The best way to stay financially healthy is to never lose sight of your goal. Too many get complacent with their finances and think their good financial position lasts forever. Nothing could be further from the truth. It can always be taken away from you.
The bear market of 2022 taught everyone that the government officials really don’t know what they’re doing. They under-react and overcorrect to changes. Trillions of dollars were vanished into thin air in just a span of a year. The government holds enormous power over us.
Many people were on the brink of bankruptcy because they were financially healthy at the end of 2021. Only to get the rug pulled underneath them in 2022. It happened faster than we would’ve liked, too. It was the worst year for the markets since the financial crisis of 2008.
The bear market taught me a lesson on making good financial decisions. Even though I started the year at the best financial health of my life, I still wasn’t immune to the macroeconomic factors at play. Then I had to dig deep within myself to know how to stay financially healthy.
Although I came out of the year relatively good, it still stung. My net worth actually declined for the first time ever. The year’s worth of hard work vanished into thin air like that. In the long run, I will be OK but it still hurt and taught me a lesson on how important it is to take care of my financial health.
Everything can be taken away from you in a second.
Financially Healthy: What Does it Mean?
Being financially healthy means you can buy anything you want but you can’t buy everything you want. You may actually even be financially comfortable and have no money stress influencing your day to day decisions.
It’s a rarity, especially in the United States because people are generally so bad at saving money. Even with record number of influencers starting YouTube channels and blogs telling people the importance of saving money. It just doesn’t get through to people.
In other case, the financially healthy person is completely debt free, has multiple sources of income, and their passive income pays for 100% of their lifestyle. It doesn’t happen overnight and many people took decades to reach their goals.
However, with the right steps, anyone can take their financial health to the next level. If a millionaire janitor accomplished it while living in America, anyone can do it. Money is too important of a topic to ignore. It doesn’t feel good to be poor.
When I was poor and financially unhealthy, I felt miserable. I had no choices and had to do anything and everything others were telling me to do. Especially if they were the source of my income. As soon as I increased my financial health profile, I felt better.
When I could say no to many more people, my happiness level improved as well.
How to Stay Financially Healthy: 9 Ways
Below are the 9 ways to stay financially healthy. Making intentional steps is a surefire way to boost your financial health.
1) Don’t Lose Sight of Your Goal
It’s one thing to get financially healthy but it’s another to stay there. In 2022, I got complacent with my finances and thought I had everything made. Therefore, I started spending money willy nilly. By the end of the year, my net worth was lower than what I started with.
It was a combination of high spending and the bear market that decimated many people’s portfolios throughout the year, including mine. It was a very volatile year. The complacency made me lose sight of my goal. I wanted to be financially independent and I had a great chance of reaching that goal.
However, that’s when I blew it! That was the lowest I’ve ever felt. Although I’m recovering, it still hurt. That mistake cost me six figures+ just in my late 20s. I can’t imagine how much more that would’ve turned into after decades of compounding.
Just like with your body, financial health is something you have to constantly take care of. When you start letting your foot off the pedal is when everything goes wrong.
2) Always be Learning How to Stay Financially Healthy
You don’t ever have everything figured out. You never know when once in a lifetime events happen. The coronavirus pandemic, record high inflation, and a horrible bear market could come your way. It can be taken away from you in a second.
You always have to learn how to stay financially healthy and be on your toes. The world changes dramatically in days and sometimes hours. The day you think you have everything figured out is the day bad things happen. It’s one thing to get to the top.
It’s another to stay there. Markets change sharper and faster than we would like. For the first time in a long time, it was actually better to save your money in 2022 versus invest it. Yes, you lose 8% purchasing power by saving money to inflation. However, it’s better than the 20%+ loss in the S&P 500 in 2022.
Constant education is crucial, especially when it comes to your money. There’s always something new to learn.
3) Continue Saving Money
No matter how high your income is, saving money never gets old. Saving money will ALWAYS be the bedrock of good financial decisions. Saving money is how you stay financially healthy because it’s the bedrock of any good personal finance decision.
Savers never go bankrupt. They can only go up in net worth. I forgot this crucial lesson during 2022 and I’m glad I got back to my roots in 2023. I saved more than ever and lived cheaply more than ever. There’s nothing wrong with admitting when I made a mistake and I go back to the basics.
A financially healthy person is notoriously good at saving money. Even if their friends taunt them. Even if their family members taunt them. No matter what, they are great at keeping the money they bring in because they understand you can’t do anything without money in the first place.
When you save money, you have freedom. It’s a lesson to never forget throughout your entire life.
4) Continue Looking for Ways to Make More Money
No matter how much you’re making, making more money never hurts. When you’re making $100k, you should try to hit $200k. And so on and so on. There will come a point when you feel like you make “enough” money. And that’s great!
That’s your stopping point. However, the journey to enough money takes longer than people realize. It’s taken me 6 years to get to $200k. And even then, I want to make more money to create a better life for myself. I want to buy a house at some point.
Making more money is never a bad idea because that’s how people achieve upward mobility. Making more money just feels great. It’s funny, I just wanted to make $200k my entire life. Once I got to $200k, I want to make $300k. And so on, and so on.
It’s become somewhat of a game for me, and I like it. Making more money is just more fun.
