Are You Financial Fit?
Your physical and financial health are both important factors affecting your well-being and security. If you are like most of us, you are likely to be paying more attention to your physical fitness than your financial fitness. One way to tell how you are doing is to take the Financial Fitness Quiz.
Financial Fitness includes creating and living with a budget, building financial reserves and making your money work harder than you do.
Physical fitness helps you increases your chances of living well in old age. Financial Fitness helps you cope with life’s financial challenges and increases your ability to retire comfortably.
Financial Fitness doesn’t happen automatically; we must work at it, just like going to gym. Why is this important? Because you want to be prepared for future, safeguard your family, and provide yourself with a financial secure future, just like you want to be physically fit. So no more excuses! Help shape your future! You deserve to give yourself the gift of living well through Financial Fitness.
Why is Getting Financially Fit More Important than Ever?
We are living longer than ever! Average life expectancy for someone born in 1900 was 47 years but this increased to 68 years for someone born in 1950 and to 77 years for those born in 2000. What this means is you have a choice, retire into poverty or start now to plan to save for retirement and the other important financial events in your life. So, action is needed now to ensure you are financially fit for the future.
So How Can I Increase My Financial Fitness?
Following our really simple approach, you need to take six steps to more financial fit.
Step 1 Talk about it
Try to communicate more with your partner (should you have one) about your household’s finances. Financially Fit households communicate more about the their finances. Hold a monthly budget meeting and work out how you are going to deal with your income and expenses that month,
Step 2 Work out what you’ll need
Work out now how much money you think you will need to live on during retirement. No matter what your age now, the sooner you work out how much money you’ll need for retirement, the better. Here is a really simple retirement calculator from the Financial Industry Regulatory Authority.
Step 3 Forecast what you will have
Forecast how much money you think you will have by the time you will retire. Financially Fit households frequently worked out how much they would have as they neared retirement if they continued to save and invest the same way that they had done to that point.
By working this out, and then comparing it to how much you’ll think you’ll need, you can gain some idea of how you might need to change the way you save so that you will be able to retire comfortably. To learn how to work this out, try using an online retirement calculator.
Step 4 Maximize tax-deferred investments
Open a retirement account and save something from each paycheck into it. The closer you get to the maximum contributions the more you retirement will be secure. Check the IRS website for current contribution limits.
Step 5 Automate your savings
Financial fit people own a savings account and automatically save into it from each paycheck. If this a challenge, evaluate where your are spending money to see if there’s any excess that can be diverted towards a savings account as the interest on the savings will add up significantly over time.
Step 6: Minimize debt and paying interest
Pay your household bills on time and your credit card balances in full each month. Pay a little extra towards your mortgage principal each month. Build an emergency fund. Save up to buy expensive items such as cars. And shop around for the best values and deals.
There are three things you can do minimize debts and consequently the need to pay interest.
First, pay their household bills on time and monthly credit card balances in full.
Second, pay a little extra on their mortgage principal each month. If your mortgage allows you to do this, consider paying a little extra each month as even small amounts make a big difference over time. You can calculate the advantages of paying extra with an online mortgage payoff calculator.
Third, reduce their debt by building an emergency fund. This is just like a fund saved towards the purchase of an expensive item (mentioned earlier) except that you are saving for unanticipated but critical expenses, not intended purchases. Something saved in an emergency fund is better than nothing, because it helps you avoid borrowing (as much) money when an unanticipated expense suddenly presents itself.
Take these steps an you will be on your way to being financial fit.