Happy, healthy, responsible.
Each of us is responsible for our own health and our own happiness - and, our own freedom.
Fiscal health equates to financial freedom as much as physical health equates to freedom from physical ills and spiritual health equates to freedom from despair.
In order to begin to improve your fiscal health, you need to take stock of where you are right now. Just as when you work to change your physical lifestyle, you track food and beverage intake, physical exercise, and change in weight and measurements, so do you need to track where your money comes from and - more importantly - where it goes in order to identify where changes can and should be made.
Here are some things to think about and some steps you can take to either adjust the financial track you are already on or to get on the financial track you want to be on.
How much do you have coming in every paycheck, every month, every year?
Is that income adequate to:
Cover your living expenses (roof over your head, food in your belly, clothes on your back, etc.)?
Save for a rainy day (those pesky car repairs)?
Put away for retirement?
If not, why not? Where are you overspending - and possibly under earning - or do you even know?
Most articles I've read - from Suze Orman to various articles on the internet to a friend's recent T. Rowe Price mailer - will tell you the following:
Keep your credit card balances low if not fully paid off every month - your credit score is affected but the ratio of available credit to accrued debt. So less debt is better!
Have 6-12 months of living expenses saved in a place that is accessible - savings account or other accessible account that isn't your main account.
Contribute to your retirement fund - whether is is the 401K at work or an IRA - to the maximum extent possible.
If you are currently on shaky financial ground, this may seem a bit overwhelming - I understand, I've been there.
So - how do you eat an elephant? One bite at a time.
First, figure out where you are at right now. Track every, and I mean EVERY expense. I do this in an Excel spreadsheet. Do this for at least a month, if not several months to a year. Actually, once you start, continue to do so in order to stay on top of and on track with your expenses.
Second, take a hard look at those expenses that are wants rather than true needs. Things like cable or satellite TV, internet, fancy phones (who has phones in your household and why), going out to eat or to the movies or other entertainment, and other spending rabbit holes. Hobbies, sports, books, clothing, and other spending binges that are not necessarily true needs, but may be spending on perceived wants to fulfill unfilled needs elsewhere.
Third, cut back as hard as you can - yes, until it hurts! - until you are truly fulfilling needs ONLY. For example - physical fitness is a need, however that expensive gym membership or yoga studio is not.
As you see where your money is going - and are figuring out why, then you can better make value-based decisions such as:
Why are we living where we are living?
Do we really need that second car?
Can I take public transportation instead?
What is my/our true relationship with money and why?
For that last question you may need counseling, both personal and financial, to really get at the heart of any overspending or miserly financial habits you have developed over the years.
I know this is a lot to think about, and finances can be the seemingly scariest area of our lives. However, it is a very important part of our lives, since our finances will determine how we live out the golden years of our lives.
So take a deep breath and just take it one step at a time. That is all any of us can do - take things one step at a time.
So, think on these things this week and take those first steps towards improving your fiscal health and ensuring your financial freedom in order to live your best life now.
Over the next few weeks, i will be sharing what things I have learned from various sources that have helped me to once again work toward improving my fiscal health.
Until next time, Namaste!
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