How fiscal fitness can improve your physical fitness

The number one worry that people have is money. Next, they worry about relationships and health. Guess what? Money impacts both relationships and health. When you are under financial stress you begin to feel very negative – defeated, fearful, detached and in conflict. Being in control of one’s finances can reduce embarrassment, shame and guilt and increase energy and boost emotional and physical fitness. Take these steps to maximize your money and improve your well-being by being prepared financially and fiscally fit.

Step 1: Enjoy Life by Being True to Yourself

Doing whatever you like is freedom. Liking what you do is happiness. What if you could do both? Start by identifying what you enjoy, in other words, what is your passion. List ten things that you are really good at (your strong points) and that you also find are a lot of fun.  Fantasize a vision of your life twenty to forty years in the future: What do picture yourself doing; what will your life be like? Given your passions, your strong points, and your vision, how are you going to get there? Use this to drive your career and ultimately your income. YOU CAN DO IT!

Impact: Happiness is a key to fitness.  

Step 2: Pay Yourself First

How much money is needed to achieve your dreams? Where and how can you find it?  With a fulfilling life, some purchases might no longer seem important. Start putting more into your savings; pay yourself first by saving at least 10 percent of your earnings. List the 3 most important items you included in your vision and how much you think they will cost.  What adjustments in your life are you willing to make to build up the savings needed?  Get your family involved and setup a budget based on those adjustments. If you are not sure where your money is going, begin to keep a journal.  Manage credit and debt to improve credit rating and reduce interest expenses. Limit the number of credit cards you own. Only charge the amount you can afford to pay each month. This will reduce or eliminate interest expenses, improve your credit score, and lower the interest rate you will be charged for a loan.

Impact: You no longer feel like you are overwhelmed. Family communications are more harmonious since everyone is involved in the plan (singing from the same hymn book).  

Step 3: Create a Safety Net

There are two ways to be prepared for the unexpected: have enough money saved to pay for the unforeseen and purchase sufficient insurance. To have enough money saved, it is important to establish an emergency fund.  Generally, the amount you need for your emergency fund equals 3 to 6 months of expenses. Review your budget and determine how much you can contribute to your emergency fund each month. As far as insurance, the most common forms of insurance are life, health, disability, property, liability and long term care. If you have people in your life that depend on you and your income, life insurance can be used to provide for them in the event of your premature death. For most people, term insurance is the most cost effective. Comparison shopping for any type of insurance can help increase satisfaction and reduce costs.

Impact:  You now feel that you have control of your life rather than having it out of control. How reassuring! 

Step 4: Grow Your Savings

As you accumulate your savings, you want it to grow, or at least to outpace inflation. There are varying risks associated with investments. Just like sowing seeds, you can diversify your garden (and reduce your risk of failure) by diversifying and selecting the mix of assets (cash, bonds, or stock) based on when the assets will be needed. If the money is needed within five years, it is better to have most of it in a cash equivalent account.

Impact: Since you know your plan, the fog has lifted and you are starting to relax.  

Step 5: Achieve Peace of Mind

You have a plan. You know where you are headed yet you are not sure how to implement it. Getting professional help may add to your peace of mind. One of the highest standards of excellence for personal financial planning is held by Certified Financial Planner® practitioners. They are required to meet education, examination, experience, and ethical requirements and complete continuing education requirements established by the CFP® Board. Additionally, there are CFP® practitioners that are fee-only which means they do not sell any products and only work for you, their client.

Impact: Peace of mind can work wonders.  

Overall impact – All these positive feelings help reduce your stress and provide more energy.