Give your finances a quick health scan

To actualise this rule, you should give your finances a health check. When we hear the phrase, “health check,” we all think of a doctor, a dentist, a gynecologist or an optician. Some have even tried the routine health check-ups every six to twelve months as the medical practitioners recommend. When was the last time you reviewed your expenses and assessed your financial situation – a financial health check?

Choosing to take a health scan of your finances should never wait for significant life events like marriage, divorce, the birth of a child, or the passing of a loved one, to happen.

Just like you would regularly monitor your physical health before getting in a worrying health situation that cannot be handled by your doctor, checking whether you are breaking even or not with your finances ensures that you are on track with your goals, within your budget, and managing your debts. Your financial situation can directly impact your lifestyle, day-to-day living, children, family, and overall well-being. It can either support or hold you back, depending on how you manage it.

Checking whether what you spent on last month was a need or a want is as healthy as checking whether you are saving enough, managing your debts, and spending wisely. Staying on top of your money and saving helps you avoid problems down the road.

To check your financial health situation, begin by reviewing whether any major changes in your life have taken place. For example, have you changed jobs? Have you received a salary enhancement? Have you gotten married, separated or divorced? Have you welcomed a new family member? Are you having children joining another level of education or do you plan to change their schools? Have you received an inheritance? Have you bought a home? Have you retired? Have you lost the family breadwinner? Each of these and more life events can alter and paint a clear picture of your financial situation. By doing that, you are scanning your financial situation which will inform your 50/30/20 rule of your plans come next year. 

Secondly, in scanning your financial health, review your saving strategies, partners and goals. Use short- or long-term goals to make saving meaningful. Work towards achieving a specific goal that will put a smile on your face when achieved. For example, if you want your children to have a university education without any hustle (which is long-term) estimate how much money you will need and how long it might take you to save it. By doing that, you will be checking your financial situation hence informing your 50/30/20 rule of your finances, and living committed to achieving your plans and set goals.

Lastly, uncertainties are ever present in our lives. You can never know what will happen in the next hour or day. That is why as you check your financial health status, you should be prepared for the best and any worst situations. Humans crave for security. They want to feel safe and have a sense of control over their well-being, yet fear and uncertainty can leave them feeling stressed, anxious, and drowned in endless “what-ifs,” and what tomorrow may bring. 

The 50/30/20 rule comes in handy in preparing for uncertainties in life, and one of the best investment vehicles is life insurance to guarantee you good returns. By having that, you will achieve the 50/30/20 rule of your finances and continue living with minimal worry. If insurance was not part of your financial health check, it is not too late, you can start today and protect yourself and your family from unexpected events. 

Whereas saving money (20 percent) requires knowledge and discipline, it should never be hard as long as you set a goal to achieve it in the short or long term.
As 2024 ends, apply the 50/30/20 rule to your earnings. You will have taken a meaningful step in assessing your financial fitness.

Mariam Nalunkuuma is the manager corporate affairs at Insurance Regulatory Authority of Uganda.