Financial health is a crucial parameter that determines the quality of your life. Let us have a look at certain determinants that encompass your financial health.
Is your basic pay enough to fulfill your daily requirements? If you do not worry about, what would you have for nourishment or what would you wear, then my friend you pass the first criteria of financial health.
Other than your daily needs being met, do you have enough savings for the near future? In case of sudden unemployment, a person with sound financial health must have enough savings to sustain them for at least 6 months. This means that even if a person gets unemployed, he must be able to pay off his living expenses for 6 months without decreasing his lifestyle level to a great extent.
Someone with good financial health can afford the finer things in life like enjoying a trip or going to a fancy restaurant without worrying about how he would pay off his children’s tuition fees. Purchasing a gold jewelry set would not project any obstacle to the lifestyle of a person with sound financial health. There is a saying that goes like this- ‘If you cannot buy it twice, you cannot afford it.
What are the requirements for building good financial health?
Know thyself in financial health
A man is his best judge. Know your income and your current lifestyle. What do you save every month? What are your sources of income? What are the essentials that you need and what are those essentials that you want? Analyze your shopping behavior. Analyze what is your relationship with money. Are you a minimalist or a spendthrift or somewhere in the middle? Your understanding of yourself is a good place to start from.
Financial health Budgeting
Based on your income and the financial position you want to achieve, budget your expenses. If you have just started earning and yet you want to have a spendthrift lifestyle, you have to figure out multiple sources of income. Or else you would not be in sound financial health. Keep an eye on where your money flows. Set a budget within which you have to sustain. Do not follow mindless trends.
Financial health Planning
One must plan for the future. There are various ways to do so like having a retirement plan, life insurance, and health insurance. Investing in real estate and having a source of passive income is an absolute essential if you do not want to break your back working all your life yet making nothing compared to inflation.
Lastly, keep improving your horizon of financial knowledge to enjoy sound financial health. It is no good for a man to constantly stress over what he would eat and where he would live. Human beings are here to experience life rather than constantly fretting about money.