Our physical health often suffers due to our unwholesome choices—poor diet, lack of exercise, and insufficient sleep—all of which compound into more serious health issues. Our financial health can be viewed through this lens, too. Is your credit card charging you huge interest from carrying so much balance? Well, that’s sadly what you get for not paying off your statement balance. To achieve financial health, the topic should be tackled head-on and addressed with utmost honesty.
While financial health cannot be stacked against a specific amount or static figure, an individual with good financial standing has adequate resources to cushion unforeseen financial blows. Fluctuations in the price of goods and services should be factored in, too. Sound financial health must include enough buffer to deal with these changes. Typically, a person’s financial state is in good shape if there’s a steady income flow, stable expenses, significant investment returns, and growing cash savings.
Six Habits to Check for Better Financial Health
How is your financial health? Vigorous? Feeble? If you are currently struggling right now and feeling financially unfit, chances are you have bred several financial habits that prove to be detrimental to your financial health. Here are a few habits you can look into for better financial health:
- Differentiate needs versus wants. Want a new set of golf clubs for your new hobby? A set can range from $300 to $600. Assess your purchases in the needs versus wants continuum. Consider your goals before making the purchase. And if possible, look for more economical alternatives. If you make purchases based on your wants instead of your needs, you are hurting your finances badly.
- Avoid being too “brand conscious”. What’s the difference between Kleenex and store-brand tissue paper? Honestly, none. Both are good for wiping things. Oh wait, there’s a difference—price. Branded items are definitely pricier than store brands. Save more money by buying store-brand home staples like milk, bottled water, condiments and toilet paper.
- Revisit your subscription services. The problem with subscription services is that once they’re set, you generally forget about them. For better financial health, mindlessly subscribing to the next best thing is one habit you need to let go of. Sure, the subscription service you set a year ago works for you. But that may not be the case now. Check your membership and recurring charges—then cancel and unsubscribe from the ones that you don’t really need anymore.
- Choose home-cooked meals over dining out. Come on. This one is pretty easy to figure out. Dining out is way more expensive than having home-cooked meals. And when you cook your own meals, you can control what you put into the food. Want to consume less salt, butter or oil? Well, besides saving, eating home-cooked meals can help you eat—and eventually, live—healthier.
- Don’t get unnecessary loans just because loan offers abound. Banks regularly send offers urging to refinance mortgage loans. There are also car dealers that convince consumers to get a new car. Really, there are so many ways to bury yourself in debt. Why get a housing loan refinancing when you are about to finish your loan mortgage in just a few more years? Sure, you’re offered an attractive interest rate, but think of the additional years to pay off the debt. And why get a new car loan when your car is still working fine, and the payments are almost done? So, choose wisely and think of the long-term pros and cons even before considering taking another loan out.
- Refuse the urge to buy now. Waiting a bit, say a day or two, can help you distinguish whether the purchase is really needed. If you find that the purchase is still relevant after the waiting period, then proceed. The idea is to help you curb impulsive buying and manage your spending. Also, keeping your purchases in check stops you from accumulating too much stuff.
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Take Charge of Your Financial Health Today!
Going back to the comparison of our finances to our physical health, we must point out that financial hygiene is necessary if we wish to achieve financial health. The things that we do and the choices that we make every day all contribute to our overall financial well-being. Be in charge of your financial health by taking stock of your money habits.