How to stay financially healthy

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How good habits can help you achieve financial wellbeing

Forming healthy financial habits takes time and effort. In fact, research by behavioral scientists (European Journal of Social Psychology) suggests that it takes more than 2 months - 66 days to be exact - for a new habit to form and before a behavior becomes automatic.

1. Live within your means

Keep track of your monthly income and expenses and find ways to free up funds to cover your expenses if you need to. Set a budget for how you will spend the money you earn.

2. Spend wisely

Get into the habit of dividing up your expenses into needs, wants and savings or debts. If it’s appropriate, aim to spend 50% of your income after tax on needs, 30% on wants and 20% on savings and debts each month.

3. Free up funds

If you're not saving as much as you'd like, or find it hard to cover your costs each month, look for ways to reduce your outgoings. Also, think about how you might increase your household income.

4. Build emergency savings

Aim to build up enough savings to cover at least 3 months of essential expenses, in case of emergency.

5. Avoid excessive borrowing and manage your existing debt

Aim to borrow only what you can reasonably afford to pay back. Take steps to manage debt that you have already, for example, cut back to free up capital, approaching your lender for support, or consolidating debts.

6. Save for the future

Start saving for your retirement as early as you can. The younger you start, the bigger your retirement fund. Remember that compound interest quickly mounts up, which is the interest earned on previously earned interest.

7. Protect what matters

If you can, take out insurance to protect you from risk that you would not be able to cover yourself, like losing your household’s main income through illness or injury.

8. Beware of scams and fraud

Online financial fraud is on the rise, so take steps to avoid becoming a victim of cybercrime. Remember the saying if something sounds too good to be true then it probably is.

Source: hsbc

Alfredo Gaxiola has worked on numerous IRS problem cases and has successfully settled with the IRS to release liens on houses, bank accounts and wages and, if needed, setting a payment installment plan that is not burdensome for the client. He has conducted appeals before the U.S. Tax Court and obtained favorable resolutions in reducing the tax debt of his clients. Mr. Gaxiola served as Treasurer of Camara de Empresarios Latinos, one of the largest and strongest Hispanic organizations in the city of Houston. He has conducted financial and accounting seminars for the Houston Small Business Development Corporation, as well.

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