When most people think of health care, they tend to think of clinical and medical care. Yet this only accounts for 20% of a person’s health and well-being. The other 80% is determined by the individual’s socioeconomic factors (40%), health behaviors (30%) and physical environment (10%).
It may seem difficult, or even impossible, to have a real impact on your socioeconomic status; but with a few changes and a little bit of planning, you can make important steps in building a healthier financial future. The ProMedica Financial Opportunity Center offers a few tips on how to get started with a budget.
Set Financial Goals
The first step to improving your finances is to set financial goals. Set short-term goals that you can achieve in less than a year, set intermediate goals that will take a year to achieve, and set long-term goals that will take two or more years to achieve.
When goal setting, make sure that they are SMART!
Specific: State exactly what is to be done.
Measurable: Include how the goal can be measured.
Attainable: Determine the steps to reach the goal.
Realistic: Do not set goals for something unrealistic.
Time-bound: State when the goal will be met.
Determine a Budget Method
Decide how you are going to organize and prioritize your income and expenses. While there are many ways to do this, there are a few proven methods that others have found to work well. These include but are not limited to:
- Zero-based budget: This type of budget accounts for all expenses, savings and debt payments so that they exactly equal your total monthly income, leaving zero dollars unaccounted for.
- Envelope budget system: This budget system works by designating a separate envelope for each expense that you want to budget for (such as groceries, eating out, gas, etc.). When you get paid, place enough cash in each envelope to cover that expense. For example, if you expect to spend $400 on gas, place $400 cash in your gas envelope.
- 50/30/20 budget rule: This rule spreads your money across three buckets: needs, wants and savings/debt. Set 50% of your money for essential living, reserve 30% of your funds for expenses that are nice to have and use the last 20% of your income to start or build your savings or pay off debt. You can also change the percentages to fit your needs.
These are just a few budget methods that you might consider using. The key is to find the method that works best for you. It’s OK to try one and if it doesn’t work, try another until you find the right one.
Create a Budget
A written, monthly budget helps you plan how much you will spend and save each month. To make an effective budget, you will need to work with detailed and accurate information about your income and spending habits. Follow these steps to create a monthly budget:
- Gather your financial records. Records may include bills, receipts, pay stubs, etc.
- Calculate your income. Determine how much total money you can expect each month.
- Create a list of monthly expenses. Write down all the expenses that you have throughout the month. This should include fixed bills, such as a car payment or mortgage, and variable expenses such as groceries and credit card bills.
- Adjust your expenses. If you’re in a situation where expenses are higher than income, look for places you can reduce your spending, like eating out less or canceling your gym membership.
- Create a monthly budget and stick to the plan. Once you have set up a basic budget, customize it according to your financial situation and goals, and stick to the plan.
Get started on your journey to better financial health and well-being today!
ProMedica Financial Opportunity Center (FOC) offers free financial coaching in a group and one-on-one setting to people of all zip codes and incomes. All FOC coaches are also trained in the Accenture career success curriculum to assist clients in achieving their employment goals. Sign up for an in-person or virtual financial coaching session. Contact ProMedica Ebeid Center for more information at 567-585-0059 or firstname.lastname@example.org.