By Dr. Jillian Starman, MFF Director of Education
I recently started back at the gym after recovery from a knee injury, and this got me thinking about financial fitness. Most people don’t get up one morning and decide to run a marathon – they need to train and get in shape. So, why do we expect people to be financially fit without training and time to get their finances in order?
Let’s look at five training steps for financial fitness:
Training Tip #1 – Set Financial Goals
Goals help us focus on what we want and can get us started on a path toward what we want to accomplish. Financial goals should focus on how we want to live our life now and in the future. Money is a tool to help us get what we want, but if we don’t know what we want, then we don’t know what type of tool it will take to get us there.
Training Tip #2 – Know Where Your Money is Going
A budget is a snapshot in time for where your money is going. I usually set up my budget for the year, and then make adjustments month by month as things come up or when I need to make changes. Your budget should include necessary items such as housing and utilities, required expenditures such as loan repayment and savings, and don’t forget to include discretionary expenditures such as eating out or other favorite activities.
Training Tip #3 – Put Your Finances on Autopay
With a budget in place, you now know how much money is coming in and how much is going out each month. Next, set up auto pay for your recurring payments – that way you will not be paying any late fees! Make sure that one of the recurring payments is to put money into a savings account – that way you will be less likely to spend before you save.
Training Tip #4 – Keep a Balanced Lifestyle
As your income increases over time, or you receive bonuses, put the extra income into savings or investments. Many people buy bigger homes or more expensive cars, and these items end up costing more over time to maintain and give you less financial freedom in the future. If you can keep your expenses relatively constant over time, it will help you reach your financial goals.
Training Tip #5 – Get Information and Advice
Make sure that you understand how to build an investment plan to meet your financial needs. Being financially fit means that you not only have your expenses paid and have emergency and other savings in place, but it also means that you are planning to be prepared for the future. The goal should be to meet current financial needs and build long-term wealth for retirement.
I hope these financial training tips are useful for you on your journey towards financial fitness. If you would like to know more about what MFF can do for you, check out our complimentary Standards of Financial Literacy course, our blogs about money and finances, or our videos on YouTube.
A Journey to Personal Financial Success
Standards of Financial Literacy (SFL), MFF’s signature program, supports the concept of personal financial freedom by giving participants of all ages the insight to set goals, track net worth and apply acquired knowledge. This online, self-paced program is ideal for individuals and groups alike.
Upon successful completion of SFL’s six-module course, participants become an MFF Fellow. Becoming an MFF Fellow is the ticket to access additional MFF courses and opportunities for mentoring, networking, internships and hands-on projects. These are the opportunities which allow MFF Fellows to continue their journey to personal financial success.
To learn more about this exciting program, click here.