Are you financially sound? If you have come to this post, you may be asking, what it means to be financially sound and how you can set out to reach your financial goals.
This post covers the following:
- What does it mean to be financially sound?
- How to achieve being financially sound
- 10 Hacks to Become Financially Sound
What does it mean to be financially sound?
In order to be financially sound, one must have more in excess than in liabilities. Also synonymous with being financially healthy, a financially sound person makes excellent financial decisions and is able to manage money well in terms of savings, investing, and spending.
Are you financially sound?
If you are feeling financially “unsound”, this post will help you enhance your financial skills with money hacks to help you become financially sound and make good financial decisions. Keep reading to learn the best hacks to become financially sound.
15 Hacks to be financially sound
#1 Create a Financial Plan
As said by Ben Franklin himself, “If you fail to plan, you plan to fail.” As these words ring true for many aspects of life, they also hold true for finances.
It is imperative to create a financial plan to stay or start being more financially sound.
Start by setting money goals. Create a plan to help you pay off debt and set aside money for an emergency.
If this all sounds overwhelming, try this budget binder to help you stay on track with your finances.
#2 Invest Early
If you invest early, you have more time to watch your money grow. You can take advantage of compound interest.
If you are new to investing, give Acorns a try.
It makes it easy to get started and at first, you are only investing a small amount of money – your spare change, so you don’t have to worry about losing too much.
Yet, as you go on and get the hang of it, you can invest more.
#3 Save for an Emergency
Emergencies happen and it is best to be prepared. If you wait until you are in a less than fortunate situation, you could end up paying on a credit card and racking up debt.
Yet, if you set aside money for life’s little mishaps, you will be covered when things go wrong.
I recommend setting aside six to nine months’ worth of bills to cover job loss. However, if you are able to set aside more, this will give you a cushion while you search for a new job or paying for a financial surprise.
If you are looking for a good, online bank that offers a higher interest rate than most brick and mortar banks, check out this review I wrote on CIT Bank.
#4 Read up on Finance
Did you know, the average CEO reads at least 50 books per year? If you want to continue to grow in your financial knowledge, grab some personal finance books from Amazon or you local library.
If you don’t know where to start you can check out my favorite personal finance books here.
Not to mention, knowledge is the key to growing and this holds true in personal finance.
#5 Live Below Your Means
Learning to live below your means is a skill that will guide you toward becoming financially sound.
If you are spending less than you earn, you are putting yourself in a position to save and invest your extra money. Therefore, you will build wealth and prepare for the future.
As a rule of thumb, try to save 20% of your earnings. You can learn to cut costs by living frugally and save more. If you need some tips on how to live frugally check out these posts:
- 75 Easy Frugal Living Tips
- 46 Frugal Hacks to Stop Being Broke
- 10 Frugal Tips for Beginners
- 10 Frugal Tasks I can do Today
- 10 Frugal Tips with the Biggest Impact
#6 Make Sure You Have Insurance
Most don’t think about insurance, but one surprise hospital trip can put you in debt for years to come. If you want to be financially sound, it is best to buy insurance for your family.
You can check out some insurance policies here
Part of being financially sound is making sure you and your family are covered.
#7 Control Impulse Spending
If you are constantly making impulse buys, it can quickly add up. It is best to learn financial discipline and save up for large purchases. You can become a better saver and start putting money away. Once you have reached your financial goals, you can then treat yourself. Yet, if you are constantly over-spending, your chances of becoming financially sound are low.
Pin me for later:
#8 Avoid Debt at All Costs
If you are in debt, it is time to create a plan to get out of debt. Learning to use the debt snowball method can help you make progress on paying down debt.
If you are not in debt, congratulations. Over 77% of Americans have some type of debt, according to a recent study.
If you are planning for your future, have an emergency fund, and insurance you are in a good place financially.
#9 Make Savings Automatic
When I was working (I am a stay-at-home mom now.) I would have money sent to my 403b before I even saw my paycheck. It was an easy way for me to invest without thinking about it. Of course, this money was tax-free so it did not make a huge difference in my take-home pay.
Yet, if you do not have this option, you can set it up a transfer with your bank and have money sent directly to a Roth IRA each month. This money is post-tax, but you will not have to pay taxes on it when you withdrawal your money. I personally like Fidelity. It is easy to use and you can invest your Roth right from their platform. You can set it up with a financial adviser, but you can also choose to do it yourself and save in fees.
#10 Pay bills on time
Try making a list of each bill you pay monthly and annually. Then schedule the “payment date” at the beginning or middle of the month. Call around and see if you can change the “payment due date” so that most of your bills are due at the same time. This will ease the burden of remembering to pay a random bill in the middle of the month.
For tracking, check out this budget bundle in my printable shop!
It also helps to set up automatic payments, when applicable. I like to use a credit card to pay certain bills and then just make one payment to this card each month. I pay it off, and I also earn points for my payments. It is an easy way to help keep track of your bills.
#11 Save Money on Food
One of the easiest ways to save money and cut back is to meal plan. Using meal planning will cut your grocery bill and help you stop ordering out at pricey restaurants or take-out because you know you have food on hand and are ready to cook. Make sure to budget in some meals you actually enjoy so you are not tempted to eat out.
#12 Review Your Budget Often
It is best to do a financial check-up at least once a year. Many take a look at their budgets in January. Yet, it is also a good idea to check your spending, savings, and debt-payoff at least once per month.
Review the following:
- Debt Payment
- Financial Goals
- Will and Trust
Trust & Will – Take The Quiz
#13 Use Cash
Paying for items with cash can keep your budget in check. Think of the last time you went to the grocery store and paid with a credit card. Chances are, you probably spent more than you intended.
Studies show people spend more when using a credit card than when paying with cash.
If you set a grocery budget and only bring cash, you are forced to stick to your list so you will have enough money to pay.
You will not be tempted to throw extra items in the cart and you be more apt to stick to your budget.
Using cash will help you be more financially sound.
#14 Prioritize Savings
Make savings a priority in your financial goals. You can pick whatever budget works best for you whether it be traditional, 80/20, or 30/30/30/10. However, each budget has a percentage dedicated to saving money. In turn, you will have more money to invest and live the life you want.
#15 Increase Income
Increasing your income will help you become financially sound and put you in a good financial place. You can do this by finding a higher-paying position, negotiating a raise, or finding a side hustle. If you are looking for ways to make extra money, you can check out these resources:
75 Side Hustle
25 Ways to Make Money Fast
20 Ways to Make Money From Your Hobbies
Financially Sound Final Thoughts…
Becoming financially sound means making good financial decisions and eliminating debt. If you are financially healthy, you know how to manage your money. Yet, if you are lacking in the financial department, use the financial sound tips above to get you to where you need to be. Becoming financially sound is a way of life.
3 Smart Ways to pay Down Debt
50 Abundance Affirmations to Change Your Money Mindset