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Are you ready to stretch those financial fitness muscles? We hope so because it’s time to get financially fit!

Being financially fit means living a life of complete financial responsibility. The Center for Financial Services Innovation (CFSI), also known as the Financial Health Network, defines four basic components of financial health:

  1. Spend
  2. Save
  3. Borrow
  4. Plan

These components reference everyday financial activities. As such, every choice you make in terms of these four activities either builds or detracts from your financial fitness. Like physical fitness, you can beef up those fitness muscles a little bit more each day.

Being financially fit is crucial for a well-balanced, stress-free life. Here’s why (and how):

Financially fit people expand their financial knowledge

A financially fit person is constantly broadening their money knowledge. They read personal finance books and blogs, attend financial education seminars. And are aware of the evolving state of the economy. This enables them to make monetary decisions from a position of knowledge and power, leaving much less up to chance or luck.

They stick to a budget

A financially fit person also knows that tracking monthly expenses is key to financial health. They are careful to set aside money from their monthly income for all fixed and discretionary expenses and to stay within the budget for each spending category.

They minimize debt

A financially fit person is committed to paying down debts and seeks to live debt-free. Constant budgeting, ongoing financial education, and planning ahead enable them to make it through the month, and through unexpected expenses, without spiraling into debt.

They maximize savings

A financially fit person also prioritizes savings. In fact, savings is a fixed item on their monthly budget instead of something that only happens if there’s money left over. This allows them to think ahead and build a comfortable nest egg or emergency fund. In turn, having a robust safety net means sleeping better at night knowing there’s money available to cover unexpected expenses or a change in life circumstances.

They maintain complete awareness of the state of their finances

A financially fit person knows exactly how much money they owe, the accumulated value of their assets, and the complete sum of their fixed and fluctuating expenses. This awareness takes the stress out of money management, allowing them to make better financial choices.

A financially fit person maintains a healthy credit score

A financially fit person also knows that excellent credit history and score is a crucial component to long-term financial health. They are careful to pay all bills on time, hold onto their credit cards for a while, and to keep their credit utilization low. This enables them to qualify for long-term loans with favorable interest rates, which saves them money for years to come.

They help their money go further

A financially fit person doesn’t waste large sums of money on credit card interest charges. They live within their means and only use these resources for purchases they can actually afford, or for large, long-term assets, like a car or a house. This means they have more funds at their disposal to help build their wealth through savings and investments.

They create concrete financial goals

A financially fit person also has long-term and short-term goals. They keep their focus on the big picture when making everyday money choices. As a result, it empowers them to actually realize their financial dreams.

The financially fit achieve financial independence

A financially fit person is independent. They don’t rely on loans from friends or family to get by. They also don’t need to pay with plastic at the end of the month because they ran out of money. Their well-padded emergency fund means they don’t depend on their monthly income to put bread on the table either. By sticking to a budget, prioritizing savings, and maintaining an awareness of their finances, they are strong, secure, and completely independent.

Being financially fit means living a life without battling anxiety about getting through the month or stressing about the future. You can achieve financial fitness by committing to making choices in each of the four components of financial health (spend, save, borrow, plan) that are forward-thinking and also help to build your financial wellness.

If you need help achieving financial fitness for yourself and your family, then we’re here to help. Contact us when you’re ready.

Your Turn: Why is financial fitness so important? Share your reasons with us in the comments.

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