Typically, an adult should have a routine comprehensive medical check-up once a year, to be sure everything is okay, and for early detection of medical conditions that can become deadly when not detected early. You also need a routine financial health check-up, to see if you are heading in the direction of your financial goals, or are heading nowhere financially. I am fascinated by the parallels between health and finance. For example, I have come to discover that you cannot become rich by cutting costs. You simply become cheap. Healthwise, you also cannot lose weight sustainably by dieting (cutting calories) only. Your body will go into fat storage mode and you cannot go much further. You have to speed up your metabolism (rate of burning calories). That means you burn more calories than you take in.
Now back to financial health. Many viruses attack our finances, but the most common strain is financial illiteracy caused by a lack of financial education. This is based on the level of violation of laws of finances. Money leaves you and it does not come back. The cash flow pattern of money in your life is one-way traffic – money comes in through salary and leaves through expense with nothing left each month. You work for many years with nothing to show.
You have to sit down and sort out your finances. Where is your money going? Can you account for what you earned in the past month? past year? five years? ten years? Do you keep records? Do you have a budget?
You need to know what you are doing now before you can see which areas you can make changes in. Folks that have worked for some years and experienced salary increases know by now that nothing has changed much despite the increases. They still end up broke each month. In the next post, I will share a quick questionnaire you can use to guide you in this process.
