5 Keys To Becoming Financially Fit (Part Three)

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How Can I Go About Becoming Financially Fit?

In Parts One and Two we looked at tracking expenses and the importance of finding out where your money is going. You cannot control what you do not track, so listing every single expense for at least a month is absolutely critical. I gave some examples of minor changes that you can make that will all help to save you money. None of those will be real game changers, but each little bit helps and when they are all added together it can amount to quite a savings on our way to becoming financially fit.

Becoming Financially Fit Through Savings

In order to become financially fit a certain amount of your income has to be set aside into a savings account. Of course it could be into any kind of an account, but it will be more meaningful and more easily tracked if it goes into an account that is used only for this purpose. Savings accounts work best as you can’t write checks on them and it takes a deliberate action to get money out.

Savings – The Second Key To Becoming Financially Fit becoming financially fit

Your goal should be to keep adding money to the account whenever you can.  An excellent way to do that (and to reward yourself) is to put in any money that you save through reducing or eliminating expenses directly into the account. For instance, if you would usually have gone to the movies with friends and it would typically cost you twenty dollars including snacks, and instead you have your friends over to watch a movie you rented and you supply the popcorn that set you back six bucks, you deposit the fourteen dollars of savings into your account.

Do the same with the savings by buying bulk, pushing back hair appointments or changing your own oil. Discipline is a requirement of becoming financially fit. You will be amazed at how fast you can accumulate money in your savings account. The trick is to put it in there and leave it there.  Left in your wallet or on the dresser is a sure invitation to that magical process known as financial evaporation where money just vanishes into thin air. I used this technique when I quit smoking and it was amazing how much money I was spending on killing myself that I now had available to spend on family holidays or even fishing tackle (grin).

A good rule of thumb for becoming financially fit is to have the equivalent of 3 to 6 months of living expenses inbecoming financially fit1 your account to act as a safety margin. This margin is to cover off emergencies that life can throw your way, like the loss of your job, a natural disaster, a major appliance failure or a vehicle collision. Think of it as your own privately funded insurance policy and just like insurance, it provides you with peace of mind.

Once you have 6 months of household expenses set aside, any additional funds that accumulate in your savings account should be earmarked for investment. This is money that you are going to put to work, and it is the money that you are going to use for your retirement. You cannot count on the government and private pension funds to provide much in the way of finances for your old age, so it falls to us to take care of ourselves. Any funding that comes our way through pension plans will have to be looked upon as a sheer bonus or an unexpected windfall.

Tomorrow we are going to look at the use of credit cards and how they factor into our focus on becoming financially fit.

Till Next Time….

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Sigrid McNab

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About Sigrid McNab

Sigrid McNab is the author of #1 Amazon Best Seller, speaker and the CEO and Founder of sigridmcnab.com. Sigrid specializes in blogging, attraction marketing, and generating highly qualified leads. Sigrid teaches people how to build a successful online business.

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4 Responses to “5 Keys To Becoming Financially Fit (Part Three)”

  1. Peng Teo Says:

    Thank you for sharing. Great advice.

    [Reply]

    sigrid Reply:

    You are so welcome Teo…

    [Reply]

    Reply

  2. Hale Pringle Says:

    I always love the “Pay yourself first” mentality.

    THere are times when I wish I had done that more when I was working. The questions “If the next five years goes like the last five years, where will your saving account be?” can be VERY scary. We should ask ourselves that all the time.

    Thanks for Sharing,
    Dr. Hale
    Hale Pringle recently posted…Making Facebook Play Nice with Your Blog PostMy Profile

    [Reply]

    sigrid Reply:

    You are so welcome Dr. Hale. You are right, it is a super scary scenario…

    [Reply]

    Reply

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