What does it mean when we say we want to be financially fit? We have all heard about the expression “physical fitness” Being physically fit means one thing to one person and something different to another. We will define this in terms of our specific ideologies and circumstances.
When we consider financial fitness, the identical premise applies. A significant driver of what being financially fit looks like for an individual is their stage of life. For example, being financially fit may be defined in a different way for a married couple than for a single person. Also, retirees may have alternate financial goals than families with young children.
There are many ways to take control of your finances. Some obvious ones include increasing your earnings and lowering your spending. In addition, you can get disciplined about studying your spending habits and implement proper debt management behaviors. Let’s discuss five fundamentals that can assist you in becoming financially fit at whatever stage of life you find yourself.
Track Your Spending
“When you know better, you do better.” – Maya Angelou.
Do you know where all of your hard-earned dollars are going? It would be wise to track your spending and spending habits to get a holistic and complete picture of what needs to be implemented to achieve your financial fitness goals. You would be surprised at how much money is spent on entertainment, eating out, and subscription fees. Knowing these will allow you to scale down on what you don’t need to divert those funds to pay off high-interest debts or savings accounts.
Also, knowing where your money is going will ensure you pay bills such as credit cards and utilities on time, leading to unnecessary late fees. Keep in mind that being too strict on yourself when it comes to spending can feel too mundane and not sustainable, so allow yourself some funds to enjoy yourself.
Become a Wise Investor
Your short and long-term goals will assist in dictating the plan that you and your fiduciary financial advisor construct. Ensuring you create a well-diversified portfolio can reduce your risk and perform well for you over the long term.
As Warren Buffet said, “Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick ‘no.'” Looking for a fast buck in the markets is almost always a dead end. Look for quality and create a portfolio with your advisor that correlates well with your risk tolerance and overall goals.
Set Concrete Goals
It can be challenging to achieve short and long-term financial goals and get financially fit if you don’t have clear goals in mind. Then, you will sail adrift like a boat without a destination. One example of a short-term goal that one can strive for that is concrete and tangible is securing three to six months of cash in an emergency fund. Additionally, a longer-term goal to consider would be to put away a specific amount annually in a college fund.
Regardless of the goal, explicitly outlining it will help you stick to your plan and adjust as needed to achieve your goal better.
Live (and Spend) Within Your Means
It’s simple. You can’t spend what you don’t have. You will cause yourself great undue stress if you decide to sign up for more obligations than you can handle. The goal is financial “breathing room,” allowing you to get financially fit. Having a solid budget will help achieve this goal by acting as a roadmap to adhere to.
Protect The Assets You Have
Can you remember the last time you and your fiduciary financial advisor reviewed your current life, health, and personal liability insurance policies? What about your will and estate plan? Have you given thought to what would happen if you became disabled? Is your home covered? It’s essential to make sure your loved ones and important possessions you have worked so hard for are protected if something should occur. No one can predict the future, but we can focus on what we can control and make efforts to prepare for the unexpected.
These principles will help you build a sound financial foundation and ensure you get financially fit.
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Farther-FamilyVest is your Fiduciary Financial Advisor in Destin, Santa Rosa Beach, and 30A.