Are you financially fit? Read our health checklist to find out

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MoneyPlus Features Team

15th May 2017 at 6:20am

Do you consider yourself a picture of health? Or are you a little cuddly round the edges?

Many of us are striving to get that perfect beach body as we hurtle towards the summer months.

But you’re never going to have a care free summer if your financial health isn’t in order.

What do I mean by financial health?

It’s how well equipped your finances are for both the present and the future, and covers many aspects like ‘the amount of savings you have, how much you are setting away for retirement and how much of your income you are spending on fixed or non-discretionary expenses.’ as Investopedia notes.

So how do you become financially fit?

Well I have compiled a check list of what we should strive to have in place and how to get there so you feel wholly healthy and ready to flex those financial muscles.

You have a monthly budget and you stick to it

The kale smoothie drinkers of the personal finance world know their income and outgoings like the back of their hand. They break their income down into categories, saving every month and budget for every expense they have.

How to get there

When it comes to budgeting, knowledge is power. Firstly you need to know all of your cash flow inside out, and how much you want to contribute to savings each month.

Find out how healthy your finances are and get tips on how to improve it today with our Financial Health Check Tool.

Then categorise the rest of your funds and give yourself a weekly or monthly limit for each. This could be for things like eating out or treating yourself to a new outfit.

If you need some help use the money advice service’s budget planner, where you can enter all of your expenditure and income then get personalised tips on how to make the most of your funds.

You have clear financial goals

Having financial goals in place is the perfect way to keep yourself financially focussed. Maybe you’re saving for a house, or maybe you’re saving for that car you’ve always wanted. Whatever your financial targets are, they are clear in your mind and you’re taking steps to make them a reality.

How to get there

First things first, you need to decide what your financial goals actually are. I find it best to write them down and decide on two or three. Then look at your income and work out how much you can dedicate each month to these goals.

Set up payments through direct debit just after pay day, that way you won’t miss the cash and you can sleep easy knowing that you are well on your way to reaching your goals.

You’re on track to make your goals a reality

An important part of having financial goals is ensuring you’re on track to achieve them. The financially fit among us know they are making great steps towards making their goals a reality and are confident in this knowledge.

How to get there

Monitoring your success is key; you need to know where you are and if you’re doing enough to reach the goals you’ve set out. But how? Well the simple dollar explains a simple method;

‘…the only thing that matters in terms of evaluating your own financial health is your own recent past. In other words, your focus should be on comparing your current financial state to your state a month ago or a quarter ago or a year ago. Are you in better shape now than you were then?’

This is an easy way to check you are on the right track, and can give you a little boost when you’re finding saving a tricky task. If you know you’re heading in the right direction and can see a difference from a month or two ago this will motivate you, and spur you on.

You’re saving for retirement

Saving enough for the retirement you want is an important part of being financially healthy, after all your pension will be a key source of income and will help you have a better quality of life in your later years. You’re saving regularly, and have started early to get a head start.

How to get there

Saving enough for the retirement you want is an important part of being financially healthy.

Just as you would do reps at the gym, you must save small amounts over a long period of time to really reap the rewards.

Your work place pension is key here, as you can benefit from tax relief and employer contributions giving each of your payments a boost.

Remember, the sooner you save the better, as your money will have time to grow giving you a better chance of having the funds for the future you want and deserve.

It’s important to keep in mind that the value of your investments can fall, and you may get back less than you invested.

You have an emergency fund

An emergency fund is a must. Having such a stash of cash helps you bounce back from the shock of an unexpected expense. The Money Advice Service suggests three months essential outgoings to help in such a situation, and that’s a perfect figure to have stowed away.

How to get there

Work out how much your essential outgoings are, I’m talking everything you HAVE to shell out for each month.

Then decide how much you can afford to put in to your savings and how long you want to give yourself to build this fund. Aim to have the fund up and running as soon as you can.

Your credit score is tip top, or you’re working to up it

Think of your credit score like your BMI. It tells you how healthy you are, and in this case tells creditors how financially stable and reliable you are.

The higher the score, the better and the better the score the more likely you are to be successful in getting credit.

How to get there

Firstly, you need to bite the bullet and actually find out what your score is. One of the best sites is the Money Saving Expert’s Credit Club. Simply by entering a few details you can get your monthly credit score and report for free.

If your score is a little on the low side, don’t fret there are ways you can improve your magic number.

Take a look at our blog 7 top tips to help you hike up your credit score for some pointers.

You’re adequately insured

Being properly insured prepares you financially for the worst case scenario, and can even provide for your loved ones if anything were to happen to you.

It pays to be prepared, and can give you great peace of mind.

How to get there

There are a lot of different types of cover out there, and it can be daunting. So if you need some help take a look at our blog Life cover: don’t leave it too late where we explain the types of cover and why they may be right for you.

Keeping financially fit is important, and taking steps to improve your wallets wellbeing really will mean that you benefit both in the short term and the long run.