What does financial fitness mean to you?
It’s probably not just about having a pile of money in a bank account or a fat portfolio of stocks and bonds. From our perspective, financial fitness enables you to make good financial decisions because you have developed the skills and knowledge to pursue goals that will enhance your wellbeing and that of those you love and care about.
We’ve covered goal setting in various other posts and it seems to go without saying that if you don’t know where you are going, you leave the destination up to chance. Most of my readers know that I follow Michael Hyatt’s idea of SMARTER goals set forth in his book, Your Best Year Ever. Smarter goals are Specific, Measurable, Actionable, Risky, Time-keyed, Exciting, Relevant to your life.
You’ll never get a handle on finances if you don’t track your outlays. We have tried to make that simpler by providing clients access to a web-based tool, eMoney. When we pose the question about outlay, most people start at the bottom by identifying one expenditure and then another and they ultimately wind up with a large unidentified amount. I have not found many people who will stick with that until they have accounted for nearly all their outflow. Remember my old adage: there are five things, and only five things, that you do with all the money that comes in each month or year: pay your taxes, pay on debts (if you have any), save some, give some, and spend the rest. In the final analysis, there is nothing left over. If you did nothing more than capture that breakdown, you would be miles ahead of most people. Try it for a month.
Invest, but not simply for the sake of investing. Why do you save and invest for the future? Most people give us answers like a new car or something else that they have wanted to buy. Some say retirement, or an education fund for children or grandchildren. The why is arguably more important than the “how” or “what.” After hearing that the goal is “retirement” I like to drill just a bit deeper and ask why is having a retirement fund important to you? I listen carefully for values and look to tie the financial plan to those values that matter most to each client. Is it that thing (car, house, etc.) or is it really about freedom from worry and / or independence from others that you value? These are the things that will prompt you to overcome procrastination and take action now in order to be more financially fit in the future.
If you would like a copy of my firm’s financial fitness checkup questionnaire, give us a call.