The Slow And Steady Race To A Healthy Financial Future

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When it comes to personal finance, it’s best to think and act like the tortoise, not the hare. To have a solid financial standing, you need to make sensible decisions – something we haven’t always done.

I’m guessing that if you’re in a position you would rather not be in when it comes to money, it’s probably due to poor decisions or unfortunate circumstances from your past that continue to haunt you today. Just in case you’re starting to kick yourself, don’t! We have all been there. And if you want to feel better, check out my biggest financial mistake. Hint: It was a decade-long disaster.

So, if taking control of your money and building a healthy financial future sounds a little intimidating, don’t worry, we’re going to take this step by step.

Pay Off High-Interest Debt

Paying off high-interest debt is necessary for a healthy financial future. If you happen to have high-interest credit card debt or personal/auto loans, make a plan to save a small emergency fund and then tackle the debt like a madman (or woman) with their hair on fire. Get rid of it. Fast.

Once the bad stuff is gone, you can focus on the fun stuff – building wealth. Let’s go.

Savings Rate Increases

Now that your debt is gone, you’ll want to focus on your savings rate. You probably already know that you should be saving money, but it’s often easier said than done. The reason many people fail with their savings goal is that they try to increase their savings rate by too much too quickly.  

Everyone wants a 50%+ savings rate, but if you’re starting

horses - healthy finances

Staycations are a BIG part of our healthy finances plan. We rode horses at a local ranch!

from ground zero, a better goal might be 10% or 20%. Trying to commit to saving too much too fast means you’re only one unexpected bill away from missing your target for the month.

 

And once you miss one month, it’s usually pretty easy to miss targets for the next month and the month after that, too. Instead, start small – really small, say 2% or 5%. Start with an amount you won’t really notice. Then, the next month, step it up a couple percentage points.

With each increase, when you stop noticing, increase it by another 1%. Continue to increase your savings rate little by little until you reach your savings rate goal. When you ease your way into it, you’ll be amazed at how quickly you start building wealth!

Emergency Funds

Your first savings goal needs to be an emergency fund. Remember, without one, you’re only one or two bad strokes of luck away from being in real financial trouble.

With a healthily sized emergency fund, you can offset the severity of, say, losing your job. It’s not exciting, but it’s essential for long-term financial health and stress-free livin’.

Your Biggest Purchase

Let’s talk real estate. You know I love it!

When people get a pay raise or make passive income, they either save it or figure out a million ways to spend it. Spending it is okay if you’re making a valued, well-thought-out purchase. 

We’re frugal, but we’re certainly no strangers to spending money on things we value. To prove it, read all about our not-so-frugal Disney vacation and how we made our dream home a reality.

We decided to stay in our home for now, but as our family grows, having healthy finances will give us the option to decide to upgrade. Buying a home requires due diligence. And that means speaking to financial professionals, such as the fine folks at https://altrua.ca, to get the best mortgage rate possible before signing on the dotted line. After all, this is likely the biggest purchase you will ever make. Make a wise decision and you’ll not only have a nice place to live, you’ll also have an equity-building asset that will contribute to your healthy financial future. #winning 

Other articles you might enjoy: 

Solid Investment Ideas

Mad Money Cat - healthy finances

Mad Money Cat has mad healthy finances. #momoneymonaps

After you have your emergency fund, a healthy savings rate, and a home, you’ll want to consider additional investments for your extra cash.

The key for us (and for you) is to diversify. Our preferred investments of choice are real estate and total index funds. But there are TONS of options. As with anything, and especially with investments, do your homework. 

By following these steps we have been able to steadily increase our savings rate year after year, and we have managed to take back control of our money and build wealth. If you complete the steps in order, you’re sure to have a healthy financial future. 

Remember, the tortoise always the wins the race. Be the tortoise.

Passive Income

And last, but certainly not least, let’s talk passive income. If you’re actively working for a paycheck, you know how hard it is. 

The idea of passive income is a funny one. Even though the definition is a little fluid, there certainly are more passive ways to earn money than heading into the office. Think: renting a room in your house, writing a book, or becoming an affiliate marketer. Interested? Check out these dozens of ways to make money!

By following the steps outlined above, you can take control of your money and secure a wonderful financial future for you and your family.

What were/are the steps you have taken to gain control of your money and build wealth?

2 comments… add one
  • Jason Dec 7, 2017, 8:18 pm

    Totally agree. The tortoise is truly the winner in the long-run. I do admit, however, wishing I sometimes could get in on Bitcoin or something sooner to get in and get out, but money easily gained is also money easily lost. It might take a little longer, but FI will occur sooner than later. Hopefully.

    • Mad Money Monster Dec 7, 2017, 8:27 pm

      Yeah, even I don’t totally understand the whole cryptocurrency thing yet. And if I don’t understand it, I’m not investing in it. Better safe than sorry.

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