If you are looking for some kind of resolution you can make before 2021, why not take a look at your finances? Most of us could probably do with improving our finances in some way or another, and many of us would be able to do that in a number of ways too. In fact, this is one of the best ways that you can make sure you are taking control of your life and making the possibility of your future a brighter one. In this article, we are going to take a look at how your average geek might approach the topic of financial health. Bear the following in mind if that sounds like something you could get on board with.
Why It Matters
But before we get into the details of how to do it, it might be interesting and important to first look into why it even matters in the first place. Why should you be concerned with your financial health, and what are the disadvantages of not doing so? And what is it anyway? Essentially, financial health can be thought of as a measure of how well you are likely to be able to meet your financial needs and cope with any possible emergencies. As long as you are able to deal with something that might crop up in this way, you can be said to have good financial health.
As you can see, it is therefore not simply a measure of what you happen to have in your bank account right now. It’s more to do with how sensible you are with your cash, what kind of earning potential you tend to have, and how you are likely to respond in different financial situations. As you might imagine, all of that is important for determining how your life is likely to pan out in a number of ways.
The greater your financial health, the greater your ability to keep things moving along swiftly no matter what occurs. That is clearly a very important thing. It is also true that having better financial health means you are more likely to be able to achieve everything you want in life – so when it comes to getting your dreams to come true, this is going to make a huge difference on that front too.
Do The Math
If you are going to be able to keep in control of your finances, you are going to benefit from applying some basic mathematics to the whole process. This is where a lot of people switch off, but actually it’s something that your average geek is going to love doing. And if nothing else, it is a fantastic way to make sure that you are approaching and improving your financial health in a big way.
So what kind of mathematical approach should you take? The main thing you need to work out is what your net worth is likely to be. If you are looking at particularly large figures, you might need to make use of a log calculator, but for most people it should be enough to use a normal calculator for this. To calculate your net worth, you just need to look at the difference between what you own and what you owe. To begin, make a list of your assets – that includes everything you own that has any value – as well as your liabilities (anything you owe). Take one from the other to get your net-worth figure.
With that information, you can start to see a little something about your financial health. Of course, this figure is likely to fluctuate over time, and you might have a significantly different net worth figure later on in the month, or in six month’s time, or whatever. For that reason, the real benefit comes when you carry out this calculation on a regular basis over a year or more. With that information to hand, you are going to start gaining a much better picture of what your overall financial health really is. And with that information, you can start to plan for a much more effective budgeting plan.
The budget is one of the most important things to think about when it comes to your financial health, for the simple reason that it is something that you can change and adapt over time as the needs demand. Therefore, while it is going to be something to look at in order to determine your financial health, you should also think of it as a flexible tool you can wield in order to improve that same health. With this in mind, what are some of the things you can do to make sure that your budget is improving as much as possible?
One of the first things to look into is whether or not you have planned for all expenses. Is there some expense that keeps coming out each month which you keep forgetting about? If so, you need to start incorporating that into your budget. You should also include in this plan any ideas or strategies you might have for reducing your expenses overall, which can include smaller scale things or bigger changes, or a combination of the two. As well as that, include any ideas on what kind of money you might be able to save each month.
In your budget, you can also have some kind of idea on how you can start to spend your money more wisely. Many people simply don’t spend their money in a very good way, and over time this leads to a lot of problems which are then harder to rectify. If you are often guilty of this, you are going to want to make sure that you are looking into how to solve it – and generally, that all starts with a good budget that incorporates everything that it possibly can. If you can do all that in your budget, as well as specifically planning for emergencies, you are going to find it is working out for you well.
Figuring Out Trends
Earlier on, we looked at how you can calculate your net worth, and we mentioned in passing that it is important to do so regularly. There is one major reason that you should do so regularly, which is that you can start to get a little closer to any trends that might be happening in your financial life. The closer you get to these trends, the more you can understand them, and that means you can start to make better and better plans for your future too. Clearly, this is worth looking into.
Even if you have a negative net worth now, you should start to look into your trends, so that you can gain a clearer sense of whether or not you are really moving in the right direction. This is something that you are going to want to think about, as it can help you to work out what you might need to improve in your life in order to have better financial health. But at the same time, do try not to obsess too much over this. No matter what position you are in, things can always get better.
As you can see, there is a lot to consider as you try to ensure you have good financial health. As long as you bear all this in mind, you should be able to improve your finances as much as you need to, so this is all worth thinking about.
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