It’s funny because often set goals to get physically fit – lost ten pounds, gain more muscle. I am mean those are all great goals. But, what about getting financially fit? Should you save or pay down debt? Is a budget really necessary? When can I retire? Getting your finances in order today can help you better prepare and plan for the future. Even if retirement is further away from you… the time to start us now!
Earlier this year, I helped organize a women’s financial fitness event at work. It was a very insightful session, and I walked away with some clear action items. So, it only made sense to share the tips that I learned with you as I think they can be helpful for anyone who wants to become financially fit!
1. Get paid what your worth and spend less than you earn
As women, it is especially important to ensure we are getting paid what we are worth. There is a lot of websites that can help you compare average salaries, such as glassdoor or payscale. Also, if you think you deserve a raise, don’t be afraid to ask for one. Know your worth, go in with some solid proof points and make your case. But regardless of how much you make, ensure that you don’t spend more than you bring in.
2. Stick to a budget
It’s one thing to create a budget, but it’s another thing to stick to it. It is so important to know where your money is going and where it is coming from. Documenting all of your spendings can help you discover where you can cut back to save for your vacation, a new pair of shoes, etc.
3. Pay off credit card debt
Credit card debt is one of the worst types of debt you can have. Why? Because the interest rates are so high, often 19% or more. So, what that means is, if you bought a shirt on sale for $50 and you didn’t pay it off before your credit card due date that shirt is now actually costing you $60 and every month you don’t pay it in full in continues to increase in price.
4. Contribute to a retirement plan
Let’s face it, if you are in your 30s or younger, the government will likely not be supplementing any of your retirement income. So, that means you need to save and start saving now. It’s never too late to leverage the power of compound interest (more on that topic on another day). If you don’t already have an RRSP — open one and set-up an automatic transfer into the account for every time you get paid.
5. Save for the rainy days
It’s essential to have money set aside to cover unexpected expenses. A good rule of thumb is 3 months of your salary (you should have enough to cover your share of 3 months of expenses or your share of expenses if you spilt them with a partner).
6. Invest your money
Don’t just leave your money in a low-interest savings account. Invest it, and let it work for you. I think it’s essential for all women to learn the basics of investing (you can learn beyond the basics if you’re interested), but having a good understanding of investing 101 can go a long way for you.
7. Maximize your employer benefits
This is a good one that many people don’t take advantage of. Most large corporations (and sometimes smaller ones too). Offer financial related “free money” such an RRSP contribution match, or share ownership plans. If your job offers any of these benefits, make sure your maximizing them and don’t leave the “free money” on the table.
8. Get/review insurance coverage
It’s important to review your insurance coverage and determine if it is appropriate for your needs. I don’t mean car insurance. But, life insurance, disability insurance are just as important to have in case of unexpected life events.
9. Create/update your will
It’s a common myth that you don’t need a will until you are much older. But that isn’t true. We should all have an estate plan in place, this is especially important if you have a home or children. There are a few online resources to create a will from the comfort of your home, such as Willful.co.
10. Keep good documentation
Last but not least. Keep well-organized records of your finances. If you can scan and keep all documents on an external hard drive or secure cloud server.
Taking the time to educate your self on financial planning can help you achieve your financial goals. Annuity.org has a free comprehensive, easy-to-read guide on financial literacy for women by women, which has even more information to get you on the path to becoming financially fit!
If you have any other tips that have helped you become more financially fit. Please share them in the comments below.