Your financial health is important and learning to maintain it can help you achieve financial freedom. The prospect of sitting down and planning your finances might seem overwhelming to begin with, but as the saying goes, every journey begins with a single step!
The first and most important part in examining your financial health is defining for yourself what financial freedom looks like. The definition of financial freedom can vary person to person because everyone has a different life circumstance. Try to avoid judging your level of success against someone else, because you genuinely do not know what their specific life circumstances are.
Once you have pinpointed what you need to maintain (or achieve!) a lifestyle that satisfies your needs and wants, you can then create goals towards financial freedom. Pro tip—make sure your goals are well defined, specific, and to the point! It is far easier to stick to goals that have clear and concise boundaries.
If you are unsure where to begin, here are a few common areas people focus on when they want to improve your financial health:
- Begin an emergency savings fund
- Save for retirement
- Pay off the car
- Be able to pay monthly expenses without stressing
- Have funds left over for fun activities
Another helpful tool for anyone who processes information better when presented in a visual format could be this Fox 2 Detroit interview with Paula Swain where she gives her top tips on how to get on a healthy financial path.
The next important step in evaluating your financial health after defining your goals is creating a budget that properly represents your needs. One helpful budgeting style you could use is the 50/20/30 budgeting plan. With this budget, one allocates 50% of their after-tax income to bills that are necessary for survival—such as groceries, car payments, and rent. Once those funds have been put towards necessary bills, you can put 30% towards things that you want, but are possible to live without. The leftover 20% should either go into your savings or be invested.
Finally, another crucial asset in achieving and maintaining your financial health is finding a financial advisor that is right for you. Please feel free to contact us if you have any questions or would like assistance in setting your goals. Financial freedom is possible, and we are here to help you begin the journey towards attaining it!