How Financially Fit Are You?

Personal Finance Blog - How Financially Fit Are You

There are many smart, savvy women (and men!) in the world who are great at what they 'do', whether it’s running the family household, or being experts in their field or running their own business. They often have one thing in common: they are not financially fit.

What is Financial Fitness?

Financial fitness is about having a harmonious relationship with money; taking control of your money; saving adequate amounts to fund your dreams, and eliminating your debt. It is about ensuring that you align your financial choices with your core values and goals.

Financial fitness is like any other form of fitness in that it does not matter what shape you are in; stepping up and recognising that you need to learn is a fabulous start.  Remember: You can have excuses or results, not both!

Get Your Head In The Game

You will probably have heard about the concept of a money mindset.  There’s a reason it has become such a hot topic, and that’s because money management has a substantial physiological component.  Your beliefs around money and your attitudes to it affect how you manage it.

Because mindset is so crucial if you want to improve your financial fitness, examining how you think about money is crucial before moving on to the more practical elements.  If you don't improve your view of money and financial matters, then you will end up back in the same position you currently want to improve upon, or worse still, you might not even be able to move forward as your limiting beliefs keep you stuck.

Financial Vision

Having a clear vision helps you make those important financial decisions, whether it's paying down your debt or how much to save for the future. Your financial vision is the roadmap that aligns your big life goals with your spending, savings, and earnings. This vision will help you define your goals and help you figure out a plan of action.  And, if you prepare it correctly, then it also does something else – it will inspire you to make your dreams a reality.

Where Are You Now?

Before you begin to look at the practicalities of sorting out your finances, you need to get a firm grip on where you are now in financial terms. Information is key here. The more you can understand your current financial situation, the more you will be able to take control of it.

Think of this as if you were preparing a CV.  Instead of your qualifications and experience, you will be looking at your financial data.  The key areas that you need to understand are:

  • Income
  • Expenses
  • Assets
  • Liabilities

Current Money Allocation

To become financially fit, you need to resist the pressure and learn how to spend in a way that gives you the quality of life that you deserve and can afford without damaging your financial future. Examining how you have been spending your money will give you important clues here. Taking your last three bank and credit card statements and analysing how you spent your money will indicate where your money is currently being allocated.

Financial Goals

It is essential to set yourself goals. You probably carry out a goal-setting activity every January and call them 'resolutions'. The problem with such resolutions and the main reason they are often soon forgotten about is that they are linked to no action plan; they are no more than simple wishes. That might seem a little unfair, but for most of us, it's true.

Setting goals and an action plan to meet them is where you will change your financial dreams into reality.  The planning, not the hoping, is what will make things happen.

Create A Budget

Being financially fit involves knowing where your money should be allocated each month. You don't need to be a financial whiz to prepare a budget, and you don't need complicated spreadsheets.  You can simply take the list of items from your money allocation review and write down the amount you plan to spend each month next to each heading. Sometimes, this process forces you to recognise that you may need to make significant changes. The key is to ensure that you have all the major items of expenditure covered; you have your goals and vision in mind, and your spending helps you work towards these; plus, you are living within your means.

Debt Elimination

Debt elimination is not just about numbers; it's about reclaiming your freedom. It's systematically reducing and eventually eradicating the debt that weighs down your financial potential. Imagine pursuing your dreams without the shadow of debt looming over you. That's the essence of financial fitness.

Strategies for Debt Elimination:

  1. Income vs. Expenses: The cornerstone of debt elimination is ensuring your income consistently exceeds your expenses. This fundamental principle sets the stage for a sustainable financial lifestyle, paving the way for debt reduction.
  2. Minimum Payments: The journey of a thousand miles begins with a single step. In debt elimination, that step is making at least the minimum payments on all your debts. This prevents your debt from growing and keeps you in good standing with creditors.
  3. Debt Listing and Prioritization: Knowledge is power. List all your debts, including details like interest rates and balances. This clarity lets you strategize effectively, choosing which debts to tackle first for maximum impact.
  4. Allocating Funds: With a clear understanding of your financial landscape, determine how much you can realistically dedicate to debt repayment. This involves creating a budget that balances your needs, wants, and debt elimination goals.
  5. Emergency Fund: Establish an emergency fund before going all-in on debt repayment. This safety net ensures you won't be forced back into debt when life's inevitable surprises occur.
  6. Focused Repayment: Once your emergency fund is established, channel your financial resources towards your debts. Start with the highest priority debt; don't let up until it's completely paid off.
  7. Maintaining Momentum: After paying off one debt, apply the same payment amount to the next debt on your list. This "snowball" effect accelerates your debt-elimination journey, turning small victories into a landslide of financial progress.
  8. Accountability and Tracking: Share your goals with someone you trust and keep a visual tracker of your progress. This keeps you accountable and provides a constant source of motivation and satisfaction as you watch your debts diminish.

Debt elimination is a transformative journey that requires patience, discipline, and a proactive mindset. By embracing these strategies, you're not just working towards eliminating debt but building a foundation for lasting financial health and freedom. Remember, the goal is not just to be debt-free but to create a life where your financial choices are aligned with your deepest values and aspirations.

Protect Your Future

Tomorrow happens, and you need to be ready for it, from having an emergency fund to saving for retirement. Creating an emergency fund is a priority if you have no savings.

Money Game Plan

Once you have examined all the areas needed to improve your financial fitness, it's time to put this information into a game plan for your money. A plan written down will help you keep focused!


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