Healthy Finances

Where to Start?

A starting point for someone with a negative balance sheet is spending on only the necessities and not covering ALL the luxuries. The luxuries will include eating out ($40), vacations ($50), latest fashion accessories ($30), out-sourced anniversaries ($100), Christmas and birthday parties ($100) and watching recent movies in the theatre ($50). There are always alternatives of homemade parties ($30), dinners (using your own groceries), and hiring DVDs ($10). All these small savings add up to huge savings account balance and ultimately build to healthy finances.

Deal with debt first

The positive additional savings of more than $100 every month can be put to good use of reducing debt. The incentive that you will have these extra payments to your debt as extra surplus when you reach the “debt-free” state will push you to reduce even more on your luxuries. Remember the rule of thumb: Pay out the debt with the highest interest rate first. This is almost always a credit card debt. Then follow with the second highest rate until you finish all your debts. I’ll never emphasise this enough. Paying off your debts should always be reflected in your budget.

You must never save when you have a debt that accumulates at a higher rate than your savings. This means, one can’t justify saving at an account that gives 5% per annum return when his/ her credit card debt accumulates at 17% per annum. This just doesn’t make sense. Rather, you pay the debt with the entire amount that remains at the end of the month and fast track its payment.

Lead a Frugal Lifestyle

Why do we waste so much of the resources because we have access? It sometimes sounds so shallow to define one’s success by materialism. People more often want to be seen as being powerful by overspending and over indulging. There are small circles of showing off competitions between friends, social club members or colleagues. Keeping up with the Joneses is unhealthy and the more people have is the more they want. Most people, who demonstrate wealth by driving around in tens of flashy cars, living in unreasonably massive property, and go around showing off their buying power, are actually less wealthy than they want everyone to believe. It is the sickness of having an inferiority complex rather than a financial problem.

Basics of a Frugal Lifestyle

1. Try recycling what you would otherwise throw away. That way you also save the environment. Re-use plastic bottles, gift wrapping paper, etc.
2. Wait for what you want but don’t need to be on sale. Believe me, everything get to be offered at a discount at some point. If you don’t need something, it can wait.
3. Don’t base giving and receiving on the price. Do your own cards, gifts, etc. Creativity can help ou achieve healthy finances. You really can. Create some fun ways to spend with your family rather than a holiday you don’t afford. I strongly believe that a holiday should be paid for in CASH and not on a credit card. Climb a mountain and have a picnic and see if that wont be fun.
4. Prepare your own healthy meals instead of spending on junk which is bad for your health. If you cannot afford the gym, why not walk or run with your dog. Keep on cutting on the expenses you don’t need. You will be surprised at how much a dollar can stretch wider than you can imagine. And by all means go for a holiday that deserved and saved for.

Budgeting for Healthy Finances

Most people are never able to stick to their budget. It is most of the times the only hope you have to hold on to your home, rescue your family from hunger and cold, etc. Even when you are operating on a positive balance sheet, a clear budget will help you build your wealth in a more focused way.

"Fear less, hope more, eat less, chew more, whine less, breathe more, talk less, say more, hate less, love more, and good things will be yours."

Swedish Proverb