Financial health is a critical part of everyone’s well-being. From keeping a household budget to monitoring investments, there are many good financial habits that most people are aware of and follow. However, other smart financial practices are often missed.
We asked the members of Forbes Finance Council which financial health habits are frequently overlooked but should be adopted. Their best answers are below.
1. Track Your Cash Flow And Net Worth
While everyone focuses on budgets and penny-pinching, you need to redirect your focus on income. Set up a personal cash flow sheet as well as a net worth statement. You will immediately know whether you are progressing or regressing month over month and why. Now ask yourself how you can increase your stream(s) of income and how you could potentially add more. It’s easier to save when there’s more! – Felix Hartmann, Hartmann Capital
2. Monitor Your Credit
Checking your credit score at least monthly will help you with your future financial goals. If you’re looking to purchase a car or home or get a loan, your credit score greatly impacts the interest rate and terms. And there are so many credit-monitoring apps that let you know your score on the day, monitor your debt and help you build your score. They can even help you prevent identity theft. – Dana Schuman, The Pioneer Woman Mercantile
3. Consider All Investment Options
Most people don’t think twice about the investment options that the custodian of their retirement account makes available to them. But most custodians limit the selection of assets to a mix of stocks, bonds and mutual funds. To truly diversify your retirement, consider a self-directed IRA and the many alternative assets that it can offer, such as real estate, precious metals and cryptocurrency. – Andy Klein, BitIRA
4. Protect Your Identity
You should get a credit check and history report each year to keep track of your credit score and the status of your various debt instruments. Also, protecting your identity and the identity of your children is very important to your current and future financial health. There are many reputable third-party companies that can help you efficiently manage both of these often-overlooked habits. – Amir Eyal, Mylestone Plans LLC
5. Pay With Cash
The financial system has largely been gamified by credit card providers and banks. The former make it easy to spend by removing the visceral component of taking money out of a billfold—a tactic that is also deployed by casinos. The latter make their profits from facilitating payments and charging interest. As such they encourage consumers to “pay the minimum.” Form a habit of using cash. – Christian Kameir, Sustany Capital
6. Keep An Eye On Recurring Expenses
Subscription services might be racking up more of a bill than you imagine. Each subscription may only be $10 to $40 a month, but if you have a few of them, it begins to add up quickly. Most of these subscriptions are things that consumers likely don’t use often enough or may have forgotten they subscribe to altogether. – Jared Weitz, United Capital Source Inc.
7. Do Your Due Diligence When Hiring A Financial Advisor
Very often we trust someone just because they hold a finance qualification or a financial advisor license. Remember to look beyond the surface. Check that the qualification or license is valid. Learn the industry jargon, keep yourself educated and trust yourself. While others may advise, the decision to execute and the responsibility is ultimately yours. – Frans Wiwanto, Flywire
8. Keep Track Of The Little Things
Everyone knows how to keep track of their groceries, utilities and other monthly expenses. However, some daily habits you don’t think about could be hurting your bottom line—your daily coffee, eating out too often, those extra snacks you buy and then never eat. All those small things begin to add up to big numbers. Watch your daily purchases and extras to see what they are really costing you. – Greg Herlean, Horizon Trust
9. Diversify With Both Short- And Long-Term Investments
The interest that you accumulate in the bank is pretty much $0. I am a firm believer that you should have cash on hand, but you can do this in the form of liquid assets. There are plenty of options to invest your money in specific assets that allow you the freedom to withdraw if needed. Diversify as much as possible in both short-term and long-term investments. – Jonathan Moisan, Advertise Purple
10. Know Your Fees
Once a year, take a look at your retirement account holdings to see how much you are paying in fees. If you have a financial advisor, are they charging you 1% a year to manage your money? Are there upfront commissions or are you being charged for your mutual funds? What is the expense ratio for your mutual funds or ETFs? High fees can eat into your returns, so it’s always good to know your fees. – Daniel Blue, Quest Education
11. Save For Taxes Throughout The Year
If you are not receiving W2 wages—or if you are but aren’t withholding enough—you may be unpleasantly surprised when you owe taxes. Self-employed individuals are supposed to pay quarterly taxes during the tax year. Whether you need to do that or not, set aside some extra funds for taxes during the year, then reward yourself if you don’t need to use them in April! – Jackie Meyer, Meyer Tax, The Concierge CPA Coach
12. Look Into Insurance
Households frequently overlook insurance needs. You work hard to provide for your lifestyle, family, etc. Why not insure it? If an emergency occurs—be it an accident, health issue or death—your legacy is always secure. Insurance policy benefits provide funds for living expenses, mortgages and outstanding debt. Insurance is an important financial health habit that everyone should adopt. – Geanette Rodriguez-Ojeda, Prestige Finance LLC
13. Develop A Personalized Plan
Nothing is more powerful than having a customized financial plan, which often makes consulting a certified financial planner a worthwhile investment. A personalized plan allows you to act upon your goals, be they short-term (paying for school) or long-term (retirement). This allows you to confidently live in the moment while having a clear image of when you will reach your next financial milestone. – Sonya Thadhani Mughal, Bailard, Inc.
14. Expand Your Network
Most people save money to buy things instead of investing in themselves by going to a conference, purchasing books, expanding their network to know the right people or meeting with their idols. – Wendy Nguyen, TNC CPAs
Get The Best Financial Tips
Straight to your inbox
Subscribe to our mailing list and get interesting stuff and updates to your email inbox.
Thank you for subscribing.