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How To Do A Finance Health Check

This article will show you how to conduct a finance health check.

Your financial health refers to the ways in which you manage your income in terms of your livelihood or sustenance. Do you have savings? Do you stack up debts? Are you hitting your financial goals? When last did you conduct a finance health check? 

Why is conducting a finance health check important?

The holistic definition of health by the World Health Organization has it that health is a state of complete physical, mental, and social well-being; and not merely the absence of disease or infirmity. 

Just like how humans require the different parts contributing to the human experience to be on point to be considered healthy, the parts that make up our finances also have to be on point!

We’ve put together a list of checks you can make on your finances to assess its health.

1. Identify where you want to be financially, and what you have presently:

We have heard over the years how important setting goals are, not just setting any goals but realistic goals. This also applies to your finances. Your goals should be SPECIFIC, MEASURABLE, ATTAINABLE, RELEVANT, and TIME-BOUND, you know, SMART. When you have identified your goals, you can then assess how you can get there by working with what you have NOW.

For example, If your goal is to have a diverse investment portfolio and increase your passive income earnings. You want to work out why you want it, when you want it, how you intend to achieve it, and start out by being honest with what you have and the money practices that have led you here.

2. Track your spending habits:

This takes intentional and careful effort. It takes total commitment and honesty to journal and track your every spending to see where your money is going. This helps you take into account if you have terrible spending habits, you also get to see the ridiculous albeit unintentional ways money leaves your account especially if you’re Nigerian… *deep sigh.

3. Track your monthly saving habits:

Do you save, or do you spend money as you make it? What is your disposition towards putting some money aside – Is it a priority or an afterthought? What have you done with past savings? Are you disciplined with your savings? Do you have a savings structure? These are important questions to ask yourself if you want to make any progress. 

One of the reasons people seem to be terrible at saving is because they can’t envision themselves having healthy saving habits while maintaining a healthy social life. Lucky for you, we have an article that addresses this.

4. Check if you hit your monthly and quarterly goals:

It’s important to run through your old goals to see if you met, exceeded, or fell short of them. This helps you diagnose what the pitfalls are and mitigate them in your future plans. 

5. Review your debts:

If you have any, it has to be done. You should review how well you’re doing in paying off debts, whether loan or credit debts. If this is poor, It’s important to see why there are recurring debts and see if it’s a direct result of bad spending habits. Actively work on reducing your debts.

6.  Check your self-accountability:

It’s great to have partners you are accountable to, but it’s also a service to yourself to ensure that you are financially accountable to yourself. This involves intentionality, honesty, and the willingness to play the long game. Self-care very well includes healthy financial practices.

7. Analyze your emergency funds:

Nobody ever likes unexpected, sudden occurrences, they are no fun. However, they happen; c’est la vie, such is life! This is why it is necessary to plan ahead to mitigate future occurrences; otherwise, you find that despite your intentions, emergencies keep eating away at your money. If you do not already have money set aside for emergencies, it’s best you start today.

8.  Cancel Unnecessary subscriptions:

This one is quite tough to swallow because who doesn’t enjoy the pleasures and comfort of our diverse subscriptions? I hate to be the one to tell you, but some of them have got to go if you are serious about practicing financial responsibility. 

Some of these things have been subscribed to for so long ago, that you do not even remember that you have them, yet there are monthly/yearly subtractions from your account. You should do a thorough look into your subscriptions, and if you find some that aren’t vital to work and in some cases, relaxation (because you are deserving}, let them go!

In summary, a finance health check is vital to your being financially responsible, and we advice should be done regularly (daily spending), monthly, quarterly, and yearly.

Here is a list of everything discussed about doing a finance health check so far

  • Identify where you want to be financially and what you have presently
  • Track your spending habit
  • Track your monthly savings
  •  Check if you hit your monthly and quarterly finance goals
  •  Review your debts, if any
  • Check your self-accountability
  • Analyze your emergency funds
  • Cancel unnecessary subscriptions

Is there anything you think we missed? Let us know in the comments.

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