Financial Health: Importance of Self Assessment

When it comes to financial health it is important to look at ourselves as objectively as possible. We have come up with some assessment tool which could help you evaluate your current state of financial health.

Stage 1. Denial.

You often use phrases like, “At least I’m doing better than…” or “The economy is bad for everyone.” You are most likely in this stage.
You probably suspect that your finances are not doing well, but you justify your ups and downs too easily.

Stage 2. Recognition of the problem.

Is your income disappearing almost without you noticing it? If so, your debts are probably getting out of control. It is time to organize your expenses and know where your money is going or you will have more serious problems.

Stage 3. Getting organized.

Are you taking actions such as cutting expenses or looking for new cash inflows? Then you are in a crucial stage; it requires a lot of control and work, but don’t worry, your effort will be rewarded with the improvement of your financial health.

Stage 4. Stability.

Have you identified what your needs and wants are? You are already in a good stage of your personal finances and have applied several financial habits such as:

Settling your debts with a culture of payment.
Setting medium and long-term financial goals.

Stage 5. Prosperity and planning.

You use phrases to refer to your economy such as: “Good thing I have a little money saved…”, “This month I receive extra money…” Congratulations, you are in the best stage; you are in control of your personal finances and you have clear objectives, so you apply several financial habits.

Which of the 5 stages are you in?

Identifying it will allow you to know what actions to take to improve your finances. Remember: knowing and applying financial habits is a key to having control over your money.

Living better, therefore, is not about being stingy, nor to stop enjoying your money, but to have a lot of discipline with your budget, with the payment of your commitments and with the planning of your financial goals.