A new decade just started! And it’s the best time to evaluate your financial health. If you haven’t done it yet, it is high time that you begin the process. The sooner, the better, as that will give you ample time to set everything in place. Given below are a few things that deserve your utmost priority in this regard.
1. Check your sources of revenue
Do you keep track of all the sources of your revenue? Do you know where your money is going? Both of these questions require definite answers. Check if your income is reliable enough. You will also have to consider adding a few more streams. This way, you won’t have to depend too much on a single source of revenue.
2. Prepare a budget
“Budget” is perhaps the scariest word you can come across. But preparing one is a must for your financial health. It lets you plan a roadmap and helps you take care of financial emergencies. The internet offers numerous tools designed to help beginners in the process. You can also join free or paid crash courses for the same.
3. Figure out how much you owe
This is perhaps the first thing that deserves attention when evaluating your financial health. Know how much you owe to others and check your credit score. The process may frighten you. But hiding from reality is never going to help you out. Knowing your debts is the first step towards repaying them. You can use the information to plan your budget to repay them at the earliest.
4. Consider the changes that took place or the ones you expect
Did any significant change take place in your life in 2019? Do you expect anything important this year? Personal changes like marriage, divorce, or adding a member to your family – everything can affect your financial strength. Consider those changes and find ways to customize your budget accordingly.
5. Prepare yourself for an emergency
Wealth creation alone is never going to strengthen your finances. It would help if you took measures to protect your investments. Insure your property, yourself, and your loved ones. The premium may appear like an unneeded expense, but ignoring this will leave you open to unpleasant surprises. Consider your lifestyle, your health, your budget, and go for a coverage plan that you can afford.
6. Stay adequately protected
Focusing too much on a low premium for insurance may do more harm than good. The rule of thumb here is to insure yourself for an amount that is ten times more than your income. For instance, if you earn $30,000 a year, your ideal insurance coverage should be about $300,000.
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