078: 5 Tips for Becoming Financially Fit

Live It Out With The Planning Woman-Learn how you can become financially fit with 5 helpful tips.

This is the time of year where we begin to think about financial matters especially when it comes to our taxes. By now, you should have received most if not all the documents you need to be able to file your tax return.

And often when we begin doing our taxes, our focus begins to shift to our finances in general. Questions like “How can we save more money?” or “How can we reduce our expenses?” are common.

And, if you’re like my husband and me, you may be thinking ahead to being an empty nester and retirement. 

Maybe you decided 2020 was going to be your year to get your finances in order. Or as I like to say, improve your financial fitness.

This month on the podcast, I am going to focus on our finances for a few of the episodes. Now, I have to say up front that I am an inactive CPA. Because I am inactive, that means I have not had the training to stay up to date on all things related to finance and accounting. So I just want to make it clear, that I am not holding myself out to be an expert. I’m just going to share what has worked for me and hopefully, you’ll be inspired to try some new things to improve your financial fitness.

When I hear the term financial fitness, I usually think of being able to have enough money to cover the necessities of life as well as enough to help me acquire the wants in my life. And those wants vary from time to time. It could be anything from getting some new clothes to saving up for a big purchase such as new furniture or going on a vacation.

As I was researching the topic of financial fitness for both the coaching session and this episode, I came across what I consider to be a good definition of financial fitness from happyliving.com.

Episode 78 Quote from Live It Out With The Planning Woman

It says, “Financial fitness is a daily practice that requires consistent effort. It is living in a way that does not exceed income earned, or put financial strain on savings goals. It is making choices that are in alignment with priorities and being generous with your wealth.”

What does financial fitness mean to you? Before we can begin to make changes to our financial situation, it is important that each of us decide for ourselves what financial fitness means to us. We all have different goals, dreams, and desires. So it’s important we know exactly what we mean when we say financial fitness.

Nailing down our individual definitions of financial fitness also frees us from comparing ourselves with others. When we know what’s most important to us, then we can pursue that and not worry about how much money someone else has or what they’re doing with their money. I believe with some hard work and discipline, big goals and dreams can be achieved.

You may have great ideas and big goals when it comes to your finances, but you feel stuck. There may be some barriers or challenges that are holding you back from achieving those financial goals.

Let me share a few barriers or challenges I’ve heard other people say they face. First is a lack of income. And by that I mean you might have a job but it is not paying you enough. Maybe you’re living paycheck to paycheck. Or there is not quite enough to save for the future. Possibly you’re having to work two jobs or more just to cover the costs of the necessities. That would be a big barrier for sure.

A second barrier or challenge is a lack of knowledge or skill to handle your finances well. Maybe you didn’t have a good example while growing up that led you to know how to manage your finances. Or perhaps you have tried to make a budget and stick to it, yet you forgot to allow for a certain expense or unexpected expenses popped up regularly that kept you from sticking to your budget. This is very common especially if you are not wired to be able to understand finances naturally. That leads us to the third barrier or challenge which is the “I’m not good with money mindset.”

Yes, there are people with a natural ability to understand finances and money. And there are others who have a hard time with the whole concept of finances. If this is you, know that you can learn how to manage your finances better. Maybe you won’t always get it perfectly right, but with some study and help you can get a better grip on what’s going on with your money. 

So as you try to make changes to your financial situation, it’s important to identify any barriers or challenges you may face in trying to achieve your goals. I encourage you to really think about what’s holding you back so you can address those challenges and move forward with more confidence.

Another thing we should think about when trying to make changes to our financial situation is identifying a strategy or strategies you should be using but are not currently implementing. There are so many different strategies available to help us with our finances. Some are quite simple while others are a little more complex and would require a professional to help you implement them.

A couple of simple strategies I think many of us know we should be doing but don’t are budgeting and good old discipline. 

I personally struggle with discipline when it comes to money. I lack patience in that when I see something I want, I can’t wait too long to get it. Now, when it comes to big purchases, I don’t jump into those right away. However, it’s often the little daily purchases that can get us in trouble. We think we’re not spending a lot at one time. But if we’re consistently buying things day after day, those purchases can add up to more than one big purchase.

Having a budget can help with this. If you set a budget for the month, you can see in black and white how much money you have and what expenses you need to cover. Consulting your budget first is a great way to begin to exercise discipline. If you don’t have the money in your budget for the thing you are wanting to purchase, knowing that can help you delay the purchase.

I encourage you to think about these strategies if you’re not implementing them. Just give them a try and see how they can help you improve your financial situation.

5 Tips to Improve Your Financial Fitness

Set clear financial goals

If you don’t know what you want your money to do for you, it’s hard to even make a budget. You need a clear idea of what you are trying to achieve with your finances. This is where defining for yourself what financial fitness means comes into play.

Maybe your main financial goal right now is just to make it through each month with a little money left over to save. And that’s perfectly fine. However, some of you may be in a position where you can save more or have more discretionary funds available. Having a plan for travel, saving up for a home or new car, and funding your child’s college education are all great goals to work towards.

So figure out what’s most important to you in the next 6-12 months and set goals based on what you come up with.

Make a budget 

Treat your budget like a map to get you to your financial goals. It is your plan for making these goals a success. I firmly believe if you will do this for even just a few months, it will open your eyes to the possibilities of doing so much more with your money. In fact, if you have the funds, you can designate a fun category so you’ll have something to look forward to every month.

Unless you are living paycheck to paycheck, a budget can be a little flexible. So try out different ways of using your money each month until you come up with something that makes sense for you and your family.

Try a no-spend month

You can do this in two ways. The first is to not spend anything above your fixed expenses such as your mortgage or rent, groceries, car payment, and utilities. I can tell you that this way is very hard to do if you are not good at restraint when it comes to purchasing things. However, with a little practice, I know it can be done.

The second way is to just pick one or two categories to not spend in that month. I can give you a couple of examples. Last July, I decided that I was not going to buy any clothes for myself during the month. I love buying new clothes and I realized that my closet was getting out of hand. Because I knew I didn’t need any new clothes, I took the month of July to not buy any. 

I’m glad to say I was very successful. And being able to control my spending in that one category certainly helped me to control our budget for the month much better.

Give a no spend month a try and see what you think. I bet you’ll find categories of spending that you can easily cut back on. And you’ll reap the benefits of having a little more money left over at the end of the month.

Write all of your expenses down

My husband who is also a CPA is the king of QuickBooks. He takes all of our receipts, online payments, and bills and records them religiously. I am not quite as excited about keeping up with what I spend and categorizing all my expenses.

However, I have discovered that if I keep a running list of my expenses each month, I can easily identify the top areas where I spend the most. This is how I figured out clothes and eating out were areas I needed to cut back on.

Personally, I keep up with this on a page in my Live It Out planner. There is always an extra lined page at the end of each month, so I just jot down every time I spend money. I have an amount I try to stay under each month. Writing down my expenses and running a total on them really helps me to stay on track.

Give writing down your expenses a try. See what patterns emerge and then make a plan to reduce any areas where needed.

Get accountability

This could be your spouse, significant other, or anyone else in your family. Maybe you want to partner with a friend and hold each other accountable. Friends are great for going through a no spend month with you.

The point here is to let someone know your financial goals and ask them to help you stay on track. Maybe you check in once a week or once a month. Whatever you do, just be consistent. 

I hope you’ve found something in this episode that will encourage you to become more financially fit. I’d love to hear what’s working for you or what’s not working for you in regards to your finances. Leave me a comment and let me know!

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