Just like a good diet and regular exercise are vital to your personal wellbeing, your finances need regular attention to keep them performing at their best.
Lib and I have laid out a simply 5-step financial fitness challenge. Over the next week, we want to see how many things you can cross off the list.
By the time you’re done, we guarantee you’ll be feeling more in control about your financial situation. Sound good? Let’s get cracking.
1. Set up a budget
A solid budget is the cornerstone of your financial fitness.
Sit down and accurately list your monthly income in one column and expenses in the other. Don’t forget about irregular charges like electricity bills, and make sure to list your savings as an expense to keep yourself accountable.
After that’s done, subtract your expenses from your income and see what’s left. If you’re in the red, it’s time to start making changes.
2. Save more of your wage
Set up an automatic debit which kicks in on pay day and sweeps 10 per cent of your salary into a high interest savings account.
You’ll be amazed at how easily you will adjust your lifestyle to function on the remaining 90 per cent of your salary, and you’ll be equally amazed at quickly those regular 10 per cent contributions grow to something substantial through the magic of compounding.
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3. Ditch bad debts
If you have bad debts like credit cards, now is the time to take control.
Stop simply paying the minimum and divert as much money as possible to paying them off. If you have savings, consider using them to pay off bad debts… they’re not earning as much as the interest you’re paying.
If you have a credit card you can’t seem to shake, look into balance transfer deals where you pay a low to 0 per cent interest rate for a defined period.
The key is to put a plan in place to pay off your debt within the interest free period, and be disciplined to not spend any more on the card.
4. Pay less for financial products
When it comes to financial products, paying fees and premiums whenever they fall due can become a reflex action. But in such a competitive space, simply accepting the fees you’re being charged means you’re missing out.
So challenge four is to make a promise to yourself. The next time a bill comes due or a fee is charged on one of your financial products, rather than simply paying it we want you to stop and check whether there is a better deal on offer somewhere else.
5. Lock in 15 minutes a month
You’ll be glad to know your last task is a simple one: we want you to commit to locking in 15 minutes every month to review your finances (make sure to do it with your partner if you have one).
That’s it… we said it was easy. We find 15 minutes is more than enough time to review your budget and spending, plan for upcoming bills and review how you’re tracking against your debts.
If you want to take your finances to the next level, take a look at our 4 Week Money Makeover. We will show you take control of your money step by step, with practical video lessons, tools and calculators, access to financial experts and more!