Your Financial Health Checkup

Is this the year you finally make plans to get financially healthy?

The Financial Health Network, a non-profit which does consulting and research for the financial service industry, completed a recent survey aimed at assessing people’s financial health by asking about debt, savings, bills and wages, among other issues.

Over 5,400 respondents indicated the following challenges:

  • 7 in 10 Americans struggle with at least one aspect of financial stability, such as paying bills or saving money.
  • About 1 in 5 middle-class workers are spending more than they earn.
  • About 20% of women say they are stressed by money, compared with 13% of men.
  • Only about 3 in 10 Americans are considered financially healthy.

Despite the fact that we have a growing economy, and a low unemployment rate, many Americans are struggling financially in some way. It’s obvious that people living at the poverty level are struggling, but almost 20% of people earning between $30,000 and $100,000 said they spend more than they earn.

One of the consultants said “It’s not just about income. You can be low income and be financially healthy.” Which we totally agree with—it’s not about how much money you make, it’s all about how you manage what you make.

What are your financials goal for 2020? If you don’t know where you want to end up financially, you can do anything and declare success. Do you ever take a trip without first plugging the destination into your GPS?

In a similar way, your Financial goals for 2020 need to begin with the end in mind! What do you want to do differently with your finances in 2020?

Ask yourself some questions:

  • How much liquid money do you have for daily use?
  • How much do you need in short term savings for accomplishing goals later this year or in the next few years?
  • How much in mid-term savings do you have for objectives in 5-10 years?
  • What are your long term financial goals?
  • What rate of return to you expect for these savings categories?
  • How do your financial goals stack up against your life goals?

All of this analysis will help you develop a picture of your short, mid and long term financial plan.

For the first 10-15 years we were married we didn’t really have a financial plan, we were just kind of “flying by the seat of our pants.” When we were exposed to the financial principles in the Bible, we got serious and created a short term plan to get out of debt. Once we had our debt under control, we really got serious about creating the mid-term and long-term plan. Twenty years later, we are still using the basics from that original plan.

The plan has been reviewed, updated and adjusted each year as life happened. We became empty nesters, both changed jobs several times, bought and sold houses in different locations, retired and qualified for Social Security

Every year as life changed, we tweaked the plan based on the changes in the previous year, or the changes we anticipated in the new year.

What are the basics for you to consider in developing your 2020 plan?

  • Will your earnings increase or decrease in this new year?
  • What can you do to increase your earnings?
  • How much money do you need to save for retirement?
  • What are your current average expenses each month?
  • Do you anticipate that your current monthly expenses will increase or decrease?

If everything that we just talked about sounds good, but you don’t have any idea of where to start, download the Money Map from the Compass Catholic website. The Money Map has seven destinations and each destination has several steps. Check off everything you have completed, then concentrate on completing each destination in order.

This is an organized, easy to understand way to develop a plan you can build upon for years to come.

Another suggestion we have for a yearly checkup is to calculate your net worth on a regular basis. As you start out, do it quarterly, then twice a year.

To do the net worth calculation, write down all your assets and an estimated value for each. Total the values. Then write down all your debts (credit cards, bank loans, mortgage loans, HELOCS, car loans, school loans, loans from Uncle Fred, etc.) and total the value. Subtract the debts from the assets to determine your net worth.

Hopefully it’s a positive number! And as you track it over a period of time you can see if your net worth is increasing or decreasing. It’s a benchmark to see your assets grow and your debts decrease and a way to stay on track with your financial goals.

Set objectives for each quarter of the year and review plan versus actual at the end of each quarter. If you are on track, have a small celebration. If things are not going well and you haven’t met your quarterly objective, what can you do to get back on track?

If you are married, develop this financial plan with your spouse, even if they have no interest in money or planning, or don’t understand how to even begin to put something like this together.

Both of you will benefit from good planning, not only from the standpoint eliminating the one key item —MONEY— that causes about half of the divorces in our world.

This financial plan will help you to find your way, not just to having a sound budget for this year, but to assist you in developing a sound financial plan that can help you obtain True Financial Freedom in the years to come.

If you create your plan keeping the Scriptures as the basis for each step that you take, you will ultimately achieve success.

The Lord tells us in Psalm 32:8, “I will teach you the way you should go; I will instruct you and advise you.”

Developing a plan and wrapping that plan in prayer will help you become a good steward of all the blessings God has showered upon you.

Checkout the Manage Your Money God’s way podcast for more.

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