Financial Fitness Strategies
Take the steps to get your finances in shape—now and for the long term.

HOW DO I CREATE A FINANCIAL FITNESS STRATEGY?

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You can start by measuring your financial fitness.

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Begin by listing your expenses: Get as specific as to how much you spend on items such as groceries, utilities, housing, insurance, transportation, loan payments, credit card payments, pet care, and childcare. Be sure to list any interest rates associated with each payment.

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Next, outline your income, both full or part-time. Do both you and your significant other earn an income? Consider if there are opportunities for new income sources without giving up too much of your family or personal time.

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Once you have that necessary information gathered, take a few moments to answer questions in the sidebar.

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If you’re one of the fortunate people who have everything under control, carry on. But, if some of your answers give you concern, then it’s probably time to act.

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FINANCIAL FITNESS QUIZ

• Are you short on money before each payday?

• Do you have trouble knowing where your money went?

• Has a recent change in your job or family status caused increased financial pressure?

• Are you sure that the life, health, and dental insurance that you receive from your employer will be sufficient for your family?

• Are you saving for your children’s education?

• Are you adequately saving for retirement?

• Can your current savings be working harder for you?

• Are your assets appropriately positioned to pass on to your beneficiary(s)?

• Do you plan adequately for taxes?

• Have you established an emergency fund that can carry you through for at least three months?

 

HOW DO I IMPROVE MY FINANCIAL FITNESS?

There are many ways you can improve your financial situation. Here are steps you could possibly take.

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• Pay yourself first. If you have the opportunity, contribute as much as you can to an employer’s retirement plan, at least the amount that the company will match.

• Protect your financial health. Sometimes the unfortunate occurs, and you need to be prepared. Protect your life (life insurance), your ability to earn an income (disability insurance), as well as your home and other key assets.

• Plan for Uncle Sam. Do you keep careful records to meet the tax deadline every year? And are you planning for your family’s or business’s future through proper estate planning?

• Save for college. College costs are rising faster than the overall inflation rate, so prepare now. No children? Then save for yourself even more.

• Establish an emergency financial fund. Keep three to six months of expenses in an easy-to-access accounts, such as a money market or savings.

• Reduce spending on non-essential items. A daily trip to the coffee shop can add up to almost $1,300 per year. If you have 20 years until retirement, you could potentially save an additional $25,000.

• Know when to splurge. Pick and choose where and how you are spending your hard-earned money. Keep the gym membership but perhaps reduce the number of times you go out to eat in a month.

• Go without an automobile payment. With such low-interest rates, it is tempting to purchase or lease a new vehicle every few years. Imagine if you were able to add that $500 monthly payment to your savings account.

• Meet with a financial professional. Discuss your specific goals and needs with a trusted financial professional who can recommend an appropriate strategy designed for you.

 

TIPS TO STAY FINANCIALLY FIT

Once you have a financial strategy developed, stay on track:

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• Stick to your budget: Having the self-discipline to stick to your budget and create good spending habits is a critical element of being financially fit. If your strategy falls off the rails, regroup and start anew.

• Monitor your spending: Monitor your spending on a monthly basis and see how it aligns with your expenses. You can use a piece of paper or several tools online that will help in this area. If your spending exceeds your income, then readjust accordingly.

• Track your progress: Track by the milestones or goals you have established, e.g., retirement savings, college fund, investments, rainy day fund, etc. Revise your strategy if necessary to accommodate life events.

 

Regardless of your goals, deciding to get started on achieving them is key to helping you become financially fit. Taking the time to outline your financial strategy and getting buy-in from others in your household who may be impacted by the changes necessary to achieve your goals is also equally important.

 

Stay fit by reviewing your goals and action steps quarterly or at the very least annually to ensure that your financial future is secure. There are several online tools available to assist you, along with your Financial Professional.