By Jordan Ottaway
Between bills and miscellaneous purchases it can be difficult to keep track where your money goes each month. A survey by the Center for Financial Services Innovation (CFSI) revealed that 57 percent of Americans are struggling financially because they don’t keep up with their personal finances.
Being financially healthy is an important topic generating conversation across social media informing those who might need help or are not aware. So without further adieu, here are four reasons why raising your financial health score should be important to you.
Too many Americans are not able to travel the financial path they want to because they are bound to what their credit score, checking and savings accounts allow them to do. Improving your financial health will allow you to break loose and take care of yourself, pay the bills, get the loans you need to stay on your desired path and still have some extra money to buy something you’ve been eyeing.
Making and maintaining a personal budget is critical because you know exactly where your money goes each month. The survey by the CFSI found that 43 percent of the total population does not have any kind of budget. Having one helps you live within your own means and not give in to the spending goal you may have.
Warren Buffett has two rules for finances: “Rule 1: Never lose money. Rule 2: Never forget Rule 1.”
An effective way to never lose money is having a savings account preparing for bigger purchases you know you’ll have to make in the future. Maybe you know your air conditioner is on its last leg or that your car needs some repairs. However, for the times where life throws you a curveball, having that money saved up will make life’s curveballs easier to handle keeping your financial goal a reality.
While many have a savings account, 74 percent of Americans don’t have a regular savings habit. Starting out with contributing a small amount every week starts to add up and will help you form a habit of saving. It sometimes helps you win some money in the process. Dave Ramsey recommends starting with a $1,000 emergency fund that be accumulated through consistent weekly savings.
Money can be one of two things: a source for happiness or a source for stress. According to the survey by the CFSI, one in five Americans are so worried about bills that they have no idea how they would make ends meet. Having a financial security net not only benefits your total finances, but it also benefits your physical health.
It’s no surprise that debt contributes to stress levels. But Dave Ramsey lays out a simple method on how to start chopping away debts you may have. He says to pay your smallest debt first and then once that’s paid off, apply that payment to your next biggest debt.
If your stress doesn’t come from debt then maybe it’s from not having a budget. Either way, making some kind of progress, albeit small steps, is a great starting point when it comes to living with less financial stress.
Striving to be financially healthy will not only help you, but it can help your family and kids as well. Being financially healthy can be described as a skill because you have to practice it to get better at it. You’re not going to get good at basketball without learning and practicing the fundamentals of the game. It’s the same when dealing with your finances.
And once you learn the fundamentals you can turn around and teach them to others. Teaching your kids to form good financial habits early will only benefit them when they venture out on their own. Awareness is the foundation.
So take heart in knowing that financial health is a phone call or spreadsheet away. But if you want results, don’t forget to practice.
As a Neighborhood Credit Union member, work to better your financial health with complimentary access to GreenPath, a financial organization aimed at helping you with money management and financial education.