5 Ways to Improve Your Financial Fitness
We all have a fair idea of how to improve our physical fitness, even if it’s not something we want to work on right now. We can go out for a jog, do some push-ups, and even attempt something more strenuous at the gym. When it comes to financial fitness though, we don’t necessarily know what to do nor where to start. It can feel a little complicated and overwhelming. Let’s take a look at what it means to be financially fit as well as 5 ways to improve your financial fitness.
What Does it Mean to be Financially Fit?
Being financially fit doesn’t mean that you’re rich or that you’re a super investor. Rather, it means that you know how to manage your money well. You know where your money is being spent, you understand how to prioritize expenses, and you are able to manage your cash flow each month.
As you improve your financial fitness and manage your finances better each month, you can build on your successes and improve your finances. You’ll find that you are able to pay off debt quicker, start saving and investing, and ultimately have a better relationship with your money.
5 Ways to Improve Your Financial Fitness
Track your Spending
This is a small daily habit that can have a massive effect on your overall finances. Simply track your spending each day. Use an app, a spreadsheet or just a pen and paper. Whatever you do, be sure to track all your expenses, even the seemingly insignificant ones.
Once you’ve done this for a week or two you can start looking at the general categories of expenses and see where your money is going.
There’s no need to overcomplicate things or to analyze your every cent. The purpose of this habit is to truly understand what you spend your money on, and then be able to make rational decisions about whether it aligns to your dreams and goals (we’ll discuss these later).
Start a Spending Plan
A Spending Plan is your plan of how to spend (and save) your money for the upcoming week or month. A Spending Plan is the same as a Budget, but with a much cooler name. Budgets have the reputation of being boring, restrictive, and hard to set up. By changing your mindset and thinking of a spending plan, you allow yourself to see the benefits of planning.
Plan for expenses that you know are coming up. You can be honest with yourself about where your money goes and use your expense tracking exercise to understand how much money you need for various categories.
You get to make the rules when it comes to a Spending Plan. All but one, and that is, never spend more than you earn. By keeping that in mind you can tweak your plan as necessary to ensure that you can survive from payday to payday.
Get Rid of your Bad Debt
Debt is like the sugar of finances. The sweet things in life are everywhere, they’re delicious, and sure makes life more fun! Why wait for something when you can have it now? Why not enjoy life to the fullest?
But sugar is bad for us. The long-term effects on our health can be painful and hard to reverse. Very much like debt.
We can, however, improve our debt situation! It may take some work and dedication, but it is absolutely possible for anyone to do!
A good place to start is to list all the debt you have, how much is remaining, what interest rate and other charges you pay, and whether or not you are in arrears. Make sure that you understand your full debt situation so that you can make an informed decision about which debt to tackle first.
During the initial stages you’ll need to see how you can survive between paydays without incurring new debt, and then start by paying just a few dollars extra towards your chosen debt. Slowly but surely, you’ll find that you make progress, both with your cash flow and with your debt payments.
By working on paying off debt you will be improving your financial fitness.
Set Financial Goals
A sure way to improve your fitness, physical or financial, is to set goals. These should be specific, measurable, and attainable. By working on the previous exercises, you will have a clear idea of how much you spend, what your plan is for the next month, and what your debt situation is. This will allow you to set a realistic goal that could be based on savings, debt payments or possibly another aspect of finances.
It’s important to be able to track your goal by time or by dollar amount. You should be able to work out your progress week by week to see if you are on track.
Set financial goals to keep you motivated and excited.
Start Saving for a Rainy Day
The final tip for improving your financial fitness is to start saving for a rainy day. Some people refer to this as an emergency fund, but it could be more than that. This could be a savings fund for upcoming expenses that will likely happen, although you’re not sure when. You could be saving for a specific purpose, or not.
When you’re just starting out on your journey of improving your finances, you don’t need to have all the answers, all the plans and all your goals set out. These things come with time and you may even change plans or goals along the way. A general savings fund for a rainy day is sufficient to start with. You can always refine the purpose later.
Get Fit, Stay Fit
5 Ways to Improve Your Financial Fitness
It’s one thing getting fit, the real work is staying fit. Keep up with the good financial habits, keep tracking your expenses, work on your spending plan, pay off debt, set and work towards goals, and save for a rainy day. As you get comfortable with these tasks, challenge yourself with bigger goals, keep learning about managing your finances better, and grow your wealth!
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Brendan Dale
Brendan Dale is a personal finance blogger, content creator and speaker. His aim is to help people make better money decisions though his platform and blog at TakeChargeOfYourMoney
Becoming financially fit is more relevant than ever now as more and more workers are coming back into the office to work.
Yes, that is very true.
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