We all grew up with doctors, parents and teachers emphasizing the importance of our physical fitness and active lifestyle. But what about maintaining your fiscal health? Are you nourishing your finances now to see benefits in the future?
Just like physical conditioning, getting our finances in shape requires us to stop bad habits, create a plan and do routine checkups. Here is a financial fitness regimen to get you on track for long-term success:
Stop bad habits. Excessive debt, impulsive spending and lack of planning are the "junk foods" of an unbalanced fiscal lifestyle. The first step to solid finances is to stop the habits that are ravaging your budget both now and in the future. For example, if you pick up a $5 cup of coffee every weekday, that's 20 days per month or 240 days per year. If you cut that habit, it'll save you $100 per month or $1,200 per year. Before you dive into all the difficult details — crunching numbers, sweating over the calculator — just focus on the big picture.
Commit to a month without using a credit card or try "sleeping on it" before making any major purchases. By slowing down and considering the long-term effects of your everyday decisions, you'll begin to see positive changes in your finances.
Create a plan. No one gets fit with sporadic workouts. It takes a steady, disciplined plan of action. Likewise, setting up a budget can help you spend within your means. You may need to track your spending using a program like YNAB for a couple of months so you can create an effective plan.
Engage in routine checkups. Everyone knows you should visit your doctor once a year for an exam; likewise, it's as important to review your financial goals annually. Once you set up a budget, you should revisit your plan to ensure you're on the right track. It is also important to re-evaluate any investment options to make sure you are allocating effectively.
Enjoy a little reward. When dieting, if you never let yourself have a small treat, you're more likely to overeat later when temptation strikes. Even the most disciplined fitness enthusiasts will enjoy a piece of cake after they've put in the hard work. In your budget, create room for a little "fun money." This will allow you to make a few non-essential purchases — all while keeping your overall financial plan intact.
If you meet a large savings goal, it might be a good time to take a vacation or have a nice meal out. You'll be surprised at how much you can enjoy a reward when you've worked hard and made the purchase in a wise way — without hurting your future.
For a new jogger, that first mile is always difficult. Then slowly, day by day, one mile turns into two and before long, it's a 10k. Creating a streamlined financial plan is a similar step-by-step process. When you get discouraged, keep going and remember it gets easier (and more fun) the longer you stick to your plan. As you achieve your financial fitness goals, remember to look back on your progress to celebrate how far you've come.
To help you create a custom financial plan, please utilize our Home Budget Calculator.
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