Ideas to Improve Your Financial Health

Posted on 04. Nov, 2019 by in Managing Finances, Small Business Tips

No-one likes to be blindsided by financial hardship. Listed here are ten ideas to help ensure your financial health stays healthy.

  1. Your safety net. Plan to have a minimum savings balance to cover three months of expenses. Ideally this should be six to twelve months. If your reserves are light, start saving now. Even if it is a little amount, it can get you on the right track.
  2. Budget. At least once a year develop a basic budget. Set goals and try to hit them. If this seems overwhelming, start simple. What is coming in and what goes out each month? Becoming aware is the first step to improving your financial health.
  3. Spouse as financial partner. If you die, does your significant other know where everything is? Can he/she pay the bills? Does he know where account numbers are? Does your spouse know who you use to help with things? If not, it is time to start talking.
  4. Review beneficiaries. Once a year review beneficiaries on all accounts. This includes retirement accounts as well as names on wills and estate plans. The legal hassle created without this review can be devastating to your surviving family. This is especially important if you had a recent life event (marriage, divorce, birth, or death).
  5. Maximize benefits. Make sure you review your retirement plans for maximizing any employer match in your account. Also review your plan’s administrative expenses. If they are too high they can cost you 10s of thousands of dollars over your lifetime.
  6. Disaster plan. If your home burned down or was flooded are your important records easily accessible and protected? If not consider creating a disaster plan, including placing important documents in a safe deposit box.
  7. Credit report review. With the recent increase in identity fraud, plan to check your credit with the major credit agencies once a year. The agencies are legally required to make their report available to you annually without charge.
  8. Insurance review. Periodically look at your health, life, home, and liability insurance. With the legal nature of our society you might consider the need for an umbrella policy to cover against potential litigation. But also consider flood insurance and a replacement value homeowner’s policy.
  9. Debt wrestling. Review your use of debt instruments. Understand your net worth (assets minus liabilities). Make progress in reducing your debt load starting with the highest interest obligations first. Is your debt lower than it was last year?
  10. Plan for fun. It is easy to make a simple financial mistake that can cost you plenty. But while on the path of financial improvement, don’t forget to smell the roses. Just do it in a financially healthy manner.

This list is by no means complete, but if you focus on the areas mentioned, your financial life will become more planned and less likely to be struck by an unforeseen surprise.


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