up a savings fund, you’ll put yourself in a healthier position. Attempt to do one half without the other and you won’t reach ‘peak health’, so make sure you get the mix right and get yourself financially fit and ready for the challenges life will throw at you.

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