Would your finances look good in a swimsuit?
Getting Fiscally Fit for the Summer
by Gary Foreman
The 7 P's of Early Loan Repayment
What's Your Net Worth?
Rebuilding Your Credit Score the Right Way
We all like to look good, especially in swimsuits and summer's lighter clothing. That's why so many people will work hard to get in shape each spring. They want everyone to be impressed with the level of their fitness.
What would happen if we took the same approach to our financial fitness? What would happen if at least once a year, we wanted our finances to be in beach body shape, so others could see us and judge whether we were financially fit? To help us answer that question, we contacted Rod Griffin, Director of Public Education at Experian. We asked him what it would take to get our finances in shape.
Q: Why is it important for people to make an effort to shape up their finances yearly?
Mr. Griffin: How we manage our money every day can have a large impact on our quality of life well into the future. Everyone should take a look at their finances on an ongoing basis and check their credit report at least once per month to make sure they are in good financial shape or determine how they can improve. Being financially fit is paramount as it will ultimately help provide more opportunities to accomplish major life goals like buying a home or even retiring.
What's your FICO® Score? Find out now for $1 with enrollment in Experian.
Q: Physical fitness experts talk in terms of building 'core' strength, meaning the muscles around our torso. What would core strength look like in financial terms?
Mr. Griffin: Credit could certainly be considered a core strength when it comes to personal finance. Credit scores impact consumers in nearly every financial (and some non-financial) aspect of their lives from buying a car to getting a cell phone. Credit scores are increasingly used as a barometer of consumers' financial health. For that reason, credit should never be ignored. Just like your body's core strength supports the rest of the body, a strong credit profile will support every part of your financial strength as well.
Q: What's the best measurement of financial health? Net worth? Credit score? Something else? And what makes it the best measurement?
Mr. Griffin: When it comes to your financial health, it's important to look at all aspects of the equation, including your credit scores, net worth, savings, etc. Credit scores can certainly be a great measurement of financial health since they can provide an overview of your debt, open credit accounts, and overall credit health. That said, they don't factor in your savings account, retirement funds, tangible assets, or other important financial factors. These elements must be monitored and nurtured as well if you are going to get in your best financial shape.
Q: Someone beginning a physical training program begins with some easy exercises. For someone who has never paid attention to their finances, what are some easy financial exercises?
Mr. Griffin: One easy exercise is to track your spending. Simply monitoring every penny you spend will give you fantastic insights into your finances, where you spend most of your money, and where you can improve. Today there are several financial apps that make it easy to track your spending automatically and allow you to create budgets, spending goals, and more.
Another easy exercise that everyone should do at least once a year, but every month if possible, is checking your credit report and score and obtaining a copy of your credit report. You can get a free credit report once every 12 months by visiting AnnualCreditReport.com. Credit reports are important as they provide you a full picture of your debt and open credit accounts. In addition, monitoring your reports is key to identifying potential identity theft. If you see activity on your report that you did not initiate, it could indicate you are a fraud victim. Identifying and resolving the fraud as soon as possible is key to reducing the amount of potential financial and credit damage.
Calculator: What's My Net Worth?
Q: People who are serious about their physical training often spend hours each week working various exercises. How much time does it take on a regular basis to get our finances in shape?
Mr. Griffin: Getting yourself in better financial shape is all about establishing consistent financial practices. Setting aside just five minutes each week to review your bank accounts and ensure all of your bills are paid will make a significant impact on your financial shape. Taking some additional time to make a budget and long-term financial plan can go a long way as well. In the end, it is much less time consuming than your daily sweat sessions at the gym, so there's no excuse!
Are there areas of your financial life over which you wish you had more control?
Subscribe to Financial Independence and start working towards achieving your financial independence.
Q: People who train physically often have a specific goal in mind. Something that helps to keep them motivated. How can someone who wants to be fiscally fit use goals to help motivate them?
Mr. Griffin: Creating goals should be a part of every financial shape up plan. Goals can be especially beneficial for people who are trying to pay off credit card debt, student loans, or any other kind of debt. Even starting small with a goal of saving whatever you can each month to pay off your debts will make a significant impact on your financial health overtime. Reaching these small milestones can be great motivation to continue saving and chipping away at that debt.
Reviewed June 2017
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step:
- Do you have the right amount of debt? The Dollar Stretcher Debt Checklist will tell you!
- Follow these 10 steps to perform your annual financial check-up right now.
- Find out more about doing a yearly financial checkup by visiting the Dollar Stretcher Library.
- What's your FICO® Score? Find out now for $1 with enrollment in Experian CreditWorksSM!
- Make sure you're getting the best CD rate. Use our simple CD tool to find out. It's completely private, easy to use and you'll know what rate is available to you in seconds!
Share your thoughts about this article with the editor.
More Money Tips & Tools
- 5 questions to ask yourself before saying 'yes' to another app or subscription
- Managing your mortgage for building wealth
- Successfully managing finances in a second marriage
- Saving-money secrets of the rich and frugal
- 5 low-risk ways to earn higher interest now
- How to save money fast
- 7 IRA withdrawals that don't trigger a penalty
- This week's Readers' Tips