Steps to financial fitness

Five key things you can start doing today to build your financial fitness.

Here's what you'll find out:

➜ How to live within your means

➜ Ways to manage debt and the unexpected

➜ Tips to set and reach long-term goals

Financial fitness, or wellbeing, is about having the financial freedom to do what lets you enjoy life. 

While you may know how to look after your physical or mental health, you may not know where to start when it comes to taking care of your financial health. 

When you’re financially fit, you’re in control of where your money goes and how you spend it. You also have peace of mind that you have a financial buffer to fall back on if something unexpected happens.

While your financial situation may change with life and your financial wellbeing may go up or down, there are five actions that can help you stay financially fit – now and in the future. These actions include some of the money habits that can have the biggest influence on your financial fitness. 

1. Staying engaged with your money

When you’re engaged with your money, you know where your money is going, pay bills on time and can make changes if you need. You can do this by: 

  • tracking your spending (particularly in any areas where you know you can be prone to overspending)
  • checking your bank balance regularly so you can meet payments without overdrawing your account 
  • reviewing your transaction history to spot any errors.

There are some other costs you may only need to review every few months or annually. They include: 

  • your direct debits, so you know you’re not being charged for any unused subscriptions,
  • deals on your regular payments like your utility bills and insurance premiums
  • how your super is tracking and whether your insurance cover and investment options are still right as your personal situation changes. 

2. Spending within your means

When you know how much you need for bills, debt repayments and savings, you’re able to make smart, guilt-free decisions about your spending. Knowing how much you need for your essentials like your groceries, transport and bills is really important -- as is knowing the difference between your ‘wants’ and needs’. 

Some people use apps to track their spending across their non-fixed essential costs like their groceries and transport costs, while other people set spending targets to make sure they don’t overspend. Setting up a bills account and automating the payments can help you to avoid late fees and remove any hassle.

When it comes to discretionary spending, it can help to have a system in place to avoid overspending

Could you set up an account just for the fun stuff, where you give yourself a weekly allowance? Or can you manage by simply checking your bank balance before making these purchases? A helpful rule of thumb is to ask yourself: ‘Do I need it? Will I use it? Is it worth it?’

Being overly frugal isn’t usually the answer - in fact, you might find you’re more tempted to spend. Work out how much you can afford to spend on the stuff you really get joy from, and then enjoy it!

3. Being smart with your debt 

Paying down debt and managing it responsibly can mean you have the financial freedom to make more choices about what you spend and save in the future. Debt is often a fact of life, but how you manage it and what kinds of debt you take on can make all the difference. 

For example, it’s best to aim not to use credit for everyday expenses. If you’re late on payments, interest can pile up quite quickly. However, many people borrow money to buy a home or even to pay for their education and these types of debt can potentially help you grow your wealth in the future. 

When you’re paying down debt, make sure you’re able to meet all your minimum repayments and then choose the debt repayment strategy that works best for you. Some people find it motivating to tackle their smallest debts first, while others reduce the cost of their debt by paying their biggest debts first. 

4. Having a plan for the unexpected 

We all face unexpected expenses from time to time, and they can have an impact on our lives depending on how well we’ll be able to deal with them. When you have money set aside for rainy days, you can bounce back without dipping into savings or relying on credit and paying interest. 

It can be easy to be overly optimistic and not to prepare for the unexpected, but having a financial buffer can mean you’re able to keep meeting your expenses in a financial emergency, even if you lose your income, deal with illness or need to take some time out to care for someone you love. 

5. Reaching your long-term goals 

Getting into a savings habit is one of the best ways to secure your financial future. Even if you have to start small, saving regularly can give you a sense of accomplishment and enjoyment. 

Research finds that setting goals means you’re statistically more likely to save, so it’s worth thinking about what it is you would like to achieve and setting out a plan to help you get there. 

Setting up a system to help you save can help too. Are you saving a regular amount each time you’re paid? If you get a tax rebate or a bonus, could you allocate any of that to grow that money? 

Committing a percentage of future pay increases is a great way to grow your money while protecting you from the ‘lifestyle creep’, when your spending goes up in line with your income. 

What’s next?

Financial fitness is a long game, but Humanforce Thrive can help you get there! Set up a financial fitness plan in the Humanforce Thrive app to check your financial fitness levels and get the best next steps for your financial future.

Or take a look at our financial fitness handbook. It's got activities you can work through to boost your financial fitness, whether it's setting a budget, tracking your spend or saving for your retirement.

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