New year, new personal finances. In today’s environment, personal finance articles are extremely important. In the past, this wasn’t something that was taught in schools so we were forced to learn on our own, usually through trial and error. Today, Americans are facing a lot of debt, therefore I am very excited about this article. It includes 7 steps that I believe in and use everyday to improve my financial health.

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Step 1 – Create A Budget

  • Whenever I discuss the topic of budgeting with someone, I always ask, “What’s the definition of insanity?” The answer is, doing the same thing but expecting a different result so if you keep having the same spending habits, how do you expect to obtain financial health? So you must create a budget and stick to it!

Step 2 – Learn How to Give

  • In Dave Ramsey’s book More than Enough, (which is one of the first personal finance books I read), he discusses the “Open Hand Theory”. He states how you can’t expect to receive anything in your hand if it always tightly closed, therefore, you must open your hand to give in order to receive. When I first gave my life to Christ, one of the first things I began to do was give. I didn’t make enough money to pay my tithes and my rent but I decided to trust God and paid my tithes (10% of my income) anyway. This decision DRASTICALLY changed my life. I went from living paycheck to paycheck to having more than enough. Some individuals may say, I have nothing to give but just look around your house, organize your closet or clean your car, I am pretty sure there is something you could give away or donate. Also, one of the most precious resources you can give is your time. Volunteer to visit the elderly, hold babies who have lost their parents or volunteer at your local soup kitchen. There are so many ways to give even if you don’t have the money to do so.

Step 3 – Increase Your Level of Education

  • This step is pretty much self explanatory. In today’s environment, there are so many highly educated individuals. Therefore, if you want to successfully compete for the best jobs, then you should continue to increase your level of education. If you have no desire to attend college, then you should continue to read books, articles, reputable magazines, etc. This allows you to have the skills and knowledge necessary to secure a higher salary.

Step 4 – Save Money!

  • You should always strive to save money as often as possible. The general rule is to save at least 10% of your income but if you can save more, then you definitely should. Reasons to save include paying for college, emergencies, retirement, your dreams, the purchase of a home, car or just to have the extra income. Also, when you have money saved, you are less likely to depend on credit cards and loans. Therefore, saving money is all around beneficial.

Step 5 – Invest in Stocks, Bonds, Real Estate or Whatever…Just Invest!

  • Have you ever heard of the saying, “Scared money don’t make money”? Well…yeah it’s true. You can’t expect to become financially healthy by playing it ‘extremely safe’. Now before you go buying up every stock and investment in sight, be sure to do your proper research. There are two books that I would recommend to get you started on your road as an investor. I believe that these books not only give you advice but they also change your mindset – Rich Dad Poor Dad by Robert T. Kiyosaki and The Intelligent Investor by Benjamin Graham . Also, if you have a 401K offered at work, please take full advantage to receive the full company match. Repeat After me – Leave no money on the table!

 Step 6 – Entrepreneurship 

  •  One of the ways the wealthy obtain their wealth is through entrepreneurship. The definition of entrepreneurship is when a person organizes and manages any enterprise, especially business, usually with considerable initiative and risk and yes there is risk involved but the rewards could be endless. Many individuals are too intimidated to start their own businesses but with proper research, planning and execution, it is very possible to do. If you are working a full-time job and too afraid to leave your job to begin the business, consider starting the business on the side. 

 Step 7 – Good Credit – Have it and Maintain It

  • There are so many benefits of having good credit – lower insurance rates, interest rates, security deposits, etc. You can’t go wrong with having good credit. Factors that effect your credit score are your credit history, making your payments on time, types of credit, new credit and amount owed on each line of debt. When you properly manage these factors, you will begin to see your credit score increase. There is so much more information to give on credit and I don’t want to make this article TOO long so please subscribe to (box on right hand side of screen) for a future article strictly on credit!

These are the 7 steps I follow to increase my financial health but I could have left some steps out. What are some of the steps you take to become financially healthy?