How Can You Improve and Track Your Financial Fitness?
Fitness apps allow you to monitor your physical fitness over time. Some apps give you personalized plans, suggesting the next steps forward in terms of diet, exercise, sleep and other aspects of your life. This gives you a holistic view of your physical fitness and puts a personal trainer in your pocket.
But what about your financial fitness? How can you assess your current state of financial fitness? How could you improve your financial fitness by taking a series of small steps? Is it possible to track your progress quickly and easily?
Here are some ways to improve and track your financial fitness.
Discover and Track Your Net Worth
Calculating your net worth is like giving yourself a fitness test. Just as a fitness test assesses your current level of physical fitness, your net worth gives you an overall picture of your financial fitness.
Calculating your net worth, which is the total value of everything you own minus the total of everything you owe, doesn’t have to be time-consuming and complicated. The GOKONG app calculates your net worth automatically. All you have to do is connect all your financial accounts and add information on any other valuable items you own.
If you have a negative net worth, don’t be discouraged. Set some financial goals that will transform it into a positive net worth over time.
If your net worth is slightly positive, build on that foundation by increasing the value of your savings, investments, real estate, vehicles, paintings and other collectibles.
GOKONG gives you personalized recommendations on how you can improve your net worth, making you financially fitter each time you follow a suggestion.
As you use the app to track your net worth over time, you’ll see exactly how you’re becoming financially fitter.
Set Goals
To improve your physical fitness, you can set goals such as:
· Walking at least 10,000 steps a day
· Running five kilometres
· Going to the gym three times a week.
To meet your fitness goals, you’ll need to prioritize them by setting aside time to exercise each week and tracking your progress.
In a similar way, if you’d like to improve your financial fitness, it’s necessary to set some financial goals, make them a priority in your life, and track your progress.
If you set an initial goal of saving CHF 100 per month, the next step is to prioritize that goal by transferring the money into your savings account on pay day. Setting up an automatic transfer is a good way of ensuring you don’t forget and it’s more likely you don’t spend it elsewhere.
Then, as you track the growth of your savings, you’ll see your financial fitness improve. That will encourage to find more ways to add to your savings.
Set short-term, medium-term and long-term financial goals and assess your progress every week, every few months, or once or twice a year in the case of long-term goals. Feel free to tweak and change your goals depending on your progress or your current circumstances.
You don’t have to know exactly how you’ll reach a goal. Just set the goal and start moving towards it.
The specifics of how you’ll reach that goal will become clear to you as you travel along the path towards it. You’ll be surprised by how easily the solutions you’re looking for appear once you’ve started making progress towards a goal.
Reduce Unnecessary Spending
When improving your physical fitness, you’re more mindful of what you eat and drink, reducing your consumption of snacks, junk food and alcohol.
In the same way, becoming more aware of exactly how you spend your money will help you improve your financial fitness.
You can do this by tracking all your expenditure over at least one month. At this stage, don’t try to change your current behavior. The first step is to become aware of exactly where all your money goes.
The next step is to look at your results and see where you could spend less without it affecting your life too much. Then, make a budget based on your new spending pattern for the next month.
It’s best to start by cutting back on just a few unnecessary items at first. When you see the benefits, you’ll be encouraged to make further changes, so that you keep more money in your pocket and invest it in improving your net worth.
Live on a Budget
A budget is like a sensible eating plan. A sensible eating plan gives you guidelines on how much of certain foods to eat, while a budget tells you how much it’s a good idea to spend in each category so that you have more money available to improve your financial fitness.
Once you’ve lived on a budget for a month or two, review it to see if you can reduce your spending further in certain areas.
Don’t make it too tough, though. Consistency will bring you closer to your goals. Just as you increase your physical fitness gradually through consistent action over time, you improve your financial fitness gradually by taking a series of small steps in the direction you want to move in.
Minimize Your Debts
It’s always good to keep your debts in check or even minimize them, so that you can start to increase your savings and investments.
If you have credit card debt or other debts you’d like to pay off, make a debt repayment plan. Set yourself a small initial goal, such as paying off your smallest debt. Then move onto a tougher goal, such as paying off a larger debt with a high interest rate. The important thing is to keep it realistic. The important thing is to keep it realistic. That will help you avoid the frustration of failing to meet your goals.
Every time you reduce or pay off a debt, your net worth will increase. It’s easy to check your net worth regularly using the GOKONG app. You’ll be delighted by how your financial fitness is improving over time and it will motivate you to continue.
Find out More about Managing Money and Investing
As your knowledge of financial matters increases, new opportunities will open up to you. You may end up buying shares in a profitable company or investing online.
You can build up your financial muscle by:
· Reading articles, eBooks and books
· Asking for advice from trusted family members, friends or financial advisers
· Asking your bank about savings or investment options
· Going to a financial seminar or workshops on platforms such as meetup
· Taking an online or offline course.
It takes consistent effort and time to strengthen the muscles in your body. In the same way, it takes time and effort to learn more about financial matters and put your knowledge into practice.
As you gradually build up your financial muscles, your financial fitness will increase and it will have a positive effect on your net worth.
Plan Ahead for Large or Unforeseen Expenses
Often people pay for large or unforeseen expenses with their credit cards because they haven’t planned ahead. Of course, you can’t plan ahead for an unforeseen expense, but you can save a certain amount of money in an emergency fund, so that you have a pool of money available if your roof starts leaking or you need emergency dental treatment.
If you have no emergency savings or only a small amount, plan to change that by brainstorming all the ways you can add money to your emergency fund.
Even if you only have room in your budget for transferring a small amount into your emergency fund each month, it’s still important to do so. Once you’re in the habit of adding money to your emergency fund regularly, you’ll be surprised how often you find a way to make it grow.
Just as a runner would plan ahead for a marathon, gradually increasing their fitness along the way, you can plan ahead for future expenses, gradually increasing your savings along the way.
Don’t Give Up
Dedicated athletes don’t give up on their goals just because they have a short-term setback such as an injury or a race they didn’t win.
Don’t give up on your financial goals if you have a short-term setback. For example, you might not be able to pay anything into your emergency fund one month because you receive an unexpectedly high tax bill that must be paid immediately.
If something like this happens, as it inevitably will from time to time, try not to let it get you down. Just start again next month. It may take longer than you expect to improve your financial fitness but don’t let a short-term setback derail you.
Imagine Your Future
Imagine feeling safe and secure in the future. Your net worth is strongly positive. You have enough money in your emergency fund to cover your family’s total expenses for at least a year. Your retirement savings are growing each month. Other investments are yielding good returns.
In your current position, this future may seem unattainable. But it’s not. Anyone can build such a future, step by step, by improving their financial fitness gradually and tracking their progress regularly.
