When was the last time you performed a personal finance health check-up?
Are your finances in order? Do you some order into your money? Just like we do with our physical health, performing a financial health check can go a long way in helping you maintain some order which guarantees you a better chance at financial freedom.
Personal Finance Health Check-up #1 - TRACK
Top of the list in a personal finance health check-up is tracking.
Tracking helps you keep an eye on all your daily transactions – record these without fail. Do not read much into it; your work is only to track. Once you start recording, do not adjust anything yet. The core purpose is to identify patterns – where your money comes from and where it goes. Tracking is an eye-opener; it is the first pulse-checker and a mind-opener. You get to see money in a different light. Tracking is enjoyable when you resist the urge to pass a judgement. Passing judgement could derail you; ensure you stick to the task and let the habit install to completion.
Next up in our personal finance check-up is comparison.
Once you get the overview of your money’s movement, calculate the difference between your INCOME and EXPENSES. This gives you a snapshot of where you stand financially – the RESULT could be; a positive, a zero or a negative. DO NOT Celebrate or Panic Yet. Treat this information as critical feedback and prepare to take the right action. Automate the process to minimise errors – use an app or spreadsheet.
Personal Finance Health Check-up #2 - COMPARE
TRUTH is indestructible, it is never late or in a hurry. If it does not come out TODAY, it will show up TOMORROW or next YEAR
Personal Finance Health Check-up #3 - PLAN
Planning counts as a personal finance health check-up tool as well.
Ensure you write down all your income and all your fixed expenses. Use an app, spreadsheet or a notepad (old school). By planning your income and expenses, you establish a cash flow pattern. A cash flow is a lens through which you see your financial health. It informs you of your ability to meet obligations. A good plan should be flexible; perform a periodic review to suit your preferences.
Ps. in some quarters, this is called a budget.
Hovering the lens over your plan is like performing an x-ray on it – the idea is to fish out priorities. A positive personal finance health check-up result welcomes Goal-setting. Essentials are items that must be paid for or affect your smooth running. Establish the frequency of how often you meet these bills. Differentiate between daily, weekly, monthly and annual payments. Once you know your priorities, it becomes easier to swing into ACTION.
Personal Finance Health Check-up #4 - PRIORITISE
Personal Finance Health Check-up #5 - ACTION
Action dictates you do two things; stay disciplined for you to enjoy total control. Secondly, you need to make your money can also work for you.
The best way to automate action is by setting a goal. Develop a vision mapping process. If in doubt, do not shy from reaching out to a support system. Consult a financial coach to help you with accountability and areas that may seem confusing. Adopt these five tips and keep coming back to see if your financial health check-up is up to speed.
Take Away
Life is a game of finding the right balance. This balance could be emotional, social, spiritual, financial or any other area of personal development. However, this balance does not come on its own! For example, when you feel physically out of shape, you consult a physician, a fitness instructor and a nutritionist. When your spiritual gauge is down, you see your spiritual teacher.
The same concept is applicable when you sense that your finances are out of shape – consult a personal finance coach.
