How to become financially healthy

What does it mean to be financially healthy or fit?

Financial health isn't just about making ends meet, it's about achieving financial freedom. Imagine feeling calm and confident knowing you can handle unexpected bills, pursue your dreams, and retire comfortably. That's what financial fitness brings.

Here are the key questions to ask yourself to determine your financial health:

1. Spending versus earning:

• Are you living paycheck to paycheck?
  Aim to spend less than you earn. Create a budget to track your income and expenses, and see where you can cut back.

2. Bill payments:

• Do late fees haunt you?
  Paying bills on time saves money and stress. Set up automatic payments or calendar reminders to avoid penalties such as interest charges.

3. Savings savvy:

• Ready for fun without debt?
  Aim to save 10-20% of your income each month to have money available to do the fun things in life – this is called liquid savings. It’s also important to build an emergency fund (3-6 months' living expenses) for unexpected events. Unlike liquid savings, an emergency fund should not be used for leisure or dipped into unnecessarily.

4. Credit score check:

• Is your credit score holding you back?
  A good score unlocks lower interest rates on loans and credit cards. Check your score regularly and work to improve it.

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5. Debt management:

• Feeling overwhelmed by debt?
  Aim for a debt-to-income ratio below 35%. Focus on paying off high-interest debts first and avoid unnecessary borrowing.

6. Insurance shield:

• Are you protected against life's surprises?
  Get the right insurance coverage (medical, life, disability, property) to safeguard your finances.

7. Long-term vision:

• Ready for a stress-free future?
  Start saving for retirement and build a tax-free savings account. The earlier you start, the better.

Where to from here?

Answer all these questions based on your current financial situation to see whether you are struggling, coping or thriving and what you can do to address the situation. It's important to remember that you're not alone and there’s always something you can do.

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_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}