Factors that determine your financial fitness
Generally, we go to the doctor for a routine health check-up once or twice a year but we completely ignore keeping a track of our financial health. People, most of the time, conveniently ignore the symptoms of ailing finances. These can prove to be hazardous for your financial health if the remedy is not provided on time. Hence, here we introduce you to some important factors, which determine your financial fitness, for your better financial health.
Spend less than you earn
If you are the one who spends more than you earn, then its time to apply a break to such practices as it may lead to a financial disaster. To be financially fit, you need to manage your expenditures depending on how much you earn and not on how much credit the banks provide. The credit limits or loans provided by banks or any financial institution, for that matter, are not provided in terms of what is best for you. They provide it based on how much the maximum amount you can pay in terms of installments. So, it is advised you do your due diligence before opting for loans and credits.
Properly insured
Managing and covering and financial risks that arise due to events occurring in your and your family’s life is important. This can be done by having adequate insurance to protect you and your family from huge financial loss. This factor determines whether you are financially fit or not by accessing your risk and then determining whether you need insurance, or even additional insurance (if in case you already have one). To ensure overall financial protection, you need to assure that you are adequately insured in terms of life, health, and property.
Financial plan
It is rightly said that a goal without a plan is just a wish. To achieve your financial goals, you need to have a financial plan in place. This plan advises on what are the set of actions that you need to take to achieve your financial goals. Not just that, having a financial plan also helps you to understand your savings, debt, insurance, and investment. Thus, it is the overall picturization of the process that first protects your wealth, then accumulates more wealth, and, finally, distributes your wealth.