Money Basics: Get Financially Fit In 5 Steps
Improving your financial health and fitness is a lot like improving your own physical health and fitness – and I’m not talking about bench pressing treasure chests of gold or climbing stair cases with heavy bags of cash. I’m talking about taking serious and accountable action with the way you use and spend money.
Getting up off your derriere and walking, running or moving in your preferred way; simply burning more calories kick starts those improvements. Making changes (whether it be small or large) to your everyday habits, with the focus and determination to look – and more importantly feel – better, delivers results.
Sharpening up your financial waistline is very similar in this respect. You need to cut your spending habits down and use your hard-earned money more wisely – like you would with your food and diet.
While the thought of being financially savvy can feel like an overwhelming task, it actually isn’t rocket science and the more you can incorporate the following changes and make them daily habits, the easier and greater financial improvements and successes will come. And not only in regards to your bank balance, but also in the way you feel about yourself.
Here are my five top steps for greater financial fitness:
We all spend way more money than we think. It isn’t until we sit down and go through all our true living expenses that we realise how much it really costs to run our lives and how easily all the little things add up. You simply need to have a budget.
You need to be honest with yourself (as you would when jumping on the bathroom scales), go through all your living expenses and leave no stone unturned. (I have a free budget available through subscribing to the SugarMamma website) or check this out.
#2 Set goals
Making the powerful decision to better your financial future starts with some clearly defined goals. Without going into the overused S.M.A.R.T goal acronym (that’s specific, measurable, achievable, realistic and timely), your financial aims should include short term, medium term and long term goals. How you think about and plan your goals is very important, so read this.
They should also be specific and include an actual deadline – for example, ‘pay $2,000 off MasterCard by 30th of June 2016′, or ‘save $10,000 for holiday by 30th of September 2016′. Then, things get real.
#3 Brainstorm a strategy
This is where a lot of people go wrong, they set brilliant goals for themselves and get excited and empowered – but then this fizzles out when they draw up stumps as to how to make these goals manifest.
You need a strategy: the steps, ideas and actions that you can reasonably take that will help you achieve your financial goals. Just as if your goal was to lose 5kgs, you would put together a plan as to what type of exercise you would do and when and what nutritional improvements you’d make to your food plan. Pretty much the same steps are needed for achieving your financial goals.
If you want to pay off a $2000 of debt by the end of June then you’ll either have to do extra work or cut down expenses in particular areas of your spending. Ideas that you might come up with for reaching your financial goals are: getting a weekend job; cutting your living expenses down (like taking lunch to work); selling items on eBay or Gumtree for extra cash etc. This is where you can really get as creative as you like, so don’t hold back!
#4 Turn them into habits
My favourite analogy for this is cleaning your teeth; we don’t think about cleaning our teeth, we just do it. You need to embed these new strategies, ideas and plans into your regular routine so that they become habits. Day after day, you need to put your money where your mouth is until you don’t even think about it anymore.
That way you’ll be putting the right financial wheels in motion so that you can see and feel the benefit without too much effort – and when things are easier it means a greater chance of success.
Flogging ourselves through early morning boot camps for months on end can quickly become demotivating and pointless if we aren’t feeling healthier, our clothes feel a little looser or our bodies are a little more toned – and within a reasonable amount of time. Similarly, we need to stop and review the financial progress that we’ve made and give ourselves that ‘pat on the back’ moment.
If your goal was to pay down some old debt, monitor how much your debt has dropped by and over how long and acknowledge how well you’re doing.
The most important factor to focus on is that you’re heading in the right direction. Sure, it may take longer than you’d hoped, but you’re experiencing an improvement in your financial fitness. And it’s not uncommon for things to speed up (and you could achieve your financial goals more efficiently) as you continue to repeat these steps.
I’ve always believed that the more you can see, feel and acknowledge the improvements you’re making, the more focused and determined you’ll become – not only for achieving your financial goals – but to be inspired to set new ones. Ultimately, you’ll find it much easier to build your fitness and create sustainable long-term financial freedom.
Canna Campbell is a certified financial advisor running her own company, SASS Financial, established in 2007. Her blog and YouTube channel, SugarMamma.TV teaches people the power of financial freedom; covering everything from managing budgets and investing in stock and shares, to saving strategies for your ultimate designer handbag. Canna regularly appears on TV as a personal finance expert, and has written for many publications.