Your financial health is important. It cannot be ignored. It is as essential as your physical or mental health. People handling their finances recklessly can often be seen struggling to manage their debts and living expenses. Financial health means making your life more comfortable and stable through sensible money decisions and staying prepared for financial uncertainties.
Here are some lessons to help you live a healthy financial life.
Stay Low On Debt
Borrow money when you can repay it without disturbing your financial goals. Avoid adding multiple debts unless it’s necessary and planned. Lower debts mean you can borrow when you need the money. It gives you the freedom to decide how to use your disposable income. It will also help you stay happier and boost your financial strength.
If you want to keep growing financially, you must focus on wealth creation by beating inflation in the long term. Ensure that your investment earns you a return higher than the prevailing inflation rate; this way, you’ll be able to create wealth and have a financially healthy life. While planning to earn higher returns, you also need to choose appropriate investment instruments in sync with your risk appetite.
Repay Loans On Time
If you have existing loans, you should plan to repay them on time. Timely payment of the loan EMIs can impact your credit score positively.
Adhil Shetty, CEO, Bankbazaar.com, explains, “Delay in the loan repayment can cause a fall in your credit score, and you may land up paying penalties and disturb your other financial goals. Having a high credit score can help you stay eligible for a new loan which can aid your financial growth. In an emergency, eligibility for an easy loan can prove to be a great financial support.”
Stick To Your Financial Goals
Why are you earning money? The answer is to achieve your financial goals! So, if you want to financially celebrate a healthy life, you must stick to your financial goals and not get distracted whatever the situation is. From time to time, check the direction of your financial effort with your financial goal requirements. You can make adjustments, if required. If you can achieve equal to or more than your financial goals, that’s how you’ll celebrate financially.
Maintain An Adequate Emergency Fund
You may have adequate money and savings as per your current situation, but that may not be enough to meet all types of financial emergencies in the future. So, you should create a sufficient emergency fund to address all your financial requirements if you meet an emergency. “It’s important to review the size of your emergency fund from time to time and in sync with the changes in your lifestyle,” suggests Shetty.
Make A Will And Stay Adequately Insured
Leaving debt-free, dispute-free assets makes the entire family happy and can be your best achievement. Your legacy should go into the right hands, which can happen only when you make a Will consisting of all the details of your assets and clearly define your legal heirs and their shares. Also, you should stay adequately insured by taking a life insurance policy so that your dependents don’t suffer financially if you leave huge debts behind. Health insurance is something that protects you financially. As medical inflation grows, your wealth may vanish in meeting the cost of hospitalisation. You can easily ward-off health risks by taking a health insurance cover of adequate size.
Financially celebrating a healthy life means providing more financial strength, making it less susceptible to future risks and achieving your financial goals on time.