Steps to Build Good Financial Health

Today many people are looking for simple ways to build good financial health for themselves and their families.  In this blog post we discuss some practical and simple steps to help you to get to your goal of obtaining good financial health.

Have Realistic Financial Plans

“Wealth won quickly dwindles away, but gathered little by little, it grows” Proverbs 13:11. The first step to financial success and wealth building is to have a realistic set of plans that are achievable. Good financial decision making is key to long term success since savings and wealth are usually built gradually over time. Each time a good financial decision is made, it contributes to your financial health long term, and vice-versa. It is important to make prudent financial choices in order to help ensure that your plan stays on track. If married, it is important that both spouses discuss your financial plans together and hold each other accountable to staying on track. Sadly in our culture, fighting over finances is one of the biggest reasons for divorce, but that should not be so. We should entrust or financial plans to the Lord, and work together toward the goal as a team. Our financial goals should be a uniting force in our marriage and not a source of quarreling and disagreement.

One of the goals of a financial plan may be to plan for retirement, or early retirement. Staying focused and sticking to your goals is the key to having a successful financial plan. This helps build the virtues of temperance and fortitude as you (and your spouse) work hard toward the goal. Like the athlete preparing for a marathon, success might entail changes in behavior in order to continue toward the goal and to avoid getting side tracked along the way.

Whatever the financial goal might be, having a realistic plan and sticking to that plan are important to your success. Seek God’s blessing on your plans and seek to do His Will in your financial life. He watches over and cares for us as a good Father, “Cast all your worries upon him because he cares for you” 1 Peter 5:7.

Live Within Your Means

The second rule of finance is to spend less than you make. If you make $60,000 per year and live as tough you only make $55,000, you will be able to use the $5,000 to pay off your debt or invest. Many Americans tend to live from paycheck to paycheck, their wages are already spent by the time they get paid each pay period. Some people make $75,000 or $100,000 per year or more and spend everything that they have earned with little or nothing to show for it. The latest gadgets, fancy meals, nights out on the town are not bad things in and of themselves on occasion, but there has to be some financial restraint. It is not necessary to try to compete with your friends or co-workers by having the latest car, it is important to spend wisely and not wastefully. As followers of Christ, we are to be in the world and not of the world. We are called to develop restraint of our human passions and grow closer to God through the exercise of virtue. Living below our means is an excellent way to grow in humility, temperance, fortitude and generosity. It is important that as we learn to start saving money, that we have the right motives. Be a generous giver and stay focused as you work toward building your financial future.

Say No to Credit Card Debt

Credit card debt can be a big problem for many people as the use of credit cards makes it so easy to spend money without realizing the consequences until it is too late. Once you fall into credit card debt you tend to get further and further behind because you now have to pay high interest rates on top of the charges. This can lead into a vicious cycle that can be difficult to get out of. The high monthly credit card payments each month take money out of your pocket that could be used for savings or investing. In addition to paying for your past purchases, some cards charge 20% interest or more. If you are currently in debt, it is very important to make the decision to get out of debt so that you can start working to build a stronger financial future.

By making purchases on credit, you are in actually borrowing from the future to pay for your current purchases. It runs the opposite of investing and saving for the future since instead of gaining on your investment you are paying interest on debt. Living in credit card debt is not healthy financially or spiritually as it can cause a good deal of stress and even depression in your life.

Good Credit is Key to Financial Health

Life’s largest purchases require credit, for example the purchase of a home or a new car. Having good credit will help you to secure much lower interest rates and better terms. The higher your credit score is, the less risky you appear to lenders. Good credit is invaluable to having a healthy financial life. With good credit you can qualify for the best credit cards and even lower insurance rates as some insurance companies now use your credit score to evaluate risk.

Review Your Spending Habits

Making wise spending choices is an important part of smart money management. Thinking twice about spending money is a good rule of thumb to avoid impulsive spending decisions that you may regret later. Ask yourself if you really need that item, and is it really necessary right now? If so, then make a wise purchase decision to get your item at the best price. Comparison shopping and watching for sales on the bigger items is a smart way to stretch your dollars, plus taking the extra time to make the purchase gives you more time to think about the decision. A dollar saved is a dollar earned. Putting the brakes on impulsive spending also helps us to build virtue. By resisting the urge to act on our impulse to spend in the moment we can strengthen the virtues of  self control and the patience.

Start an Emergency Fund

Ideally, it is good to have an emergency fund that can provide for a loss of three to six months expenses, including housing payments. That seems like a lot, and it is, but it is an important to keep a reserve fund to help protect against unexpected situations, such as a job loss, medical emergency etc…. It can seem like a lot of money, but the good news is that you can start saving a little each month towards your goal. This can be incorporated into your monthly budget, that way it is easier to be consistent.

One way to set money aside is to open an investment account and setup automatically scheduled purchases to invest toward your goal. Setting up a scheduled investment is a great help to ensure that we stay on track on setting money aside toward our goal. InvestingCatholic offers both Individual and Joint Accounts that are great options for those who want to build up an Emergency Fund. We offer a variety of Catholic values, goals-based investment options for you to choose from. Plus, we don’t require minimums and there are no transaction fees. Clients can add as little or as much to their investment account, as often as they like. We simply charge an affordable Investment Management fee each month. Check us out at www.investingcatholic.com to learn more about what we offer.

Setting Up A Savings Plan

Once you determine the appropriate amount needed for your emergency fund, the next step is to decide how much you can afford to save each month and how long it will take to meet your goal. Once you make these decisions, you are on your way!

Getting To Your Goal Sooner

If you want to get to your goal faster, there are many ways to get some extra cash. Again, this will depend a lot on your motivation, work-life balance requirements, and the consent of your spouse. Some ways might be to take on some overtime hours at work (if this is available), taking on a temporary part-time job, have a garage sale, take up a hobby and sell your products online, the possibilities are endless if you put your mind to it…

About InvestingCatholic

InvestingCatholic is an SEC Registered Investment Adviser. Our clients can open and manage their investment accounts online 24/7 through our custodian, Folio Investments Inc. We are a fee-only fiduciary adviser with a focus on providing our clients with globally diversified, investment model portfolios screened for Catholic values. Our firm is run by Catholic financial advisers who are dedicated to their faith and are here to serve Catholics and anyone else who shares our moral beliefs, especially the belief in the protection of life from conception until natural death. All investments we provide to clients are screened for Catholic Values per the U.S. Bishops Socially Responsible Investment Guidelines.

We provide discretionary investment management to our clients through risk-based model portfolio “Folio” allocations which we provide through our custodian.  Our focus is to serve anyone who wishes to invest in Catholic values investments, without minimum investment amount requirements. InvestingCatholic provides our clients with investment choices including our low-cost Indexed ETF Portfolios as well as our Ave Maria Mutual Fund Portfolios. All investments are carefully screened for Catholic Values and built using asset allocation in order to maximize potential return for each level of risk.

InvestingCatholic serves individuals, families, religious organizations and small businesses. Please visit us at www.investingcatholic.com and learn more about InvestingCatholic and how we can serve your investment needs!