5) Avoid Debt to Remain Financially Healthy
Debt is the enemy. Even low interest debt. Mortgage debt for real estate investing or primary home residence is one thing. However, consumer and personal debt is another. I took on $15k worth of 0% debt in 2022. And it was the worst decision I ever made.
When the debt neared maturity, I started feeling bad. How am I going to come up with the money to pay the balloon payment? Will I even have enough money to do so? It’s not even about the dollar amount that matters. It’s about that you owe someone else money.
That just feels bad. It makes you feel like your life isn’t yours. Someone else has a claim to your paycheck. It doesn’t feel good when you don’t own 100% of your paycheck. Someone else owns it. You’re not even working for your employer at that point.
You’re working for the bank. Which is a bad position to be in if you want to be financially healthy.
6) Diversify Income Sources
One income source is too close to zero income sources. When you diversify your income sources, you no longer care if there’s a bad macroeconomic event that uproots your entire life. Maybe there’s a layoff or your boss just decides he no longer likes you.
To be financially healthy, you should diversify your income sources so you are less dependent on someone else. Dependence is the worst thing in the world because then, someone else controls you. You are at the complete mercy of the person you are dependent on.
It may not happen this year or the next, but diversifying your income sources to multiple significant amounts gives you peace of mind. I’m always diversifying my income sources because I never know when one income source just ends in the blink of an eye.
Companies have multiple product lines and multiple customers for a reason. They don’t want to be dependent on a single one.
7) Keep Buying Assets
One asset a day keeps the 9-5 away. If you want to be financially healthy, you HAVE to buy assets. It’s an even bonus if the assets pay you dividends or monthly income. Assets are what creates financial freedom, nothing else.
When you buy assets every paycheck, you feel like you are leveling up. The money you contribute will now make you richer than before. You are moving up in life. That’s why buying assets is so fun. You’re not working for your money, your money is working for you.
Assets give you financial health while liabilities take it away. It’s an even better bonus when you buy income producing assets like real estate or dividend paying stocks. The quarterly or monthly payment just feels great. It’s something you look forward to.
It’s a good boost to your active income from a 9-5. I look forward to the end of the month because it’s when my $1.5k passive income checks come in.
8) Make Quality Purchases
Staying financially healthy does NOT mean hoarding as much cash as you possibly can. It means spending money on things that add a lot of value to your life. There’s no point in saving $5 by getting fast food if it means you have to spend $5,000 in medical bills down the road.
I personally am going a vegan diet in 2023 and it’s been amazing so far. My stomach digests food much more easily and I feel lighter throughout the day, weeks, and months. Quality purchases are well worth the money. Spending $5 to get $500 worth of value is well worth it.
Companies devise so many ways to make quality products at an affordable price. Companies are working for you. They are your employees, you should take advantage of them as much as you can. I personally look to buy quality products now instead of cheap products.
It’s how I compete against someone else who thinks price is the most important factor in making a purchase. It’s not. Value is the most important.
9) Never Give Up
The road to good financial health takes a long time. It takes people at least a decade before they make it. To be financially healthy, you can’t give up. Even if you want to. In my fourth year of the journey is when I questioned everything. Why was I saving so much money? For what?
Am I getting good things in return for sacrificing THIS much? Luckily, my mind was numb from a terrible job I was in. Therefore, I couldn’t really put my displeasure in action because my life was so bad at that point. I survived that line of thinking and am now stronger than ever.
There will be years when you feel like you’re sacrificing too much for what you get in return. That’s not actually the case. Even if it feels like that. People’s biggest regrets revolve around money and how they didn’t do a good job taking care of money.
You won’t have that regret if you never give up. If you just give it that one more year of effort that changes your and your family’s life forever. It’s worth it.
Being Financially Healthy Puts You Ahead
It’s more important than ever to be financially healthy. The bear market of 2022 showed just how incompetent our government leaders are. We can’t depend on the government to provide us with price stability.
We always have to be one step ahead of them and be prepared for how they’ll ruin everything.
The Fed has a great record to under-react and over-correct. Getting ahead will require many sacrifices. There are many things I would much rather do with my money than spend it on the S&P 500. I want to see the world and buy a house.
However, I’m delaying gratification as much as possible. One day, I know I’ll say it was all worth it. One day, my assets will pay for all my expenses and then some. Even my entertainment budget. I know one day, my assets will pay for a house, too.
It’s been a really hard journey so far. However, I am determined to remain financially healthy because I can’t pursue any interesting projects I want to pursue until I have money. Additionally, I felt so insecure with myself when I wasn’t financially healthy.
Getting ahead is not the easiest thing in the world but it’s well worth it. The journey is well worth it. Even though I’m not there yet, I can’t imagine how I would feel if I didn’t even have anything to fall back on. Having $400k by my late 20s feels very nice.
I can only grow that asset to larger amounts.
How to Stay Financially Healthy: 9 Ways Shortlist
- Don’t lose sight of your goal
- Always be learning how to stay financially healthy
- Continue saving money
- Continue looking for ways to make more money
- Avoid debt to remain financially healthy
- Diversify income sources
- Keep buying assets
- Make quality purchases
- Never give up
