Your financial health is the current state of your financial affairs. It can include your savings, investments, retirement funds, and expenses.
It’s essential to optimize your financial health for a secure future. Strong financial health usually means having predictable income, good return on investments (ROI), a growing cash balance, and limited changes in your expenses.
Join us as we uncover how you can make your financial future bright in 2024.
7 Ways To Optimize Your Financial Health
Here are seven ways to start improving and prioritizing your financial health.
1. Create a budget (and stick to it)
A budget is not just about considering your future expenses; you must also consider how you spend your money now.
It is time to track all your income and expenses and determine which costs can be cut back or are unnecessary. For example, if you stop at the coffee shop on your way to the office each morning for a bagel and a coffee, why not pack a snack or toastie and have coffee at work instead?
For budgeting, you must clearly define your “wants” and “needs” to see where you can save money.
You can use free mobile apps or a downloadable spreadsheet template to help you track all your money. And once you have a budget, stick to it!
2. Save for emergencies
Life is full of surprises and curveballs. Unexpected expenses—like car trouble, vet bills, or job loss – can wreak havoc with your carefully monitored finances.
But, having an emergency fund can ease your mind (and wallet).
Aim to have three months’ living costs in your fund. But, even if that’s not possible, small amounts will eventually add up. Prioritize adding to your emergency fund in your budget to avoid dipping into your savings or getting a loan when an emergency requires extra funds.
3. Get rid of debt
You need to set out to first repay all your high-interest debt. And you should pay your debts yourself. Otherwise, you might snowball into more outstanding debt.
Although paying off your highest-interest loans first is recommended by most, some financial advisors suggest first paying off the smallest debts so you feel a sense of accomplishment. You can then work your way to more significant debts.
Whichever approach you adopt, plan to start clearing the debt. Again, having a budget helps you see where to cut back on expenses and redirect those funds to debt repayment.
4. Monitor your credit score
Regularly monitoring your credit score can show you the positive impact of your smart financial decisions. As you repay debts, you’ll witness your credit score improve steadily over time.
This will keep you financially motivated, and a healthy credit score will unlock a better financial future.
You’ll be able to land your dream home or car as getting loans with favorable interest rates is easier with a good score.
But you might ask yourself, “How can I check my credit score?”
There are numerous platforms where you can monitor your score and take charge of your financial health, with SoFi being one of the best options available.
5. Make smart investments
It is never too late to start making smart investments to help you plan for the future. One of the best ways to invest is to have a diverse portfolio.
There are three main asset classes:
- Stocks
- Bonds
- Cash
Each of these assets performs differently in different market conditions. By diversifying your investment portfolio across these assets, you’re less reliant on one market, and your assets might grow in value.
6. Beware of fraud
Everyone knows at least one person who has been targeted by scammers or accidentally involved in financial fraud (by no fault of their own).
And you sure don’t want to become the next victim of a cyber criminal trying to make a quick buck.
If a loan sounds too good to be true, it is. If someone is offering you a job out of the blue over a messaging app, don’t trust them. If a Nigerian prince leaves you his inheritance, he probably wants you to pay some money first.
Yes, these are all scams, and you should tread carefully.
7. Protect yourself (and your family)
If you are (finally) in a financially good spot, you should do everything you can to keep it that way.
One way to protect yourself and your financial situation is to take out insurance. It depends on the policy you get, but insurance can provide you or your family with financial protection if you cannot work due to injury or illness.
Final Thoughts
Prioritizing financial health is something all of us should be doing, and it’s a good idea to start sooner rather than later.
The older you become, the less time you have to sort out your budget and start saving. But it’s never too late to start. And luckily, it’s also not very difficult to get started either.
You’ll be well on your way with careful budgeting, saving, and investing.
Make 2024 your year by optimizing your financial health through the seven easy steps discussed above.
