Financial health is a vital aspect of living a happy, stress-free life. It’s a measure of your financial situation and encompasses all aspects of your finances, from your earnings and assets to debts.
Improving your financial well-being is not just about increasing your income. It involves making informed decisions and managing your finances effectively to ensure a good quality of life and a stable future.
However, thinking about how to improve your financial health can be incredibly daunting. Where to begin? How to plan? What to review?
The good news is that it doesn’t matter what your current money situation looks like. Anyone can improve their financial health by putting a few key money principles into practice.
In this blog, we’ll explore five effective ways to improve your financial health and well-being.
Let’s begin!
1) Track Your Spending
If you’re looking to improve your financial health, a budget is the best foundation to start building everything else. Creating a budget is never going to be a bad idea in understanding your finances. However, sticking to it is an everyday commitment that is easier said than done. It’s important to be disciplined in order to prevent overspending.
Small decisions, such as avoiding going out for lunch or delaying an online purchase can make or break your budget. As such, you need to be ready to pivot and adjust to ensure you stick to your commitments.
One of the most effective methods is to use a budgeting app to track and categorise your spending. That way, if you feel that you’ve spent more than what you planned, you can reduce spending in another area.
2) Create a Plan for Debt
The key is to use debt to your advantage while avoiding getting into a cycle. This means that you need to manage your existing debt effectively.
Remember, paying off high-interest debts is a major investment in your financial health and well-being. Begin by getting a clear understanding of what debt you have and where you’re starting from.
Once you have a clear idea of your debt repayments, it’s time to prioritise. Typically, you could rank your debts from the smallest to largest balance and focus on paying off the smallest ones first. In this way, you maintain momentum and motivation by crossing off the quick wins. However, if you’re looking to tackle debt in the most effective way for your financial health, start repaying from highest to lowest interest rate.
No matter which strategy you decide to go with, the best one is one that you can stick with and follow for the long term.
3) Save For Major Expenses
To improve your financial health over time, you have to start growing a nest egg, instead of relying on debt.
As you begin your journey, consider planning for major expenses and saving up until you reach the amount you’ve set. This will help you better budget for your expected payments, preventing the need to turn to high-interest loans.
Whilst you may not have extra funds left over to save at the end of a month, with the right plan, you can save up enough money to manage your major expenses and improve your financial well-being. Even a few pounds a week can make all the difference.
4) Create a Financial Plan
A financial plan is your roadmap on how to direct your income towards building the life you want now and in the future.
Good financial planning involves setting short and long-term financial goals and aligning your budget to meet them. Moreover, it also includes understanding your money habits and leveraging them to your benefit.
If you have any doubts or queries about financial planning, consider speaking to an expert at one of the public bodies that can help. While the consultation may seem needless, proper financial planning can help improve your financial health significantly and help you progress in life.
5) Build Your Emergency Fund
Financial emergencies often strike when you least expect them. An expensive vehicle repair, vet bill or any other unexpected expense can destroy your budget entirely. If you don’t already have an emergency fund to account for unforeseen expenses, it’s highly recommended you start building one.
If you already have an emergency savings account, examine it regularly to ensure you’re setting enough aside. Where possible, the goal should be to keep three months of funds for basic expenses in your emergency fund.
Calculate what that amount would be for you and then aim to have that much set aside in your fund. If that amount still seems a way away, you can try out different money management techniques to put more money into your savings.
Choose Salad Money for Fair and Affordable Loans
Being financially healthy means being better equipped to deal with financial crises and effectively work towards your financial goals. However, good financial health is not achievable overnight.
If you run into any hiccups along the journey to improve your financial health, rest assured that Salad Money is here to offer you a helping hand.
As one of the UK’s leading online lenders, Salad Money is an organisation dedicated to providing every employed citizen with affordable credit options.
We understand that your credit score isn’t a fair way to be assessed for a loan. That’s why we use open-banking-based assessments to evaluate applicants and make our loans more accessible.
With our ‘More Than Your Score’ loans, we aim to provide loan options for every working employee irrespective of their credit scores.
To learn more about our services, click here or apply for a loan now!
