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5 steps to financial fitness

5 steps to financial fitness, with Money Bites
Join us for this training session, focused on your financial fitness.

Money Bite-Size Read:

  • We all know that it takes consistent training to increase our fitness.
  • Similarly, it takes a dedicated focus on your finances to improve your financial health.
  • Here’s 5 steps to financial fitness to help build up your financial confidence and capabilities to increase your overall financial wellbeing.

The Money Bites Take:

Just as many of us train to improve our fitness, we need to build up our financial fitness over time to enjoy the outcome of financial wellbeing.

We all know that physical exercise is essential for a healthy life.

We’re also told that you need to stick to a program to meet your goals and enjoy the significant health benefits of exercise. We don’t expect to go to the gym once and emerge with a six-pack. Getting to that level of fitness requires consistent training and dedication.

Your financial fitness requires the same level of dedication.

Getting financially fit means you aren’t scared to look at your finances. You need to train your financial habits so get comfortable in knowing how to budget and save money. You need to have a vision for why you’re training and what you’re hoping to accomplish. Training your financial fitness is a non-negotiable if you want to enjoy greater financial wellbeing.

 

Here’s 5 steps to financial fitness:

 

1. Know where you are starting from right now

We all start from different levels of financial fitness. You may have great parents who set you up for life by teaching you about money early. You may have a supportive circle around you and are able to talk to your friends about money or have these conversations with your partner.

Look at your current financial status. What are you doing well, where could you improve your habits, and what do you want to learn more about? Don’t compare yourself to anyone else’s starting point because there’s always someone you perceive is doing better than you. Instead, recognise where you are right now as your starting point.

 

2. Recognise any limitations you start with

When you start a training program, many gyms will tell you to consider consulting your doctor. This is particularly true of anyone new to exercise or who has a chronic health condition. Talking to your doctor means you get advice on anything that might limit your training so that you can actively manage this.

The same can be said of your finances. If you’re carrying any debt, you may want to hold off on making risky investments until you’ve paid this off. If you’re carrying multiple debts, you may want to pay off the debt with the highest interest rate rather than making the minimum payment on all debts. This is where it can be helpful to speak to a financial advisor to get specific advice on your situation in the same way a doctor can give you more personalised health advice.

 

3. Set goals for what you want to achieve

At the start of any training program, you need to clarify why you’re taking action. For example, you may wish to run a particular distance, which is where the couch to 5k idea came from. You may want to explore your neighbourhood and get back to nature by walking in the local park each day.

When it comes to your finances, figure out what your goals are. Make sure that these goals are structured to be achievable. There’s a huge number of financial goals that you choose from, but the most effective goals are ones that mean something to you as you’re more likely to stick to them. The best way of thinking about goal setting for a new financial year is where you want to be a year from now.

 

4. Decide on the method for achieving your goals

You can’t get physically fit without choosing the method by which you’ll achieve your goals. Are you going to pay for an exclusive health club or save money on a gym membership by working out at home? The best exercise is one you’ll enjoy and do regularly to see progress.

For your financial goals, you need to pick the best method to achieve them. A budget is key for managing where your money goes. You could choose to adopt a standard savings percentage like the 50-30-20 budget method or an author’s recommended methodology like the Barefoot Investor. The most effective budgets I’ve seen consider your circumstances, such as having a student budget when you’re studying.

 

5. Check in on your progress regularly

You know whether or not you’re meeting your goals because you check in on your progress. We often measure this by the distance covered in a specific time or how far you can run before taking a break when it comes to our fitness.

When it comes to your financial fitness, you need to monitor your progress. That includes seeing how far you’ve come and celebrating your money wins in meeting your goals. Taking the time to check in on your progress means you’re more likely to stick with your financial goals and achieve them long-term.

Remember that when it comes to financial fitness, it’s a marathon, not a sprint.

We all start from different financial circumstances, and the best way of measuring your financial fitness is to appreciate your progress over time. So take the time to step into the financial gym and start working out your muscles to be more financially fit this time next year.

Written by Kate Crowhurst

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