The COVID-19 has taught us so many life lessons. For instance, we learned that personalized skills and self-directed learning are much more important than having a 9-5 job in this unfortunate time. If we do a behavioral study, then we can figure out that every human is different. However, we don’t make rational decisions when it comes to financial planning. But in uncertain times, we need to make unusual decisions that will help us form a future dream life. Thus, we consider financial health our priority. So, let’s learn more about this hot topic.
Why is it vital to become financially healthy in the future?
Financial health doesn’t need to do anything with the amount that you earn. But it’s more about how you spend and manage money on a monthly and yearly basis. Thus, people who start saving at an early age have more in an emergency fund. According to Govender:
“If you are earning a high income, then it doesn’t mean you are financially healthy, free, independent, or stable.”
So, you should keep yourself aware of your actions and make the right decisions to design a better future. Now we are about to enter 2022, where consumers are facing a high percentage of inflation. So, all these factors are changing dimensions, and the world is struggling with the supply chain. Thus, you should set a money resolution and design strategies that can smooth your way.
Some stats to support the argument:
If we look at the stats, they are enough to prove that financial health is of utmost importance. According to a recent survey, 73% of Americans think of money as a source of stress. Apart from this, around 80% of US workers spend 12-20 hours/month dealing with financial issues. So, ultimately all these things lead towards stress and ruin the focus. Due to this, we need to be concerned about our financial health, especially when entering 2022.
What are the steps to take for gaining financial health in 2022?
We make tons of decisions each day. But most of the decisions are simple, and few result in severe consequences. The planning related to the finances is exact and has long-term effects on our life. So, here are six main steps that you need to take while planning.
Set your financial goals and objectives:
Goal setting is the first and fundamental step in financial planning. But before setting objectives, ensure that you have a proper roadmap for everything. Here are the main things that should be there while setting goals:
- The goals should be achievable
- Apart from this, set goals that you can later easily convert into actionable strategies. For instance, if you want to save a specific amount of money at the end of the year, you must have a certain income.
- Before making goals ensure that you set a time frame in which you will achieve them
- Last but it’s vital to separate your needs from wants then you can multiply savings
Above all, always follow the SMART rule for setting goals. In addition to this, it will be great to have a financial advisor that will measure the performance of your goals. Above all, measure results and ensure that goals are still relatable to your final dream.
Gather financial & personal information:
If you want to remain financially healthy, then before setting a goal, gather all your personal and financial information. Success always depends on the clarity and quality of information that you collected over time. So, accumulate all relevant information that will include:
- A complete track of income & expenses
- Full detail about assets and liabilities
- Apart from this, know the percentage to which extent you can bear the loss. So, set tolerance capacity to be financially independent.
If you do a job/self-employed and don’t have complete financial information, then take help from a paystub generator.
Analyze info that you gathered:
The next step to gain financial health is by analyzing personal and financial data that you gathered. You can use different ratios to analyze the current profile and status. However, you can use the following ratios to improve the financial circumstances by pinpointing strengths and weaknesses.
| Solvency ratio | Savings ratio |
| Liquidity ratio | Debt service ratio |
But your attitude, tolerance, and risk strategy play a vital role in deciding the future. You have the option of designing a questionnaire to analyze asset allocation and dream goals.
Develop a plan to gain financial health:
Plan development is another main thing that plays a vital role. In simple words, we can say that financial health depends on this point. So, you should address each issue separately, and it includes the following things:
- Make a net worth statement
- Calculate annual consolidation report
- Take help of paystub generator to manage cash in-outflow
- Design a cash flow statement that includes cash surplus & deficit
But you also have the option of taking help from financial advisors. The experts are best to seek advice when it comes to implementing strategy. Later, based on these things, you can design a new investment/pension strategy. Apart from this, these statements help to adjust income and expenses.
Implement strategies by using tips:
After knowing everything, the next step is to implement the strategy in the right way. But there are specific tips that would help you in the whole process. So, here are a few other action steps that can help you:
- Protect the savings by using insurance
- Plan for the post-retirement life and consider investing amount in different projects
- Check credit card and maintain a good credit score
- Design an emergency fund and contribute to the retirement plan
- Apart from this, don’t forget to evaluate alternatives because life can take turn anytime
- Plan for income & expenses before time, and it’s possible only by maintaining the record.
- Rethink about the things that are most important in your life
Note: In the end, it’s vital to re-evaluate the plan before finally implementing it. So, keep in mind that financial planning is a dynamic process, and you will have to take action to achieve your goals.
Conclusion:
These rules, tips, and steps could be an excellent tool for achieving financial health and success in life. But you should adopt the habit of seeing the bigger picture and see every aspect before making a final choice. In short, without improving your general practices, you can’t achieve financial goals to live a stress-free life. Thus, incorporate these tips into your life, and soon you will start feeling stress-free. The main aim of all these efforts is to live a life full of financial security, which is an excellent opportunity for this.
