How To Build Your Financial Well Being

Thinking about money can be stressful. Planning for your money and tracking your expenses can be cumbersome. However, it is a necessity like your nutrition.

In this article, we seek to understand the importance of financial well-being and how you can achieve it drawing our lessons from nutrition. Just as it is essential to take care of your body and health it is important to take care of your financial health.

Balanced Diet and Diversification

Balanced diet is a foundational principle of nutrition. Your body cannot live on one type of food. It will be malnutrition. The same goes for your finances. You cannot live on just one income, you will be financially handicapped.

Just as there are different types of foods namely carbohydrates, proteins, and vitamins, and each serves its purpose, your finances need to be thought about in that sense too. There are things to do to build your financial muscles, there are financial habits you need to adapt to repair your financial injuries, and there are finances you need to ensure the smooth day-to-day running of your life.

To have a balanced financial diet you should diversify. You can look at diversifying in two ways:

Income Diversification

Income diversification is where you increase your sources of income. There are many ways to increase one's sources of income. To start with you can get a second job, if you can. You can trade your skills as a freelancer. You can start a side hustle or you can invest in investments that give you passive income such as dividend-paying stocks.

Read Also: Why You Should Diversify Your Income

Portfolio Diversification

To start with, you can only be able to create a portfolio after you have increased your income to be able to save. Once you save, do not put all your money in one basket. Diversification is a golden rule in investing. You can save some money with a Sacco, some in the stock market, some invested in the chama. Whatever style you choose, the most important thing is to diversify.

Regular Intake and Continuous Learning

You cannot have one balanced diet meal and never eat again. You need to keep nourishing yourself consistently. When it comes to your financial health you cannot read one article and never read anything else on personal finances and investing. You need a stable diet of healthy finance content to keep refreshing your knowledge.

Here are a few ideas on how you can nourish your money matters diet

Blogs

Find blogs that write about money matters and investing and keep up with the content they post. A blog such as Money254 is a gem full of financial articles that will get you thinking about your money the right way.

Books

Some individuals have spent copious amounts of time learning about the different aspects of money matters and then they have compiled their findings in a book. It is wise to spend a weekend or two reading up all that knowledge.

Read Also: 9 Financial Topics You Need an Understanding Of 

Social Media

Social media is not just for selfies and trending dances. You can transform your life financially if you spend time in the right corners of the social media universe. Curate your feed to empower you with the content it serves you.

Friends

They say show me five of your friends and I’ll tell you how much you earn. Whether this saying is factual or not, the key thing is, what conversations do you have with your friends? How do you challenge each other? Having financially attentive friends will make you attentive too.

Portion Control and Financial Discipline

Too much of something is poisonous. As much as food is a requirement for your body and health, ingesting too much can harm you. That is why portion control is advisable. Similarly, spending without breaks will adversely affect your financial well-being. There is a need to have portion control.

Just as portion control requires discipline and setting boundaries even for yourself so does financial health too.

Budgeting

Budgeting is portion control for your paycheck. Think about it like this. If you went to a restaurant and they brought food, you might think, this food is a bit much but once you start eating, you get through the whole plate. You might have thought, maybe I can eat half and have the rest to go. But that is not usually what happens. However, if before you were served you asked for an extra plate and halved your food, and asked the waiter to pack it for you to go, it would not be as hard to control yourself. 

That is what budgeting does to your income. Divide up your money before it lands in your account. You can even automate the different budget allocations. This way you will be very efficient with the way you spend your money.

Read Also: How to Budget and Save A Lot of Money as an Employee

Track Your Expenses

Lately, I have been working to lose some weight. The first step towards that was to track what I was eating, how much, and at what time. Then with this information, I would effect my strategy and so far it is working. 

Similarly, when working on your financial health you need to track how much money comes in and how you spend each shilling. Without knowing the leaking holes you cannot fix the roof. 

Track your expenses and know where you spend your money it is not possible to introduce portioning by cutting down on expenses that are not necessary.

Hydration and Emergency Funds

Interestingly, you can live longer without food than you can without water. This goes to show how important hydration is. Hydration is like your emergency funds. These are the funds you draw whenever you are financially thirsty. When you build an emergency fund it is like saving water for the days of drought. 

There are two types of savings that you need to have. The normal savings that can be used to invest. And the emergency savings. Savings in the emergency kitty are not accessed unless it is truly an emergency. You need to cultivate discipline so that everything does not become an emergency.

Crucial to note is that funds in the emergency basket should be liquid so that you can access them as soon as there is an emergency. You do not want to be dying of thirst and you cannot access the water you have saved up.

Specialised Diets and Advanced Financial Knowledge

Some individuals require specialized diets due to specific health conditions or goals. Athletes, for example, might need unique diets to support their training and performance.

As your financial knowledge grows, you might delve into more specialized areas like advanced investment strategies, tax planning, or estate planning. Just as a specialized diet caters to specific needs, advanced financial knowledge can cater to your specific financial goals.

Work with a Financial Planner 

When your nutrition requires special attention you go to a nutritionist. Similarly, when you need special attention to your finances you can take on the services of a financial planner. A financial planner, being an expert in matters of money, knows more than you do and they can assess a financial situation better than you can. Therefore, it is a good idea to talk to one.

Read Also: Should I Get a Financial Advisor in My 20s and 30s?

Taking a Personal Finance Course

On the other hand, you can opt to take a personal finance course that will teach you the money management knowledge and skills you need. Taking a personal finance course will only be effective if you are committed enough to apply the lessons by yourself.

Long-Term Planning and Nutritional Health

Long-term health is a result of consistent healthy eating habits and lifestyle choices over time. Similarly, building wealth and achieving financial goals require long-term planning, consistent saving, and wise investment decisions made over time.

Play the long game

Just like your health, your finances too are a long game. Do not be tempted by get-rich-quick schemes. Committing to building a stable consistent financial lifeline is the surest way to financial well-being.

Practice delayed gratification

To secure your future there are sacrifices you will need to make today. For instance, you will have to live below your means to save and invest. Once you save and invest significantly you will enjoy the fruits of your sacrifices.

Live below your means

If you spend more energy than you ingest, you will become emaciated and might starve. Similarly, if you spend more than you make consistently you will be digging your financial grave. Live below your means and invest the surplus, you will thank yourself later.

Take Away

There are parallels between human nutrition and money management. It is important to have a holistic and balanced approach to financial well-being. Just as nourishing your body supports overall health, nourishing your knowledge of money supports your financial health and stability.