The term “financial health” refers to how you manage your money and plan for your future. All your financial decisions and activities have an effect on your financial health. It’s always important to consider what we should be doing—in general—to help improve our financial health and habits.
Below are 5 broad personal finance goals to help you get on track to achieving your financial goals.
Calculate your net worth and personal budget
Rather than ignoring your finances and leaving them to chance, a bit of number crunching can help you evaluate your current financial health and determine how to reach your short- and long-term financial goals.
It is important to calculate your net worth—the difference between what you own and what you owe. To calculate, start by making a list of what you own—your assets—and what you owe—your debt. Then, subtract the two to arrive at your net worth.
Your net worth represents where you are financially at that moment, and it is normal for the figure to fluctuate over time. Calculating your net worth one time can be helpful, but the real value comes from making this calculation on a regular basis (it’s recommended to update it once a year). By doing this, you’ll be able to evaluate and track your progress over time. You can see your net worth grow and look for key areas where you may need to improve.
Manage lifestyle inflation
Yes, lifestyle inflation. The more you make, the more you spend. And a lot of times we don’t even realize we’re doing it. But—if you make more money and spend the same amount you did before you got a raise, that’s more money you can save for retirement to build an emergency fund. Don’t get me wrong, lifestyle inflation can and will increase over time as we age and start having families or need a bigger home or a new wardrobe for that promotion you may have gotten. This is natural lifestyle inflation.
Is it a need or a want?
This is always an internal battle I have with myself. Do I really need those new pair of high heels, or is a want because even though I have two other pairs just like them, I think I just have to have them?
Think of things based on survival mode. Do you need those extra groceries in your shopping cart? Most likely, yes. Do you need a car to get from point A to point B in the area you live in or is there public transportation you can take that can save you money? Do you need the monthly subscriptions to Netflix, Hulu, HBO and so forth or can you live on one—or none?
Once you have calculated your net worth, look at the amount of money you are comfortable with saving, then start saving. Don’t wait 10 years before retirement to start stashing money away. You will not be prepared. Also, look into making savings automatic—set up an account in which a designated amount from every paycheck goes. If your employer offers a 401(k)plan, use it—and if your employer matches a percentage, that’s free money!
Make an emergency fund
I know what you’re thinking—you’re already saving money so why would you need to also have an emergency fund? These are two different things. A 401(k), for example, is an account you are putting money into but don’t plan to access until you retire. A savings account for an emergency fund is something you can access in a pinch when your car breaks down or you have to visit the ER. An emergency fund can help in instances that are unforeseen; you will be thankful to have it when the time comes.
Lastly, no matter what, start where you are. Are you older than anticipated to start saving money? Have you never calculated your net worth before? It’s OK. All that matters is that you start somewhere—and start now.
ASCP Career Toolkits
Want to run your own business or expand what you’ve got? The skin care industry is fiercely competitive, and skin professionals need every tool they can find to attain and maintain success. ASCP’s goal is to empower our members to thrive in their dream career.
No More Guessing
Figure start-up and ongoing expenses with our exclusive Business Start-Up Calculator. When you open a business, there are a lot of expenses to consider. We’ve taken the guesswork out of what you need, with costs specific to the skin care industry.
Reach Your Potential
Wondering what the potential for opening your own business could be? Get started with our Business Revenue Calculator: Determining what services to provide, how much to charge, and the volume of business you need to meet your revenue goals can be a daunting task. We’ve done the research for you.
Navigate your Way to Your Dream Job
Nobody gets their dream job without a little help. These tools are designed to do just that.
Employee Compensation Calculator: Hourly? Salary? Commission? Retail? Understanding compensation is critical to career success. The Employee Compensation Calculator will help you figure it all out.
Not an ASCP member? Join today!