Financial Fitness – 2011 exercise plan
Financial Fitness 2011 exercise plan
Financial Fitness 2011 exercise plan
How to Shape Up, Thin Down and Build Financial Muscle!
Financial Advisor Allen Duck offers up some great advice to help us get in financial shape!
How many people make New Year's resolutions to better our lives in some manner. Many of our resolutions revolve around getting in shape, physically and financially, and often times we let things get away from us around the middle of February. Oops. Well here we are in the middle of March so I thought it would be a great time to snap back before so much of the year has passed us by things get pushed aside. Lets remember that an action taken today will provide us a outcome tomorrow, an action put off till tomorrow will provide us nothing but the basis for excuses.
1.) Get Moving! Like the beginning of any fitness program we have to get up and get moving. This means committing to being involved in your financial life and no longer allowing yourself to be a financial couch potato. The easiest way to get out of financial shape is to become lazy about managing your money and your savings as well as controlling expenses. By taking your eye off the ball you can quickly find yourself overcommitted to expenses , your savings dwindling and your debt rising. So step one is to recommit. Be aware of what you earn, (what comes in after tax), and what you spend, (what really goes out) and what you need to save for your future goals [List them.]
2.) Go On A Financial Diet. If you want to lose weight you have to watch what you eat. The same applies to your finances. Go through your checkbook and ATM receipts for the last few months. What have you spent money on? Write these expenses down. Which ones are core, monthly expenses like heat, electricity, rent or mortgage? And which were discretionary like going out to eat, entertainment, one time purchases? Set the fixed expenses aside and focus on the added financial calories. Can you alter your lifestyle in some manner to reduce expense? Perhaps go out to dinner one or two fewer times a month, rent a movie at home instead of going to a theatre, reduce your impulse buying? Realize that we all like, and need, to live a full life. But try to keep the excess expenses in control and within your means. Very few people have an actual budget that they use to monitor expenses and catch excess early before it becomes an issue. Consider your family as a business and recognize that spending more than you make can quickly undermine your balance sheet creating serious operating issues.
3.) Get Leaner. So you have identified the added financial calories in your life and made some changes consider this the aerobics of financial fitness. Now let's get leaner, its time to pump a few weights. Review the fixed cost sheet you have developed. Are there minor changes that can made there? For example, car and homeowners insurance is really owned to cover large events you financially would have difficulty paying for (your car is stolen or your house burns down). It's not meant for small occurrences and claims. Examine your deductibles. Can you afford to increase those to the maximum? Cutting the cost of the premium. Can you alter your cable television bill? Do you need all the channels you have? Would it be cheaper to drop premium channels and subscribe to a service like Netflix instead? Or worse, are you paying for services you don't even use? Do you have both a landline and cell phone? Would it be cheaper to just use your cell phone? Do you use all your cell phone minutes and exceed those on your plan and get penalized with larger monthly bills or are you paying for too many minutes? Do this for all your bills. Review them all in detail. Call each company, and their competitor, to see if there are cheaper products or services they provide for what you are seeking. It takes a commitment of time and energy but will return many times over in a better understanding of your situation and financial savings.
4.) Build A Plan. The way to stay fit for the rest of your life and not have to commit to the same old New Year's resolutions every year is to build a plan you can commit to. Identify and qualify the things you want to be and have in your life. Establish these as goals. Plot out what it will take monetarily to achieve these goals and what it will take you saving each month to get there. Developing a plan can be pretty simple to start with and expanded upon over time as life changes your situation. Some of the obvious goals are retirement,. College for the kids, second homes etc. But don't forget the things that you might desire sooner, car, pool, deck. Plan for them and accommodate a little less expense these items become more tangible and become a real incentive to a more structured life.
5.) Build Muscle. You've begun to lose weight. You have established a personal plan of action. Now let's get stronger. Establish a savings account. Build up enough cash to cover 3-6 months of your leaner monthly expenditures. Once that is established start to save and invest your money for your longer term future goals. At this point you have cut out excess, set aside emergency funds and have started to accumulate wealth for your future desires. You are financially stronger for it. If you have a retirement plan at work, take advantage of it, if not take advantage of the savings plans afforded most people by the Government.
6.) Hire A Trainer. Like any exercise regimen if you need help that's ok. If managing your financial life is too difficult for you then hire a Financial Advisor to assist you. Interview a handful and find the one that best meets your needs and personality. Ask your friends for referrals. Who do they use and are they satisfied. Ask for references. Do your due diligence. Like a bad trainer a bad Financial Advisor can set you back, so take your time and make sure you are fully comfortable with the one you choose.
7.) Stay Educated. Try to keep current with what is going on in the financial world around you. There are very good websites like Yahoo Finance or MSN Money. Periodicals like the Wall Street Journal, Kiplinger's, Smart Money are informative. There's financial radio programming on stations like NPR or your local news/talk station. And, there are massive amounts of books written on financial planning and management at your library or book store. A quick daily update will enable you to see the shape of the economy as it develops and plan more appropriatelty. Surprises are great at birthdays and holidays, horrible when they hit your financial well being unexpectedly.
8.) Stay Balanced. My final bit of advice to you is to stay balanced. As I tell all of my clients we must plan for tomorrow, plan for the ongoing risks around us, but we are alive and breathing today so live for today as well. Don't cut yourself off from the things that bring you joy now. A solid financial life, which is part of a life well led, is all about balance. Tighten up the budget, build a plan for tomorrow, save and invest, but also go to that movie with friends or go out to dinner with your spouse. Just do them all in moderation and keep score. Carrying credit card balances for long periods, watching the balances increase month over month, are signs of being out of balance and a good indicator that its time to hit the financial gym.
9.) Be Disciplined. Anyone who has been on a actual diet or fitness plan knows that its easy to fall off the wagon and into old habits quickly losing everything that has previously be gained. The same is true in financial fitness. If your neighbors have the good fortune to win the lottery and buy a new car don't believe you can too. You can't. While it is a very tempting thing to do, it is far better to be financially secure than up with the neighbors and struggling pay the bills. And as with all fitness programs, the longer you stay with it the easier it becomes.
10.) Celebrate A slice of cake once in a while will not destroy a fitness program, so when the reserves are up and the occasion affords an opportunity have a good time, it will feel great and is deserved.
And lastly - ask for advice if you feel you need insights on your personal situation. We are here to help and welcome the opportunity.
www.nstarfinco.com
Allen
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