Are your finances in line with your financial goals? Are you making right decisions to achieve financial goals. If not, then this article will help you in achieving the same. The article lists 6 step guide to make you financially healthy.

So let’s begin.

1. Determine current financial situation

Evaluate your income, fixed and variable expenses, savings and investment.

Prepare a list of your assets and debts. Also include the approximate value of each and the amount of your debts.

2. Establish financial goals

Identify your feelings and opinions about money and the reasons for feeling or thinking that way. For example, if you like money and would like to be rich, first identify the reasons to see if there are other underlying reasons. If, on the other hand, you hate rich people, reflect on the experiences or reasons that make you think so.

Similarly, determine the source of these feelings or emotions. That is, what is the real reason or motive for achieving the proposed financial goals. For example, you want a house in a luxurious location because you think it’s important to maintain the status or you want a sports car to try to impress a someone. Take some time to reflect on the intentions of each of your financial goals and determine if it is worth the effort they require to achieve them.

Read: How to become rich, millionaire way

Prioritize your financial goals according to their importance and your current financial and personal situation. For example, maybe you would love to buy the new iPhone X, but daughter has just entered high school and will go to college in 3 years. So maybe it’s better to focus on securing her education first, before giving her such a big luxury.

Make sure your financial goals are in line with your current financial situation. Remember that the farther they are from your reality, the harder it will be to reach them and the more dissatisfaction you will have along the way.

Remember that your financial goals are specific and personal. So don’t let yourself be influenced by others, that is, if you don’t need or want the new iPhone X, don’t let others influence you in making your financial decisions.

3. Identify action alternatives

Based on your current financial situation, make a list of areas of opportunities for your current financial actions and decisions. Some examples are:

• I am saving only 10% of my salary
• I’m spending $800 a month on coffees
• I buy new clothes every week
• I have a car used only on weekends
• I’m a irregular debt payer and $3,000 a month is paid in credit card interest
• I have no medical and life insurance policy

Review areas of opportunity and propose actions you could take to improve them.

For example, if you think you can’t reduce current expenses, then you must increase income to reach your financial goals, brainstorm everything you could do to achieve it, for example:

• Ask for a raise
• Change job
• Working overtime as a consultant or freelancer
• Invest money in your saving account and unproductive assets
• Start a business
• Be a commission agent for a product
• Create a blog

4. Evaluate the alternatives

Review which of these actions are best suited to your life and your financial goals. Consider that making a decision, even the decision not to decide, has a tied opportunity cost, which can be not only economic, but also time consuming.

Also consider the risk of each of the alternatives. Although uncertainty is normal in every decision that is made, it is important that you are aware of the possible losses in case the result is not as expected. It also tries to analyse and minimise this risk as much as possible. It’s a good idea to ask an expert or someone you trust for advice to help you make the best possible decision.

5. Create and implement financial plan

Once you have identified the financial objectives and what you are going to do to achieve them, it is time to go into detail in the planning and execution.

If you decide that you need to increase your investments to receive periodic returns, it’s time to determine factors such as:

• How much will you invest?
• How often will the deposits be made?
• Where will that money come from? Spending cuts or increase in income?
• In what institution will I invest those resources?
• In which instrument?
• What is the expected return?
• At what level of risk?
• How long will that money be invested?

Once you have your plan well defined, it is time for action!

6. Periodically review financial plan

It’s important that you periodically review your plan to measure financial situation and make sure your financial goals are maintained. Also, to make any adjustments you feel are necessary to achieve your goals or reach them more quickly.

The minimum recommended frequency for a complete review of your finances is every year. You can take advantage of the dates of the tax returns to do it or do it at the end or start each year. However, it is advisable to carry out more frequent small revisions to adapt to new personal, social and financial condition.