This is a term you’ve probably heard or seen before, but what exactly is financial health? Well, in a nutshell, it is the overall state or “health” of your finances. It’s an overview of what kind of financial shape you are in and what kind of financial security you have. But how exactly is it calculated, and how do you know what kind of state your financial health is in? Well, we are here to break it down for you. Below we will examine how financial health is calculated, how to tell if you’re financial health is in a good or poor state, and how to improve your financial health if a few areas need a little work.
How is financial health evaluated?
When calculating your financial health, you must examine all the various aspects of your finances. This will include your savings and investment accounts, your expenses and spending habits, your debt, your credit rating, and the overall effectiveness of your financial planning. In a perfect world, all of your finances would be handle automatically, but this is not the case. Having good financial health (and maintaining it) is a lot of hard work.
Are you in good or bad financial health?
One very simple test to help you decide whether you are in a good or bad financial standing is by evaluating your current financial situation and how you feel about it. If thinking about your finances gives you a lot of stress and anxiety, this is a sign that your financial health may not be as good as it can be. Another way is by evaluating your net worth. For this, all you need to do is add up the value of your assets, savings, and investments and subtract the money that you owe (such as debt or any outstanding loans). If you’re in the positive, that’s great, if you’re breaking even or sitting in the negatives, there’s some work to be done.
How to improve your financial health
If your net worth is sitting in the negatives or you would like to improve your financial health, there are many options to help you get there. One of our mottos here at GetMeDebtFree is that a debt-free life is possible. Canadians have tolerated debt as a way of life for too long, and it’s time to end it.
These are just a few simple ways to improve your financial health before diving deeper into consolidating your debt.
Create a budget for yourself:
If you’re spending more than what you’re bringing in, start budgeting your money and cut unnecessary expenses where you can. As an example, let’s say during the work week, you go out and spend an average of $10 on lunch. That’s $50 a week or $200 a month. What may seem like a small amount can add up very quickly.
Pay off high-interest loans/debt first:
If you have a lot of outstanding debt and loans to pay off, it’s best to organize them and decide which ones have the higher amount of interest owing or the highest interest rates. Focus on paying those off faster to save yourself some money on interest charges. And for more information on how to pay off your debt, click here.
Save and put aside money:
Wherever you can, try to save money and have a separate account set aside for unexpected emergencies. Think about what your long-term goals are and start putting money towards making those goals a reality. Some people even like to have two separate savings accounts. One for goals and one for emergencies for crypto Investments.
If you’re ready to improve your financial health and lead a debt-free life, let GetMeDebtFree point you in the right direction! We have searched out who we believe to be the best companies in Canada to help our fellow citizens get out of debt. If the company does not pass our Gold Standard Test, then we will not recommend their services. If you are looking for the best advice on how to consolidate your debt, fill out our contact form, and we will be sure to refer you to a company that we approve of.
Let it be clear, we do not mine your data nor sell your information to all kinds of companies. We are simply looking to connect people who are serious about dealing with their debt to a professional who is best suit to help make that happen. You have nothing to lose and much to gain, so fill out a contact form and take that first step to a debt-free future.
