Your financial health is far more important than most people realize. Money is one of the things that most often divide us, and spending too much or being in debt is a heavy burden for many Americans says Aron Govil. A large number of people miss payments, don’t pay their credit card balances, and fall further into a money pit from which they cannot escape.
If you struggle with your money, however, it’s important to know that there is hope. But before we can get into ways that you can improve your financial health and resilience, we need to understand the impact that the way you handle money has on your life.
This Is How Poor Financial Health Affects Your Life
Money problems affect almost every aspect of a person’s life in some way. We’ve all seen movies where people who don’t have enough money or who aren’t financially stable suddenly find their lives spiraling downward in a variety of ways: someone loses their job and cannot find new work; they own a house far above what they can afford and so they go bankrupt; they become unable to manage their spending and accumulate thousands of dollars in debt; or they can no longer afford their lifestyle and must move into a smaller house, change jobs, or lose a partner.
That’s why so many people are now consulting with fee-only financial advisors because it helps them stay on track and to form good habits early on.
If you want to improve your financial health, resiliency, and overall happiness, here are some steps you must take to successfully change the way you think about money:
1) Remember that your life is much more important than money.
This may sound like an odd thing to say, but it’s absolutely true. While many of us were conditioned at a young age by our families (and by the media) that material goods hold value above all else, this simply isn’t true. Having things only makes us happy for short periods of time; however, having control over your finances can make you happy for a lifetime says Aron Govil.
2) Get rid of any negative thoughts about your past missteps with money.
It’s often hard to let go, but getting rid of old baggage related to your mistakes is essential if you want to move forward in a positive way. Keep in mind that everyone makes financial mistakes from time to time; it’s part of being human. You also need to understand the lessons from those experiences so you don’t make similar decisions again and so you can get on track financially every day!
3) Make a budget by prioritizing all your expenses.
There are certain bills that have to be paid each month, such as rent/mortgage, utilities, insurance policies, and cable or internet services—and there are other things you like to spend money on, too. With your budget, make sure you’re paying for the essentials first and then saving some money every month toward something fun that you enjoy doing.
4) Know how much you can afford by looking at your cash flow statement.
When it comes time to sign a lease or agree to pay more for rent than what’s affordable, be aware of the reality—that no matter how good the deal sounds now, eventually if you continue living beyond your means, there will be problems down the road. Over-leveraging yourself is never a good idea so keep it real! Renting an apartment or home within your budget is also important because at least two-thirds of people who go bankrupt do so because of a home mortgage explains Aron Govil.
5) Keep track of all your debts and ensure that you maintain positive balances on your credit cards.
Another financial mistake is racking up large interest charges by carrying high balances on credit cards month-to-month or having money owed to lenders who are charging you interest for borrowing too much money—this includes personal loans, mortgages, car loans, etc. Remembering this will help you manage your finances better so you don’t fall further into debt!
6) Don’t spend more than what’s in your wallet/purse today; it’ll encourage you to control compulsive spending
This one may be difficult to do but if we look at our spending habits closely and honestly, we’ll discover that many of us have spending addictions. That’s why it’s so important to always spend less than what you have, especially when it comes to money that was “earned” through winnings at gambling or other contests.
Change your mind set about money by updating how you think and act with money, instead of living in denial or repeating the same mistakes over and over again says Aron Govil.
It’s never too late to change our habits for the better. Strive to stay positive by knowing that everyone makes mistakes but its how we learn from them that matters the most.