By Mikelle Rogers - Telcoe Federal Credit Union
To be financially fit means to have a strong and healthy financial situation. It involves managing your money wisely, making informed financial decisions, and achieving a state of stability and security in your financial life.
Let's Compare:
Your financial fitness journey is comparable to your experience at the gym, as it involves recognizing your initial state, making necessary adjustments, developing discipline and knowledge, gradually progressing towards financial goals, and ultimately achieving financial freedom and success. Let's dive into your story:
Just like when you walked up a flight of stairs and realized it left you winded, you began to recognize that you were out of shape physically. You start to wonder if you should take a trip back to the gym. Theoretically, this is the same situation when you receive your bi-weekly check. You received your paycheck deposit on a Thursday, had $800 in your checking account, and impulsively decided to treat yourself to a $400 online shopping spree. However, unexpected expenses arose as your tire blew out, costing you $100, and you had to pay bills amounting to around $150. The next day, you went out for lunch with your coworkers and had to fill up your tank, which totaled $100. By Monday, after receiving your paycheck deposit, you only had $50 left to last until the next payday. It was clear to you that a change was needed, prompting you to attend a webinar on saving and budget control—an important first step in your financial fitness journey.
Similar to incorporating a healthy diet and increasing gym visits, you started paying all your bills a little earlier than before and began implementing the 20-30-50 split method. With each paycheck, you allocated 20 percent to your savings, 30 percent for spending, and 50 percent toward bills and other essentials. Additionally, you began expanding your financial literacy by learning about money management. Although you were still in the early stages of your journey, you had made significant progress.
As time went on, just like lifting heavier weights and using larger machines at the gym, you devoted considerable effort to your financial fitness. You started investing monthly, aiming for better returns on your savings. This phase of your journey required patience, perseverance, and continuous learning. With each step, you moved closer to becoming a master of financial fitness.
Finally, you reached a major milestone in your financial fitness journey—the equivalent of reaching your ideal body. This symbolized achieving financial freedom, being free of debt, and surpassing your long-term financial goals. You had learned how to control and maximize your income, resulting in a well-off and successful financial position. Although you had accomplished a significant level of financial fitness, you understood that the journey didn't end there. You recognized the importance of ongoing financial management and continued to grow and maintain your financial well-being.
Your financial fitness journey mirrors your gym journey in recognizing your starting point, making necessary changes, building discipline and knowledge, gradually progressing towards goals, and ultimately achieving financial freedom and success. Remember, financial fitness is a lifelong journey, and with continued dedication and learning, you can maintain and enhance your financial well-being.
Key Aspects:
Budgeting
Budgeting is creating and following a plan where you track your income, expenses, and savings. Writing down your fixed and variable expenses will allow you to see the overall picture of your current situation. Budgets are completely customizable so you can plan on a bi-weekly or monthly basis. This will ensure that you are living within your means and prioritizing your financial goals. Check out a budgeting app (free one) or use this online budget worksheet for free.
Saving Money
Saving money is important for two main reasons: building an emergency fund and reaching long-term financial goals. One way to make saving easier is by setting up a system where the money is automatically deducted from your paycheck. This method is effective because it keeps the money out of your immediate reach, helping you avoid spending it impulsively. Another option is to open a separate savings account that is not linked to your regular checking account. This can help you keep your savings separate and reduce the temptation to dip into them. Alternatively, some people prefer to use a cash-only approach. This means physically setting aside cash for each expense, which can make it more tangible and easier to track. Whichever method you choose, the key is to make saving a regular habit and find a strategy that works best for you.
Investing Money
Investing can help your money grow over time, beating inflation and providing additional income. Investing can be tricky but start investing in yourself first. A great starting point is a Quarter Plus Money Market account. These usually require a larger amount for the initial deposit and the interest rates are also higher. These accounts allow your money to grow over time.
Debt Management
This involves keeping debt levels manageable, making timely payments, and minimizing high-interest debt. Prioritizing debt repayment can free up funds for other financial goals. There are many methods to pay off debt. One of the most popular is the snowball method.
Financial Planning
Planning can help the process of analyzing, organizing, and strategizing your finances to achieve specific goals and secure your financial future. Financial planning is crucial because it helps you make informed decisions, achieve your financial goals, manage risks effectively, and attain long-term financial stability and security. Financial planning is for all ages. Think of it like a wellness visit with our doctor and the goals you want to work on. You leave with concrete advice on how to achieve your goals.
Financial Literacy
Having knowledge and understanding of financial concepts, products, and strategies will allow you to make informed decisions, avoid scams, and navigate the complex world of personal finance. Reading books, attending webinars, or just speaking with someone at your credit union can help you grasp an idea of how to improve your skills.
Risk Management
Having appropriate insurance coverage, such as health, life, disability, or property insurance can help attain the correct coverage for any emergencies that arise. Having an emergency savings account is always a great step to take but having a form of coverage will save you money in the long run. You can open one for free with Telcoe Federal Credit Union.
Overall, being financially fit means having control over your finances, being prepared for the future, and having the ability to handle financial challenges that may arise. It provides peace of mind and opens up opportunities for achieving your goals and dreams.
Not sure how to start?
GreenPath Financial Wellness is a nonprofit organization that specializes in providing financial counseling, education, and debt management services. It is dedicated to helping individuals and families achieve financial well-being and overcome financial challenges. GreenPath offers personalized financial counseling sessions to help people create budgets, manage their debt, improve credit scores, and develop effective money management skills. They also provide educational resources and workshops on various financial topics, such as budgeting, saving, and investing. In terms of debt management, GreenPath assists individuals in creating a debt repayment plan that suits their financial situation and works with creditors to negotiate reduced interest rates and payment arrangements. They aim to help people regain control of their finances, reduce debt, and work towards long-term financial stability. Telcoe Federal Credit Union partnered with Greenpath over 10 years ago. Members can reach out as late as 9 pm or even Saturday to speak with a certified financial specialist.
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