When planning and saving for financial goals like buying a house, paying for college, or retirement, it’s important to periodically assess your financial health and determine if you are on track to meet your financial goals. Reviewing your financial health gives you a gauge of how you are currently managing your money and what you might need to adjust to meet your future goals. This blog will discuss how you should review your financial health and the adjustments you can make to maximize your probability of meeting your future goals.  

What Does it Mean to be Financially Healthy?

There are four key indicators of being financially healthy. 

1. Having sufficient income to meet your current needs by creating and managing a budget. 
2. Being able to handle both expected and unexpected expenses with an emergency fund. 
3. Having a financially feasible plan to pay off any debt over time (student loans and mortgages may take longer than a car loan). 
4. Making a financial plan that includes regular saving towards financial goals. These could be as small as saving for a weekend getaway or something larger like buying a home or saving for retirement. 

While it is true that every person’s financial situation is different and that the scale of income, expenses, debt, and goals will vary widely, the same fundamental indicators can apply to everyone. Regularly assessing and adjusting these aspects of your financial life can help maintain and improve your financial health. 

How Do You Know that You’re Financially Healthy? 

There are other indicators you can look at to address your financial health. 

1. Do you have a steady flow of income? 
2. Do you have no debt other than your mortgage? 
3. Do you have a high rate of savings towards your financial goals? 
4. Is the cash balance in your savings account growing every month? 
5. Are you regularly surprised by running out of money? 
6. Do you save up for big purchases or rely on credit? 
7. Do you monitor the status of your credit report and credit score? 

It’s about achieving a balance between saving, spending, and investing that aligns with your financial goals and circumstances. Thinking about the answers to these questions will give you a better sense for your personal situation and actions that contribute to your financial health. This can help you stay on track and make any adjustments as needed.   

Tips/Tricks to Better Manage your Financial Health

If you want to improve your financial health, here are some tips/tricks that can help you. This will set you in the right direction to better prepare yourself for any unexpected expenses/changes that might occur along the way. 

1. Set financial goals that are realistic and measurable and adjust your habits to support them. Be honest with yourself about what is possible. 
2. Focus on increasing your income. Especially if you are young, your future income is your greatest asset. Invest in yourself! 
3. Create and stick to a budget that aligns with your goals and helps you save money. 
4. If you have any consumer debt, pay it off and avoid taking on any new debt. 
5. Track your spending and review your progress regularly to make sure you are sticking to your goals and budget. 
6. Make some sacrifices involving cutting spending, minimizing non-essential purchases (i.e., entertainment, eating out, online shopping, etc.), and lowering car, internet, and any other payments/costs across the board. 
7. Start an emergency fund (if you don’t have one) to help you deal with unexpected expenses. 
8. Consider participating in your employer’s HSA-eligible health plan 
9. Consider participating in your employer’s stock purchase plan (ESPP) 
10. If your income allows, contribute to a Roth IRA 

This is going to involve a lot of discipline and persistence that might become challenging down the road, but it will ultimately help you achieve your financial goals. Remember, this is a gradual process and small steps taken consistently can lead to significant improvements to your financial health over time.  If you need assistance with your tax planning or retirement planning in general, please reach out to our team”