Working on your financial fitness can be dealt with in the same way as physical fitness. You set goals, splurge occasionally, and automate where you can. And just like getting fit physically, bad habits can quickly creep in. So, shaking up your finances once in a while to make sure that it’s in great shape is a must.
Financial Fitness in 6 Weeks
Here we approach finances in the same way as a trainer would physical fitness. We also broke down the steps into something that you can do in six weeks. After all, consistency is an essential element when it comes to fitness, whether physically or financially.
Week 1: Do a financial checkup
Even if you have been exercising for a long time, you are bound to forget a few muscles here and there. So, it’s important to see what shape you are in before starting any exercise regimen. It is the same with your finances. Even if you think you are running a tight ship, there are bound to be some loose ends. The first week of your financial fitness program is the perfect time for you to assess your financial situation.
Make sure to check for the following:
- Your credit
- Your emergency fund, which should contain an amount that can cover six months of living expenses.
- Your retirement fund
- Your investments
Your day-to-day routine should consist of minor checkups, like monitoring your credit card expenses, as well as your checking and savings accounts. Tracking of costs should also be included in your everyday routine. This exercise ensures that you are always on top of how much you have.
Week 2: Setting goals and check credit score
Anyone who works out needs to set goals. After all, working out without a goal can work against anyone’s motivation, making it easy to quit. The same goes for financial fitness. If you are not sure what your goals are, saving and investing can get you nowhere since you don’t know what you’re working towards.
On the second week, write down your financial goals, but make sure that you can be as specific as possible. Write “pay credit card debt by December” instead of “pay credit card debt.”
During the same week, you can also request for your credit score at www.AnnualCreditReport.com, where you can get one free report per year from each of the three agencies—Experian, Equifax, and TransUnion.
Once you get your credit score, see how you can improve it. It’s best to aim for a credit score of 700 or above so you can afford the best rates on mortgages and loans.
Week 3: Tackle your investment mix
The key to physical fitness is mixing up your exercises to target the core, cardio, strength, and flexibility. It is the same with your money. Mixing up your investments can assure you of a healthier portfolio.
On the third week of your financial fitness program, take the time to determine your financial goals and then strategize. If you’re still young, you can afford to be less conservative with your investments and set yourself up for more returns. As you age, adjust the mix accordingly.
Week 4: Boost your earning power
For those who exercise regularly, hitting a fitness plateau is a common phenomenon. But this can be fixed by taking a new, challenging class or sport that brings fitness to a whole new level. The same concept applies to your career.
Landing a new job will most often result in a salary increase of up to 20 percent higher than what you’d typically get from internal promotion. So, the next best thing you can do for your finances is to invest in yourself through continued education, acquiring skills and knowledge that will make you more valuable to your current company or poachable to others.
Week 4 is all about boosting your earning power. Take this time to re-assess your skills and achievements, and determine what new skills or certifications you need to make the next step in your career.
Week 5: Take care of your health
Your physical health and financial health go hand in hand. When you’re not well, you spend more on hospital expenses and medicines, which can set you back financially. So, in week 5 of your financial fitness program, assess your health and health needs. Check if you are getting the basics of self-care, such as sleep, diet, exercise, and regular checkups. Take this time also to check your health insurance and what it covers. If you don’t have health insurance yet, make sure that you make time to get one.
Week 6: Work on your safety net
For this step, you will need to have your financial info on hand. Get an overview of your investments, what you owe on your mortgage, and what your life insurance covers. For a proper safety net, you need to know how much you need for your safety net. You can calculate the amount you need at www.LifeHappens.org, which can help you plan for almost all emergencies.
Take this time also to check the health of all your insurance policies to ensure that you’re covered. This exercise ensures that you will not only be protected but also save some money along the way.