With Sutherland to Surf around the corner I thought it was a great time to talk about financial fitness. Just like a fitness check, a financial fitness examination will pick up on problems you need to work on.
A couple of years ago I ran my first S2S, before I entered the race my running regimen was almost non-existent because, like most people, I am incredibly busy and as such I kept putting it off. The event became my motivation to run regularly.
I believe you need to have the same sort of end-goal motivation to become financially fit. What do you mean by that you might ask. Well, financially fit might have different meaning to different people but essentially it should mean you can pay your credit card in full eeach month, you have savings in the bank for at least a month's worth of expenses, you're contributing extra to super, you have an investment plan and are starting to build wealth through assets.
The problem with our finances is essentially the same problem that happens with our fitness, they are simply not what they should be and we're not really sure where to start in order to get back on track. So how do you start working on your financial fitness?
- Set a goal It wasnt until I registered for the run that I commited to regular running. The same goes for your finances, set a goal, whether it is saving for retirement, paying off your credit cards, contributing to super, save a deposit for your first home or start to invest - it's much easier to work towards a goal within the time limit that you set yourself to reach it.
- Make a plan once you've set a goal you need to work how you're going to get there. With my run I needed to work out how many times per week I had to train in order to be able to finish the run. The same goes for your finances, work out how much you need to reach your goal, where its going to come from and how much you need to set aside each week.
- Be prepared to sacrifice Did I enjoy the soreness, cramps and running in cold windy winter nights?!? Absolutely not! To become financially fit you might have to make sacrifices, might mean you have to take lunch to work a few days a week, watch one less movie per month, g oto the park instead of a cafe or cut down on superfluous shopping. Or its a matter of working out what your personal goals are and make sure they align with your work goals. Workout what you can do without, prioritise the rest and keep an eye on the goal you set for yourself.
- Be prepared for setbacks Just a couple of weeks before the run I twisted my ankle, meaning I couldn't run so I had to work other ways to keep my mind motivated to get me through the run on D day. You might find that you have car repairs, or an appliance breaks down, or you simply blow the budget on the weekend. Don't let that get in the way of achieving your goals, just work out what you need to do to still meet your goals and keep going!
- Celebrate every victory if your goal is to pay off your credit cards maybe don't celebrate with a weekend away or a holiday but make sure you aknowledge your achievement.
- Start the process again Once I completed the Sutherland to Surf I immediately looked for another challenge, which was a half marathon 2 months down the track. Once you have achieved your first goal in becoming financially fit pat yourself on the back and move on to setting your next goal.
Now, what I didn't mention was that 2 weeks after completing the S2S I got the flu, I was off my running schedule for over 3 weeks, so I just had to resume my training in a manner that would allow me to complete the whole 21.1kms without dying. The same goes for your finances. The one guarantee in life is that there will be surprises and your finances are no exception. The trick after you have spent thousands of dollars in car repairs, unexpected medical bills, a sudden employment change is to dust yourself off, take a deep breath, focus on the end goal and start again. The starting again is the most important part.
What is missing here is the reward, my reward to become physically fit is to have more energy, have less stress, hopefully live healthier for longer and keep fitting into what's in my wardrobe until i am ready to discard of it. Your reward to becoming financially fit is financial independence, security, stability, options and a comfortable lifestyle and retirement and I believe that is a great goal to aim for.
If you need help assessing your financial fitness don't leave it another day! Call Tedy on 9526 7888 and have your finances fitness tested.