Finances can be a stressful subject for many people. By merely breaking down and analyzing the components of your financial portfolio you can simplify what would otherwise be an overwhelming subject. Individuals who aim to live a financially healthy lifestyle need to learn how to create healthy money habits and many tips and tricks are available to help you become financially free. While this list is far from complete, it is a great place to start so without further ado, here are the 5 money moves to help you live a healthy lifestyle.
1. Take the Time to Become Financially Educated
Understand everything that the financial world has to offer by doing your own research. Learning the basics will help you evaluate your financial situation and put you on the right path to living a financially healthy lifestyle. Developing financial literacy sets the groundwork for saving strategies, as well as making and following a budget. By understanding the essentials behind financial literacy, you can start making more sound financial decisions and properly plan for your present and future needs.
By learning financial literacy, you will better understand how money works and how you can make it work for you. Everyone benefits from financial literacy, regardless of age. Newly employed adults should learn valuable budgeting and savings tips to keep their expenses under control. Parents can acquire the discipline to save for their children’s tuition, learn refinancing tips, start paying into 401k’s and life insurance plans such as Bestow to prepare for the future. Any age can benefit from financial literacy, and good financial management goes hand in hand with a healthy financial life.
2. Take the Time to Recalculate Your Budget
A money plan is essential to your lifestyle’s security. The “why” is an important question to consider when re-calculating your budget. Why do you want to recalculate? Are you planning a vacation? Do you want to finally buy that cabin on the lake? Although each person’s “why” will be unique, it will be a leading factor when recalculating.
The next step is to determine what changes you should make to your budget to get you closer to the goal you have in mind. Look at all of your out-of-pocket expenses, from your grocery bills to your hydro bills, to get an overall picture of where you should re-evaluate. The task of re-calculating your debt may seem difficult at first, however, the benefits will greatly outway the work.
If you find that your expenditures are way too high and that you are unable to save for specific goals, identify the non-essentials you can cut back on. An example being prioritizing needs over wants, you can save thousands a year by dining in rather than dining out. Maybe you have paid a subscription or a monthly membership that you don’t use regularly. Consider canceling these subscriptions and watch your monthly expenses decline and your savings grow! Making a thorough analysis of your financial position will help you identify where you can cut back, and most importantly, where you can invest the money instead.
Tracking your expenses is easy and simple, and many apps allow you to do it for free. Numerous apps enable you to keep track of receipts by taking a photo of them and then storing them in a folder, making tracking receipts and expenditures easy. Throughout the month, with easy-to-read graphs and tables, you will be able to see for yourself where your money is going. An analysis of your data on a monthly basis will allow you to determine precisely where you should be cutting back.
3. Take the time to weigh in future childcare and college expenses
Not to overwhelm you with any more than what you may already have on your plate, but something to consider thinking about is future expenses that may be larger than most things you are paying for now – such as childcare or college expenses, especially if you are pre-parenthood. However, taking some time to plan ahead and make some calculations, you can save yourself from falling into a situation where you are trying to bite off more than you can chew. Ideally, you can aim to be in a situation where you’ve more or less planned out these types of expenses so that any childcare or college expenses are within the realm of what you were expecting they would be. With this in mind, applying for life insurance at a relatively early age may be something you want to consider. Certain life insurance plans, such as Bestow, allow you to apply for coverage from the age of 21-55.
4. Take the Time to Improve your Credit Score
Your credit score is important when it comes to taking out loans for that new vacation home that you re-calculated your budget for. A number of online platforms allow users to check their credit score within minutes or seconds, and many of these credit score checking platforms are free to use. Making sure your credit score is in good standing will get you the best interest rates on loans and credit cards, which can significantly lower the amount of money you end up spending in the future. Making frequent payments and paying your bills on time are some of the best ways to improve your credit score and keep it that way.
Should your credit score be lower than ideal, you may be eligible for a secured credit card. A secured credit card is a credit card that is backed by a cash deposit. The cash deposit acts as collateral on default payments. With secured credit cards, the amount of credit that you can borrow is usually limited and the interest and fees are typically higher, however, they work like credit cards. Credit card balances in good standing will reflect positively on your credit score and good standing will enhance that score as well.
5. Take the Time to Build up Your Emergency Fund
The Covid 2020 event taught us many lessons. Among them was the importance of creating an emergency fund, given the fact that one never knows what lies ahead. It is ideal to have six months of expenses on hand as a reserve in case of an emergency. Continually increasing your emergency fund is essential to a financially healthy lifestyle for you and your family. You should not stop at the bare minimum of six months.
Creating a separate saving account for your emergency fund is the perfect place to start. Keeping your emergency fund separate from your other savings is an organized way of keeping track of your overall financial situation. A high-yield account is a great savings vehicle to consider. A high-yield savings account allows you to earn a higher interest rate than a regular savings account. Establishing an emergency fund or increasing an existing emergency fund are great ways for you to prepare for a rainy day. Your savings should be automatically deducted from your chequing account and deposited into your emergency fund to ensure you don’t spend the money.
This is a fund for emergencies so you should have access to it at all times, but on the other hand, do not keep it too close! You do not want to be tempted to withdraw money from your emergency fund at any time. Ask yourself whether the situation you are confronted with is urgent, essential, or unexpected. If you answer yes to these questions, dip right in, but don’t forget to top it right back up! You will not be disappointed if you adopt this money-saving habit into your lifestyle.
Now is the time to take charge of your finances. By doing this, peace of mind and a healthier lifestyle can be achieved. The building of a foundation of personal knowledge, recalculating your budget, repairing your credit score, setting up emergency funds and paying off debts are positive money moves for you and your family. Make the best of a fiscally healthy lifestyle by creating a financial plan to lead the lifestyle you want.