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4 Steps to Financial Health

by Guest Poster

Americans these days are increasingly concerned about their health — quitting smoking, exercising more and eating more locally grown fruits and vegetables. If only people were as conscientious about their personal finances.

If you’re one of those people whose pocketbook feels worn out, whose retirement savings seem flabby, it’s time to give yourself a financial check-up.

Here are some ways to ensure that you’re on the path to financial well-being:

Work out your mortgage.

Hopefully, you got a mortgage you could afford. But one way to potentially make it even more affordable is to consider refinancing.

It couldn’t be a better time. Interest rates on mortgages have been hovering around a bargain-basement 3.6%. Even if you were already lucky enough to have a mortgage with 4.5% interest, refinancing could potentially save you a few hundred dollars a month in payments.

Financial health checkupGo meet with a mortgage officer to find out more. There will likely be a few thousand in closing costs, so you’ll have to ask yourself whether you’ll stay in your house long enough for the savings to recoup the costs. Still, it could be a great way to have a leaner, meaner mortgage that works for you.

Homeowners who closed on their home before June 2009 and whose home value has fallen — making them unqualified for traditional financing — may even be able to take advantage of the federal government’s HARP program.

Save regularly.

Just like we promise ourselves we’re going to go the gym but don’t, plans to save money also tend to fall by the wayside. There’s always that temptation to spend or buy something else right now, rather than doing without to have a longer and happier financial future.

The best way to solve the savings problem is to automate and turn it into a routine. The money you’re socking away should be out of sight and out of mind.

If your employer has a 401(k) retirement plan, find out the maximum contribution that is matched, and make it. Maybe even put in more. You’ll automatically get smaller paychecks, and will adjust accordingly.

If you can, set up individual retirement accounts (IRAs) and even savings accounts that automatically deduct money from your checking account, too, and get into the routine of always subtracting out the withdrawals for the month when you do your accounting.

Slim down your spending.

Calorie counting can be one of the most effective ways of losing weight because it forces you to have a firm grasp of what you’re eating each day. You all of a sudden realize that you can have a glass of wine or dessert with dinner, but you can’t have both.

The same goes for spending: Maybe you could buy new shoes or buy take-out lunch every day or work, but not both. Try keeping a log of what you’re spending.

There are event aggregation websites out there including Mint.com or Manilla.com that round up data from your financial accounts in one place and analyze your spending habits. The websites even have smartphone apps so that you can check your financial habits on the go.

Check your insurance policies.

Review your coverage occasionally and make sure it’s up-to-date and that you’re not paying for things that you don’t need. Perhaps you forgot to tell your car insurer that your commute is shorter than it used to be, or you don’t need as large of a life insurance policy because your kids are grown up.

Check the deductibles and coverage levels and then ask your agent or a customer service representative why they are necessary. Ask if there are special discounts for being a member of a particular association or for certain behaviors such as a clean driving record or a teenager with good grades in school.

And don’t stick with the same insurer because the agent has good manners. It’s always worth it to “get a second opinion” sometimes. Every few years, shop around and ask for quotes. Don’t forget to ask about potentially bundling a number of different types of policies together.

Taking these steps will help ensure that you are not just healthy — but also wealthy and potentially wise — in your later years.

Kelly Spors writes for RothIRA.com, a leading retirement and Roth IRA resource. A former Wall Street Journal reporter, Kelly has written about small business and personal finance for The New York Times, Entrepreneur magazine, Yahoo! and SmallBizTrends.com.

Image courtesy of vichie81/FreeDigitalPhotos.net

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{ 6 comments… read them below or add one }

femmefrugality August 23, 2012 at 8:56 AM

I check out my insurance every few years…luckily the company I’m with has never let me down and I’ve never had to switch for lower rates!
femmefrugality recently posted..How to Pick a Major Without Wasting MoneyMy Profile

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Shawanda Greene August 23, 2012 at 2:15 PM

I recently checked with esurance to see if I could get a cheaper auto insurance policy than the one I have now. According to the results, I can get one for twenty bucks less per month, which is a shocker because I only pay about $50 per month now.
Shawanda Greene recently posted..How to Dodge the High Price and Inconvenience of Your Doctor’s OfficeMy Profile

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Daisy @ Add Vodka August 23, 2012 at 9:46 AM

I’d love to get in the habit of putting money away every time I do something good. I’m rewarding myself for the future that way. And saving regularly.
Daisy @ Add Vodka recently posted..The Life Insurance Movement: I’m IndifferentMy Profile

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Shawanda Greene August 23, 2012 at 2:20 PM

I used to reward myself every few months, after hitting a lofty goal. A while back, I told myself I’d treat myself to a new pair of Vibram FiveFingers if I lost x number of pounds. I’m still rocking the ones I bought over a year ago, so I guess I have my work cut out for me. :)
Shawanda Greene recently posted..How to Dodge the High Price and Inconvenience of Your Doctor’s OfficeMy Profile

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Holly@ClubThrifty August 23, 2012 at 10:39 AM

Good tips, lady! I totally agree with all of them!
Holly@ClubThrifty recently posted..Start Saving Money Today with These 4 Simple TipsMy Profile

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Shawanda Greene August 23, 2012 at 2:22 PM

Thanks! However, your comment made me realize I inadvertently, and shamefully, took credit for a post I didn’t write. Kelly Spors from RothIRA.com authored this gem. The by-line is fixed now.
Shawanda Greene recently posted..How to Dodge the High Price and Inconvenience of Your Doctor’s OfficeMy Profile

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