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Why Is Financial Health Check-up Important at Regular Intervals?

February 01, 2024 • 551 views

In this modern era, prices of commodities and services are increasing faster than your income. Thus, having a clear knowledge of your financial situation is vital. Assessing your finances will help you make an effective plan to address your woes. To know your financial health, analyse your total income, expenses, assets, savings, and liabilities.

It is important to have a clear understanding of your financial situation. Individuals generally make mistakes by assuming their financial situation without considering all of their expenses and liabilities. It is difficult to be certain of your financial health. In this blog post, you will learn everything you need to know about conducting a financial health check-up and how to go about doing it.

What is Financial Health?

The term financial health represents your current financial condition and how you manage your funds. It describes the state of your personal monetary situation, including your savings, fixed expenses and long-term investments.

Having healthy finances will give you stability in the long run, whereas bad finances can get you in a horrible situation like a debt trap. Today’s fast-paced world demands everyone to manage their resources smartly. Thus, you should regularly check your financial health.

Reasons Why Financial Health Check-Ups Are Important

Doing a financial health check may sound very basic. However, it is necessary to understand a lot about your finances. You can read the below points to know about its importance:

  • You can have an in-depth analysis of your earnings and expenditures.
  • It gives you an idea to save money while optimising your credit usage.
  • A proper health check lets you recognise and reduce unnecessary expenses.
  • You get a clear plan for making the right investment to achieve your target.
  • It provides the knowledge to plan your mutual funds and stock investments.
  • Lastly, it ensures you have the correct pathway to live a stress-free and stable life.

Also Read - How to Set and Achieve Short-Term Financial Goals: A Step-by-Step Guide

How to Check Your Financial Health?

A personal finance health check is vital for you to have a financially burden-free and stable life. There are various ways you can check your finances by yourself. You can refer to the below points to learn about these steps:

1. Check Your Creditworthiness

One of the easiest and simplest steps to have an idea about your finances is to check your credit score. Maintaining a good score enables you to get loans easily at low interest rates. This will help you save money as it lowers the interest you pay against your loan. You can check your CIBIL score right now and do your online financial health check by following the below steps:

  • Step 1: Find ‘Free CIBIL Score’ in the right-top corner and click on it. 
  • Step 2: Fill up your application by choosing your gender and employment type.
  • Step 3: Enter personal details like name, email ID, phone number, etc. Then, fill in your PAN number.  
  • Step 4: Agree with the policies and proceed to submit your application.
  • Step 5: A report will be sent to you on your mail ID soon. You can check your CIBIL score by downloading the report.

This will help you in knowing your creditworthiness and provide clarity over your finances.

2. Debt Check

To evaluate your present net worth, you must add all your debts and investments. You can easily check your debt by going through bank statements, credit reports and trading account statements. Doing this regularly will help you in planning your expenses, and remove the unnecessary expenses.

3. Budget the Surplus

Calculate your estimated income for upcoming years to plan your future finances. This may sound complicated to some; however, it isn’t. You just need to think about the minimum and maximum money you can make over a period and plan accordingly.

In simple words, if you can achieve your maximum estimated income, you will have more flexibility in your financial plans. Whereas, if you can only achieve your minimum estimated income, you will have to reduce your expenses.

4. Plan Your Emergency Fund

No matter what, people should always have a plan to meet their emergency fund requirements. Therefore, financial health checks are vital to plan and meet the urgent need for funds. Medical treatments are the biggest example when people with bad finances take Personal Loan at high interest rates for bill payments.

This can create a financial burden and put you in a stressful situation. Thus, you should check your financial health regularly to plan and save funds for uncertain emergencies.

5. Know Your Investment Options

Regular financial health checks empower you to make better investments. Knowing your financial condition is essential, as it allows you to find the best investment options to meet your long-term plans. Making the right investments can bring a positive change to anyone’s life.

6. Save For Retirement

You cannot work for whole-life, thus it is important to plan your life after retirement. Having healthy finances enables people to have a stable and burden-free life after retirement.

You can follow the above financial health checklist to create a path to achieving financial stability in life.

Also Read - Why Addressing Pending Loans Should Be a Priority for Financial Health?

To Conclude

In conclusion, this blog will give you an idea about the importance of regularly checking financial health. It is never too late to start, so if you are reading this, check your finances right now. Planning and reducing unnecessary expenditures in your daily life will ultimately help you in the long run.

Take your first step in achieving good financial health by checking your CIBIL for free at Poonawalla Fincorp.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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