When it comes to your financial health, it is important to address financial issues, set your goals, and to seek expert advice.
Our financial health touches on every aspect of our lives, affecting our emotions, behaviours and attitudes. Our stress levels and sense of worth are often directly linked to our feeling of financial security, so just as it's important to look after your mental and physical health, your financial health is also an important aspect of your wellbeing.
3 steps to start looking at your financial health
1. Know where you are now
The first thing you should be doing to take care of your financial health is track it. This is simply knowing what you spend your money on and what percentage of it goes on what. Until you know this, making a budget is very difficult.
2. Know what you’re spending on and budget for it
Split your monthly expenses into those things which are ‘musts’, things you simply have to pay. This could be rent or mortgage, car repayments, etc.
Then look at your bills, phone, electricity, gas, water, rates, car insurance etc. Try to work out what you pay annually for each of those then divide it by 12 and work out how much per month you should be putting away, so you have the money when it’s needed.
Many utilities and car insurers will accept a direct debit monthly payment, which is worth considering. It takes the money without you having to think about it, so it’s not lying there in your account, tempting you to spend it on something else.
Then food, at this point, add in your weekly supermarket shop.
3. Once you’ve worked out what you’re spending on, take it away from your monthly wage.
The trick then, is working out a percentage of what’s left which you will save, come what may. This could be for holidays, new car or house deposit. Either way, save. It’s a really good idea to have a separate bank account for your savings, maybe two. One long term, one shorter term.
Ideally you will reach a sum of at least 3 months of your full wage, saved and put away, it’s good not to touch that. It’s your safety net and can help you feel a lot more secure knowing you have it. It’s about being ready to deal with any unexpected financial challenges such as job loss, loss of income due to unforeseen circumstances and other life challenges that may arise from time to time.
Then, the rest is yours to choose what you spend on.
Being aware of your financial situation and having a budget you can live with and stick to is a major factor in reducing financial stress.
It’s not about being rich, it’s about feeling secure. Once you’ve got that in hand, you should also set your sights on longer-term financial goals such as paying off the mortgage or buying your first house. This is exciting and can be a real motivation to save even more.
Could you swap a bought coffee for a homemade one? Before buying something online stop and think about whether you really need it, plan your weekly shops and meals to avoid wastage. Having a goal, like paying off the mortgage or getting a house deposit together is a real inspiration to save.
At some stage, and the earlier the better, you should start thinking about having a comfortable retirement. You might think you’re too young right now, but starting early and having a plan can make an enormous difference to the amount of money you end up with when you retire.
Covid-19 has changed our lives in one way or another. We’ve all had to learn a new way of living. Some have discovered online shopping, others have figured out clever ways to work from home.
So, this time of huge change, just might be the inspiration to consider the importance of your financial health.
At Bank First, we’re here for you, just like you’re there for others. We can help with setting empowering goals through our financial planning services, and guide you on ways to save for the future through refinancing your home loan or getting a competitive rate on your car loan.
If you have any questions, we’d be happy to help. Get in touch with us on 1300 654 822 or get in touch with one of our friendly Relationship Officers.