Achieve Financial Fitness: Tips for Managing Your Money Wisely

Financial fitness refers to your overall financial well-being, similar to how physical fitness pertains to your physical health.

The American Medical Association emphasizes the importance of regular physical exercise for a healthy lifestyle, noting its benefits extend far beyond the doctor's office. While we aren't medical professionals, we recognize that financial fitness, like physical fitness, can yield long-lasting benefits.

Defining Financial Fitness

Financial fitness encompasses the skills, knowledge, and tools that enable you to make sound financial decisions. It's not just about wealth or investing; it's about gaining valuable insights, boosting your financial knowledge, and empowering you to make informed decisions regarding your finances. A financially fit individual understands their finances well, providing the confidence and knowledge needed to manage basic money matters.

Some of the key benefits include:

• Effective money management
• Creating and adhering to a budget
• Managing debt effectively
• Achieving financial goals
• Reducing financial anxieties
• Making ethical decisions regarding insurance, loans, investments, and credit card usage

Habits of Financially Fit People

Set Financial Goals:

These are the targets you have set your sights on. They are not your neighbors’ goals. They are not your best friend’s goals. They are yours.

What are your short-term goals and long-term goals?

If you are married, it’s important that you set goals with your spouse.

Choose goals that motivate you, encourage you, and give you a sense of purpose as you achieve them. While goals can and should be challenging, they aren’t pie in the sky. Don’t shoot for the stars and settle for the moon. You’re more likely to get discouraged and give up.

Your goals should be SMART—Specific, Measurable, Attainable, Relevant/Rewarding, and Time-specific.

They Identify Their Financial Values:

These are the principles that guide your finances and help you define your goals. Create a list of what’s important to you. How does this align with your spouse or partner? What commonalities do you share?

More importantly, do your financial outlays line up with your financial values? A quick review of someone’s checkbook, Visa statement, or financial spreadsheet will quickly reveal what’s important to them.

They Create and Adhere to a Spending Plan:

This is your budget. It must be realistic and include a savings plan. Build up an emergency reserve if you don’t already have one. You can even create savings “buckets” for items such as vacations and emergency repairs.

They Track Expenditures:

Stay organized by keeping track of your expenses and comparing them to your budget. Create a tracking system on a spreadsheet, a budgeting app, or even a spiral notebook. Keeping track of your expenses and comparing them to your budget will help maintain discipline and ensure you stay on course toward your goals.

You might be surprised at how much you spend on incidentals, which can help you cut back on unnecessary outlays.

They Live Below Your Means:

Do you want money at the end of your month or month at the end of your money?

According to the Corporate Finance Institute, 78% of us live paycheck to paycheck. A layoff or financial emergency can be devastating.

Those who are financially fit have prepared for the unexpected and have reserves that help cushion unforeseen financial blows.

The financially fit create and commit to a financial plan.

A financial plan serves as a roadmap, guiding you from your present situation to your financial destination, defined by your long-term financial goals.

The plan outlines both short-term and long-term goals. It is tailored to your specific situation and incorporates strategies that assist you in reaching your objectives.

Please keep this in mind. You are not alone. We are here to support you. With your feedback, we help develop and track the progress toward your financial goals. Further, your plan is not set in stone, and adjustments can be made based on changing circumstances in your life.

Like physical fitness, financial fitness requires discipline and patience. Embracing these principles will yield a lifetime of dividends.