“Don’t tell me where your priorities are. Show me where you spend your money — and I’ll tell you what they are.”
~James W. Frick
Is your financial health a priority?
Before you say “yes,” answer these four questions:
- Do you pay all your bills on time?
- Can your finances comfortably survive missing a paycheck without your bills suffering?
- Do you have money prepared to handle an emergency?
- Is your net worth, positive or negative?
Is your financial health a priority?
Let me help you out.
So now that you’ve had a minute, what do you think?
Are you truly putting forth your best effort to attain good financial health?
We all know the value of physical fitness, but we often come up short when it comes to our financial fitness.
But, not to worry. Fortunately, there are a few simple things you can start today to get your finances on track.
The very first thing you need to do is:
1. Know Your Numbers
Money in versus money out.
This is the key to understanding financial fitness.
The simplest way to do that is to take a pen and paper and write it down.
Start by:
- Listing your monthly or bi-weekly take-home earnings
- Then, list all your necessities like food, housing, utilities, insurance, and basic transportation.
- Next, gather your bank statements.
- Now, compare what you have coming in, against what you have going out.
If you have more coming in, then hooray for you, you’re on the right track.
BUT, if there’s more going out — then start slashing non-essential spending immediately!
When you see it in black and white, it goes a long way towards helping you make better spending decisions.
2. Create a Spending Plan
A spending plan is just another way of thinking about your budget.
And what I do for my budget is once I’ve listed my income, then I give every dollar a job.
A good plan will help you identify what you need to do to reach your desired financial fitness faster.
Here’s how you start:
- Set a realistic goal. Ask yourself where do you want your finances to be in one year. Make sure it is reasonably attainable.
- Track your expenses. Jot down every dime you spend for at least 30 days. Don’t leave anything out because you feel guilty about it. That’s called denial, and it will only hinder your efforts.
- Separate your needs from your wants. Ask yourself, will buying this get me closer or farther from my financial goals? Also, think of what will happen if you don’t buy it. Will your world collapse? Probably not, right?
- Prioritize your spending. Necessities come first! If it doesn’t keep you alive or provide shelter, then it’s not a necessity.
- Put your plan into action. Here’s where you give every dollar a job. You choose where the money will go before you ever spend a dime.
3. Pay Yourself First
When I say, “pay yourself first,” I do not mean that I want you to go out on a spending spree. I mean that I want you to SAVE. Whether it’s $5 per week, or $500 per week, put your money in a savings account and watch it grow.
I know this may sound difficult if you’re struggling with your finances already.
But that’s precisely why you need to do this off the top. Otherwise, you’ll never find any money to save.
Then, what will you do when the unexpected happens, which it always does?
And 40% of Americans can’t even cover a $400 emergency without turning to credit cards, loans, or selling valuables.
So the lesson here is that it’s always better to be proactive than reactive.
Also, if you think that money will appear when you need it, then you’re setting yourself up for a financial disaster.
One great action you can take is automatic withdrawals. It’s good to have money sent directly from your paycheck to your savings account.
Here’s why:
- It’s easy and convenient.
- It doesn’t rely on your discipline.
- You pay yourself first.
- You’ll save more money faster.
- It moves you closer toward your financial goals.
4. Start Small
If you have never run a mile, then you can’t expect to win a marathon.
However, you can train, practice, and increase your distance a little bit every day.
Then, over time, you will build the endurance and skill needed to at least complete a marathon.
The same goes for your financial health.
You don’t have to focus on saving a year’s worth of expenses in only a few months.
Instead, try to focus on developing a savings habit. Start by committing to save at least 5% of your salary or even $5 every paycheck.
You can also do less if you need to.
But no matter what amount you choose, the key is to start today and to be consistent.
Before you know it, here’s what you’ll see:
- Your savings balance moving upward
- More confidence in your finances
- Yourself moving closer towards achieving your financial goals.
5. Limit Your Debt
It’s sad to say it, but Americans are drowning in $4 trillion worth of consumer debt!
What’s worse, is that number doesn’t even include mortgages.
But it does include everything else. For example, credit cards, auto, personal, and student loans.
Then, it’s the high-interest rates and the inability to control spending that is keeping them there.
Unfortunately, that has been the American way.
Everyone wants bigger, better, and more!
But the good news is that debt does not have to be a lifestyle.
And if you’re ready to improve your financial fitness then here’s what you need to do:
- Establish a get-rid-of-debt plan. You can use this debt payment calculator to see how long it may take.
- Slash your expenses. And buy generic when you can.
- Increase your income. Work overtime, drive for Uber or get a temporary part-time job. The quicker you get out of debt, the better off your finances will be.
- Consider debt consolidation. You may be able to move high-interest loans to one lower interest loan payment. It could save you hundreds of dollars.
- Seek low-interest or no-interest credit card offers. Sometimes all you need to do is call your credit card company and ask. Plus, even a limited time offer for 6 months will help pay down the principal balance faster.
- Don’t create any new debt! You must stop spending! It’s the only way you’ll ever reach financial fitness.
6. Monitor Your Credit Score
Whether you like it or not, your credit score tells a lot about your financial health.
But often people forget about it because it’s not a number that we see every day.
Or, they avoid it because they’re afraid of what it will show, which is never a good sign.
And poor credit can negatively impact your ability to qualify for a mortgage or car loan.
A good credit score starts at around 670 and here’s why you should monitor yours several times a year:
- Catch discrepancies faster. Identity theft is a huge problem. It can go undetected for months or even years if you’re not paying close attention.
- Keeps you informed on where your numbers stand. Even if your score is low, you can take action faster to improve it.
- Shows what areas need improvement. For instance, it tells if your history of on-time payments is less than 100%. So you can work to increase your on-time payments, which will help to boost your score.
So it all boils down to this, your financial fitness is just as important as your physical health.
And not having good financial health can set you up for a financial disaster.
In any case, if your finances are in good shape, then you can use these six easy steps to stay on track.
But, if you’ve realized that you’re in poor financial health, then use these steps to start making changes today!
Want to learn more about how to CRUSH DEBT and pursue your passion? Let’s Talk!
I’m looking forward to hearing about your plans to crush your debt!
DeShena
DeShena Woodard
Hi, my name is DeShena. I am a working mom, turned aspiring entrepreneur and money mindset mentor. I achieved my mission of becoming 100% Debt-Free and starting a business. My goal is to help other professional women learn to crush debt and pursue their passion as well.
