“Financial Fitness” For The New Year
December 31st, 2007 | by rachel |
Financially speaking, are you better off than you were 10 years ago, 5 years ago, 3 years ago, 1 year ago? If so, what is your plan to keep from hitting a “financial plateau”? If not, what does your “financial fitness” plan look like for this year? Healthy bodies demand consistent, appropriate fitness activities to operate efficiently. Finances require the same thing and deserve nothing less. Go ahead and ring in the new year without a care in the world! Then, use this formula and achieve “fitness” for your finances in this new year!
Okay, so I was NOT a Math major in college and I made this up on my own. This string of letters may not be written exactly according to a mathematician’s standards but it is a “formula” that makes sense. It addresses 3 main areas that dictate the level of financial fitness you experience – spending habits & financial record keeping, income, and debt.
sl + ei – d * (s+i) / mb = financial fitness
sl stands for “spending less” …Less than you make and, whenever possible, less than you are spending now.
ei stands for “extra income” …Overtime, extra jobs, selling something on eBay, garage sale proceeds, bonuses, tax refunds, etc. ANY extra money you can scrape together!
d stands for “debt” …Certainly, you need to reduce it. Eliminating it completely would be ideal!
s+i stands for “savings + interest” …If you have any money that you can set aside, even small amounts, as savings, make sure it is earning the most interest possible.
mb stands for “monthly budgeting” …Finances will not magically behave and perform in the most profitable manner without some planning. Creating and using a monthly budget makes you accountable on a regular basis WHILE giving you the opportunity to make timely changes for the betterment of your overall financial picture. If it helps, here it is in longhand:
spend less & earn extra income whenever possible
subtract debt
multiply savings & interest
divide everything with a monthly budgeting process
ENJOY financial fitness as a result of your effort!
In the year to come, we will explore specific strategies to help implement this formula. As the new year begins, make some notes about where your finances stand today. Do you spend more than you make each month? How much debt do you have? Do you have money in savings? Retirement? If so, how much? Then, follow this formula with me through the new year and see just how fit your finances are 365 days from now. I predict we will all be pleased with the results!
Happy New Year!
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