Today we will talk about one crucial topic that every person who trades on IronTrade should be aware of. It is financial health.

 

Financial health is a term that describes the state of your personal finances. 4 criteria are usually used to define whether you are healthy in terms of finances or not: your savings, feeling management, ability to plan and forecast your expenses, and finally, ability to achieve your financial aims.

 

If you want to be financially independent all your life, it is vital to promote solid financial health. Now we will talk about evaluating your financial health status and how you can improve it.

 

Suppose you want to have a good and healthy relationship with finances. In that case, you should know that it takes maintenance and consistency. It is absolutely the same as when we try to eat healthy food and do exercises to keep our body strong. It takes time to shape your finances. On the other hand, if you do not work on your finances, the situation might get worse. It reminds me of money management in trading. When you do good risk management, your trades go well; if not, your trades fail.

 

Some people think that financial health is about debts and your ability to pay them off. In reality, it is not. If you have debts, it is ok. More important is how you manage your flows of income and forecast expenses. Many unplanned purchases may ruin your balance, and you will not have a strong return on investments. The absence of debt does not mean a healthy financial state, nor does it indicate that a person can plan its money flow. There are various components that matter, not only one.

 

How to manage your financial health?

 

There is no one answer because every person has different circumstances. Try to evaluate your start position at first and ask yourself some questions:

 

– Can you support yourself in case of an emergency situation? Do you have some available funds for such a case?
– Do you have health insurance?
– Is your net worth positive? Just calculate the total amount of your assets (cash, property, financial instruments in possession) and subtract your debts.
– Do you have enough money to live?
– Can you afford to buy something new or the things you want?
– Do you have debts? Is your interest rate less than 50%?
– Do you save some money for retirement?

 

If your answer is yes to most of these questions, then it might indicate that your financial health is good and you manage your money more or less wisely. If not, then it is high time to make some changes.

 

 

Essential steps to improve your financial health

 

All of us are born equal. No one was good at budgeting at the beginning. It is the same skill as reading or writing. You can acquire it in some time. Just follow these steps:

 

1. Start budgeting

 

If you constantly don’t have money and do not know where all of them are gone, you can start to log every purchase. You can do it as you prefer: write it down in a planner, Google sheets, or in a special app. Then split your expenses into categories and count every one of them. No matter how you do it, but you will get an idea about your spending habits.

 

Indeed it may sound tedious. But it will help you realize where it all goes and help you cut unnecessary expenses. After a while, you may stop doing that (however, we advise you not to). You will know exactly how much money you need for every category and feel more control over it.

 

2. Pay off your debt

 

When you owe money, it is always a pressure. It is essential to pay off your debts and stop feeling miserable. It is up to you how you do it: with many small amounts or one big. Just don’t forget to allocate enough funds for daily expenses and savings. Otherwise, you may get into another debt soon.

 

3. Start to save money

 

It is never too late to put some amount of money aside regularly. Professionals said it is essential to keep money enough for 3-6 months of living. If you do not have these much, then you can start small. The main idea here is consistency. You may save any amounts you are comfortable with. Just do it consistently: every week or month.

 

4. Happy end

 

To sum it up, we can say that financial health is an important topic. However, it is only about evaluating your current position and your ability to plan and forecast your expenses and savings. Do not just let it go. IronTrade has always been in your corner and always insisted on our traders’ financial literacy. Anyone can improve their financial state. Try to start it today with the tips above!