6 Golden Rules to Improve Your Financial Well-Being

We begin every year with new goals, new resolutions, and new targets with a major focus on financial health. One of the factors that impact our mental health and overall well-being is financial health! The stronger our financial health, the stronger our mental health, and vice versa. However, there is one thing that is constant about life – uncertainty! And this makes achieving our goals related to financial health a challenge. 

It is important to have control over one’s finances, by developing positive financial habits and continuing it in the long run. This ensures the security and stability of one’s future. However, in order to improve one’s financial health, there is a certain level of discipline and dedication required. To make this easier for you, we have listed out a few rules that will help you improve your financial health over a period of time.  

1. Get a Set Budget!

The very first step that will set you on the right track is budgeting. It is crucial that you create a budget. If you haven’t started this yet, this is a sign to begin! A budget helps in identifying your income and expenses and locating areas that can withstand a cut down in costs. While creating a monthly budget, it is important that first allocate your income across fixed expenses like rent, any loans, utility bills, etc. The next step would be identifying all the variable expenses and segregating them into essentials like groceries, and transportation, variable expenses, and non-essential ones like eating out at restaurants, cinemas, luxury spending, etc. This segregation enables you to identify those non-essential variable expenses that can either be cut down or postponed. The key here is to prioritize.

2. Be Debt-Free

If you have any debts through personal loans, automobile loans, housing loans, or any other loan, start paying off your debts. Ensure all the smaller debts and high-interest-rate debts are closed at the earliest. Remember, the lesser debts you have, tracking them becomes gets simplified. If you use credit cards, ensure you clear the dues on time in order to avoid high penalties and late fees.

3. Regular Savings

Saving is an important aspect of financial planning. Make sure to save a portion of your income towards an emergency fund. This fund will come in handy during unexpected events. The pandemic is a great reminder of why one must have an emergency fund. Begin with small amounts and increase them with time. Create an emergency fund that will take care of your expenses for a period of 6-8 months. Furthermore, you can create many such funds to take care of certain situations, for instance, a retirement fund or a vacation fund.

4. Make wise investments

In addition to savings, one must invest in different financial instruments such as equity, debt, mutual funds, fixed deposits, real estate, gold, etc. However, it is important to consider various factors such as age, income, time horizon of investment, and financial goals before choosing the instrument. You can seek the advice of a financial expert before you invest your money.

5. Asset Protection

As you begin earning, the focus is always on securing assets like a home, a car, etc. What you tend to forget is that these assets need to be protected too. Make sure you insure your assets to protect them from any unforeseen events. Another area that needs focus is your health.

Always consider getting yourself health insurance and life insurance at an early stage, as the premium would be much lesser when you’re younger.

6. Regular monitoring 

It is good to invest your money across various assets and financial instruments. However, the market is subject to fluctuations, and unexpected economic or political factors can influence the current market price of these assets and instruments. Always monitor your investments as this gives you an idea of any changes that need to be done to have a profitable investment. It also ensures your financial goals are met within the pre-determined time.

In conclusion, to improve one’s financial health, it is essential to be committed and disciplined. With proper financial planning, and by following these golden rules, you can have reasonable control over your finances and achieve all your financial goals without any stress. Whether you are a novice or a professional aiming at taking your financial well-being a notch higher, this rule book will prove to be a valuable guide.