Fit Finances

Fit Finances

Jun 05

What: Practical tips to getting your finances fit.

Why: Living a fit life involves making an effort in all areas.  Finances are a huge cause
of stress and bad health for many of us.  Making an effort in your financial fitness can lead to huge gains in your overall health and well being.

I’m fortunate enough to have married a financial guru.  Bo has mentored hundreds of professional athletes and their families in ways to build and maintain wealth for a lifetime.  A quick interview with him over the dinner table last night gave me 5 tips for financial fitness to share with you.

1.  Pay Yourself

I love how Bo frames this.  The moment we get money, we are quickly coming up with ways we can give it to other people; credit card companies, restaurant owners, car dealers, and boutique owners, just to name a few.  What about paying you?

First, save at least 6 months of living expenses in the event of an accident or life change.  Then, maximize retirement accounts.  Not only does a retirement account provide you money later in life, but it offers tax benefits and holds you accountable.  Most retirement accounts charge penalties for early withdrawal making it less appealing to take your money back out.

Once you’ve paid you, then you are free to pay whomever else you like.

2.  Expenses First, Income Second

Bo explains the one thing that wealthy people have in common is their expenses, not their income.  Most millionaires in our country today make less than $100,000.  They are not cheap with their money, rather they are just smart with planning their expenses.

On the contrary, there are plenty of people who make $1,000,000 or more each year and are not technically millionaires.  They blow their money on items they think they can afford before paying themselves.

3.  Eliminate Your “It’s Justs”

According to Bo, the most dangerous words in the English language are “it’s just.”  Think about the myriad of things we blow money on because “it’s just.”  How many times have you picked up unnecessary items at Wal-Mart just because they were on sale.  “But it’s just $10.”  How often have you overpaid for fancy coffee drinks because “it’s just?”  See where I’m going here?

Bo says that the most commonly overlooked “it’s justs” are electronic service bills and movie channels.  We pay for cell minutes, long distance service, or cable movie channels that we seldom use or are unnecessary all together.  Sit down with your bills, eliminate your “it’s justs”, and before you know it, you’ve come up with a mortgage payment or family vacation with your annual savings.

4. Use Coupons

I’m not suggesting any of you go on Extreme Couponing.  Just make the effort.  Many retailers offer rewards, coupons, or discounts through credit card services, mailing lists, or loyalty programs.  It’s often completely unnecessary to pay full price for something.

Before you make your next purchase, at least make the effort to see if discounts are available.  Search newspaper ads, online, or even within the store for promotional offers and incentives.  A great example of this is our Kroger rewards program.  Our family frequently receives personalized coupons, gas discounts, and even cash back for participating in this grocer’s loyalty program.

5.  Pay Attention

Bo suggests that most people do not like the terms “allowance” or “budget,” but rather should just pay attention.  A great example of this is your bank account.  Is your bank charging you fees to hold your money?  Are you paying attention to your statement each month?   All banks have accounts available that do not charge fees, and some even pay you for keeping your money.  Pay attention to these little details and they’ll pay out big in the end.

*All images are courtesy of Google images.