In a recent Sunday service, Minister Jo Ann warned us to be ready for the storm. This readiness included being ready in the natural and the spiritual areas of our lives. When our storms come, will we be prepared to stand against whatever hits us? This readiness takes us beyond the day-to-day struggles and issues. It gets down to preparation and making sure our storehouses are full in all of the areas of our lives, including our finances. Saying that it is important to be in a solid place financially is an understatement.
For example, what would happen if you or your spouse lost your job? The event in itself would be stressful. How much more stressful would it be if you were not prepared for the unexpected. But how great would it be if you were prepared financially? What if you had an emergency fund and savings account in place? What if you were out of debt and did not have that hanging over your head? It would certainly lessen the blow. Not that we would be putting our trust in those things because God is a provider. But because God gave us the foresight to be prepared for the storm, and we were ready.
So what is financial health? It is simply the state of your financial situation. There are different dimensions to your financial health like savings, emergency fund, retirement fund, etc. The foundation to good financial health is learning to not spend all that you make. It is learning to budget (and keep your budget) and have the discipline to put money away for emergencies, which will happen, and your retirement.
Having overall balance in your finances is the key to financial health. There are many areas to juggle. Some experts recommend that about half of your income go toward fixed expenses like rent and utilities, 20 percent for financial goals like savings, and 30 percent for day-to-day expenses like groceries and gas. Hopefully as time progresses, these guidelines will be able to be adhered to.
Each of our financial situations are different. A single person with no children would have a different financial objective than parents with three children to put through higher education. And an empty nester would have different financial objectives than both of the former. You have to develop goals that work for your situation and be prepared when the unexpected happens.
There are certain objectives that are true for all. Having a budget that shows you where your income is going is the roadmap to success. Oftentimes, we may find that we are spending more money on discretionary items (eating out, beauty treatments, coffee, etc.) than we may have realized. It can help us divert that money toward long-term goals like savings, emergency funds, and retirement investments.
In terms of a financial-inventory checkup:
· Do you have a budget and are you keeping it? Know where your money is going!
· Are you out of debt or striving to be there? Cash is king. Save for what you want to buy.
· Do you know your credit score? This can be a good gauge of your financial health.
· Do you have a retirement saving? Some experts recommend investing 15% of your salary.
· Do you have an emergency fund? Some experts recommend six to twelve months of your monthly budget. Having this in place can keep you out of debt when emergencies happen.
· What is your net worth? As you see this number move toward the positive and grow, it will help you know that you are heading toward better financial health.
Strive for good financial health. It will help you be better prepared for the unexpected.
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