5 Steps To Financial Fitness
Fitness and finance are usually the top two categories where people have the most room for improvement. Like any type of training, achieving financial fitness requires discipline and determination over the long term. Routinely assessing where you stand can benefit you today and down the road. Start your training toward a more secure financial future, by following these Financial Fitness steps:
SET CLEAR FINANCIAL GOALS
If you don’t know where you're going , it will be difficult to get there. Your goals should be clear and detailed. You must define exactly what you want to accomplish financially. Setting clear goals will allow you to determine what you’re building towards and why. It will help you make wise financial decisions. You must also make it possible for you to achieve your goals. If your goals are disproportionately challenging your motivation will decline.
UNDERSTAND WHERE YOUR MONEY IS GOING
One of the most important steps to reaching your financial goals is establishing a solid budget. Your budget is key to reaching any financial goal. Establish a budget that includes necessities, required expenditures, discretionary items, and the periodic savings necessary to finance long term financial goals. Track your spending and compare it regularly against your budget and make changes to your spending habits where necessary.
MANAGE YOUR DEBT
Financial goals are similar to weight loss goals. If you are on a diet you will likely have to manage what you eat and get rid of unhealthy habits. You need to identify the habits that are costing you the most money and find ways to eliminate them. Build a debt management strategy to reduce and eliminate high interest debt and to accelerate the payment of debts like student loans.
MAINTAIN A STEADY LIFESTYLE
Spending does not have to grow at the same rate as income. Growth in income should increase your savings and investment accounts. Keeping expenditures relatively constant over time is a key method in achieving a secure financial future.
Building wealth through investing is a vital part of any financial plan. Your first experience with investing will likely be within a 401(k) or similar employer-sponsored retirement plan, which are the most common and easy retirement options. You should establish a low cost, broadly diversified portfolio that’s appropriate to achieve both short and long term goals.
Being financially fit means understanding and utilizing the main principles and best practices in saving and investing.