Fiscal Fitness

Achieving Fiscal Fitness

Adopting smart money habits

Do you consider yourself financially fit? If not, maybe it’s time to take a closer look at your finances to see if you can be smarter with money.

Here are some elements of a fiscal fitness plan:

• Set financial goals. What are your immediate, short-term and longerterm goals? Would you like to get out of debt? Purchase a new car or a home? Save for a child’s education? Once you’ve prioritized your goals, you can decide whether to make changes in how you’re managing money.
• Establish a budget. A working budget can help organize your finances and help you find ways to save money.
• Track your spending. Use a budgeting app to track exactly where your money is going each month.
• Trim your debt. If a large part (such as one-third) of your monthly spending goes to paying down debt, it should be a priority to reduce that debt. Living within your budget can help you cut debt balances faster.
• Start saving. Try establishing achievable, short-term goals such as saving $50 per month, then increase that amount over time.

Think twice and save!

You’d be surprised how much money you can save per year if you learn to change your mindset about spending.

• When you’re about to buy something, stop and identify your true motivation for doing so. Do you really need it today? Is this purchase consistent with your primary financial goal? If not, step away and save the money.
• Try the 48-hour rule on larger purchases: take 48 hours before deciding whether to buy. Set your dollar limit for when this rule kicks in, such as for any expense over $200, $100 or even $25.
• Ask yourself if you’re buying something simply to keep up with others.
• Find a cheaper substitute for that daily $5 latte or other luxury. Your savings will accumulate quickly.
• Don’t deprive yourself by instantly giving up all comforts such as lunches out or spa treatments. Instead, try reducing the frequency of your indulgences, such as going to the movies once per month instead of weekly.

Teaching children about money management

An early start

Introducing your children to the responsible use of money can start as early as preschool. A very young child can learn to put coins in a piggy bank. Teach them to tell the difference between a penny, nickel, dime and quarter. Explain how your money comes from the work you do.

A working allowance

Depending on a child’s maturity level, set up a small payment for their regular help with certain chores. They’ll learn to associate money with effort. Consider paying in denominations that encourage saving. For example, instead of a $5 bill, pay in $1 bills and encourage them to save at least one.

Teens and money

Teach your teen how to use and keep track of a bank account, handle credit cards responsibly, and avoid the perils of debt. Many teenagers don’t understand that credit cards are a form of borrowing, and that interest owed can accumulate quickly. Encourage them to work part-time if their schedule allows.