New Year’s Resolution: Get Fiscally Fit
With a new year, everyone starts talking about New Year’s resolutions. The most common resolution, which is almost always mentioned, is getting healthy - lose weight, get fit, work out or something else to this extent. However, a great addition to these goals is to become financially fit. So while you are adding these health goals for your body, why not also add some financial goals to your resolutions?
Get healthy: The first thing people usually do when starting their health program is to see what their starting point looks like and what their end goal is. They usually take pictures, write down their starting weight or measure their body fat. Getting financially fit should start the same way. Take a picture of your credit report. Write down your starting fico score. Write down what debt you see on your credit report and measure your debt-to-income ratio. Knowing where you want to go should start with knowing where you currently stand. If you have a fico score in the 650 range and you want to get to 700 by mid-year, then figure out what is holding you back. Are you holding too much debt? Do you have current late accounts? Are you maxing out your current credit cards? Knowing where you are wanting to get to and what you look like now is a great starting place.
Lose weight: If you want to lose weight, most people figure out what caused them to gain weight. Was it eating poorly or not working out? Losing weight is just like losing debt. Gaining debt is caused the same way as gaining weight. Am I spending my money in the wrong places, not saving or paying on the wrong things? When trying to lose debt you need to cut out the spending in those wrong places. This might involve not stopping for an expensive cup of coffee. Not impulse shopping at the grocery store and just sticking to your list of what you need. Maybe it is packing a lunch at work in order to save the money of eating out. The average cost of eating out for lunch is around $8 per day. Eating out five times a week for an entire year will cost you more than $2,000. That amount of money will pay down a lot of debt. So taking a healthy sandwich, cooking extra at night so you can take leftovers will not only save money that you can use to pay down debt, but can also stop the temptation from eating the so yummy, but so bad items we all love on the menu.
Get fit: Getting fit involves some work. No one gets fit by doing nothing. It usually involves weight training, running or some other strenuous activity. Getting financially fit is the same way. It will require some smart savings, paying down debt or some other task that will help you reach your goal. Determine what is keeping you from getting financially fit. Is it no savings, high interest credit cards or some other payment? If your goal is to build your savings, then see what amount you fill comfortable saving each week or paycheck. Make it a goal that will push you to reach, but something that is attainable. Find a way to keep track of the times you hit your goal. Put an “X,” a gold star or a smiley face on a calendar the weeks you saved that money. This is like weighing yourself each week. When you know you have to weigh, everyone usually tries to hit their goal. Maybe you want to pay off credit cards. Take what you learned from your credit report and focus on a certain area. Maybe you have a high interest credit card that you are paying a lot toward each month, but seeing no movement. Figure out what you are paying each month and set a goal to pay an additional amount each month. Set the extra payment money aside each week or payday, so you are not tempted to spend it. Then when you make the payment, find a way to track it. Starting a streak is sometimes all you need to push yourself to keep the streak from ending. Then when you see your credit card start to get paid down quicker, it becomes easier to make those payments.
Setting a New Year’s resolution to get physically fit each year is a great way to focus on yourself, but getting financially fit, is a great way to relieve stress, feel accomplished and also help you reach your goals. Sometimes to hit your physical goal you need to get the advice of a personal trainer, and this is no different from getting fiscally fit. You might need to get the advice of a banker, or someone else who knows how to help you reach your goals. All of these things take hard work, but in the end, reaching your goals is one of the greatest accomplishments that can pay off for years.