Feature Articles: Financial Information & Tips
How to improve financial health
Michael Ravenscraft, MS, CPA, former Financial Education Specialist, University of Missouri Extension
Many consider the new year as a chance for renewal, giving us a fresh outlook. Often we are conscious of our physical health and changes we can make physically. In much the same way, we can use this time to focus more on our financial health to determine where our family money is going and why.
It was not that long ago when we faced one of the deepest recessions in recent history and, as a result, many of us have a greater appreciation for the value of a dollar. We can also benefit from the realization that we can do without some things we thought we needed as we better distinguish between our needs and wants.
Here are some steps to make powerful positive changes in our financial lives by looking at what we’re doing right — and what we can improve.
- Gather information, and then write it down! When people make a decision to improve their physical health, one of the first things they do is get on the scale. Why? Because they need to know what they currently weigh. Regarding our finances, we also need to know where we stand in our financial lives.
- Determine what you own. Make a list of assets, like bank accounts and investments, along with other items you own.
- Write down what you owe and to whom. This is the starting point, where you are today.
- Keep track of what you make, what you spend and where you spend it. More detail is better. This is your current budget. We all have one; it’s just informal. An accurate record of what we’re doing is a very powerful tool, so keep track!
Now you’re armed with the information to make decisions. Your current budget is like your calorie count. Take a hard look and decide if everything in your spending habits belongs in your long-term plan.
Are you taking on extra debt each month? Is enough going into savings? Do you have a rainy day fund? Do you have a current plan for retirement? Where will the money come from to increase contributions to savings and/or retirement?
It’s much easier to make these long-term decisions when you’re armed with information about what your resources are and how you’re using them. These spending decisions, even if it’s just a few dollars a day, can have an enormous impact on your long-term wealth and financial security.
Nobody thinks counting calories is fun or exciting. Yet after weeks and months of keeping track, you love the way you look and feel. The same concept applies to your money. At first it’s tough to give up those extras in your budget, but then you see your savings going up and it feels pretty good. So start keeping track, building wealth, and in the long run, you’ll love the way you feel!
Last update: Monday, January 23, 2017