financial fitness | blog.firstffcu.com

Quick question: Are you financially fit? If so, how financially fit are you?

There are really no clear guidelines as to what constitutes financial fitness, much less how to grade variations of that fitness. However, it’s a helpful question because it gets you thinking about your finances. More specifically, whether you’re on the right track toward your financial goals. Those goals differ by individual and include being able to retire, pay for a child’s wedding and college education, and even saving for that dream vacation. To make sure that you’re on the right track toward your goals, here a few steps to help get you started.

As a first step, put together a reasonable budget, detailing your income and expenses by month. This will help you understand your cash flow and identify areas where you can cut costs.

Next, start saving for unexpected expenses, like a medical emergency, major car repair, and an appliance replacement. Ideally, try to keep at least three months’ worth of living expenses in your emergency savings fund.

Check your credit report at least once each year, making sure that there are no mistakes. You’re entitled to a free copy of your credit report every year from the three major credit reporting companies, Experian, Equifax, and TransUnion.

As part of a long-term plan, begin saving for your retirement at the earliest age possible, working with a financial professional to create a portfolio that aligns with your appetite for risk, number of years until you expect or want to retire, and other factors.

Develop and review a financial plan. This is a written document that details your short and long-term goals with tactics and strategies to address them. Review the plan at least annually, making any necessary changes if your goals or personal circumstances change.

Finally, consider investing early and often. This has the potential to produce greater returns than investing a larger amount over a shorter period of time.

For instance, assume an equal rate of return for each of these two scenarios: If you invest $75 a month beginning at age 25 and continue until you are 65, your earnings will be greater than the 35 year old who invested $100 a month until reaching 65.

This is a hypothetical example and is not representative of any specific investment. Your results may vary, but you get the point. If you need help getting or maintaining financial fitness, contact a financial professional.

Questions about this topic? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534. You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial, LLC

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Worried about all the extra spending you did this past holiday season? While those around you are probably setting new year’s resolutions and going on strict food diets, have you ever thought about going on a financial fitness diet? By embarking on a financial fast – even for just a few weeks, you’ll build your savings back up, see if there are any areas in your budget you need to tighten up in the new year, and learn to be happy with what you have without going overboard on spending.

What exactly is a financial fast? It’s a period of time you’ll set for yourself in advance, to not spend any money other than on necessities. The fast can be a week or two, a month, or more – if you have the discipline to do it. In order to be successful, here are a few tips for staying on course.

What defines a necessity?

This might be the hardest part of a financial fast. A necessity is an actual “need,” something you really can’t live without. Groceries would certainly be defined as a necessity or medication, whereas buying coffee daily from your favorite local coffee shop on the way to work or going out to dinner with friends is a “nice to have,” but not a “need.” Define your necessities in advance of beginning your financial fast and don’t let yourself stray off course.

Plan in advance.

Think about how long you’d like to go on this financial diet. Say you decide to financially fast for a month. You will need to plan ahead to see what things may come up in that month that you’ll need to prepare for. Do any family members have birthdays in that month where you’d need to purchase a gift, do you have kids who may be attending a party and once again you’ll need to buy a gift, or are there any other upcoming events you have already RSVP’d to? You’ll need to plan ahead to be successful on this one. For any of the parties, can you bring a homemade gift or gift an experience? If not, you can still commit to trying to buy a less expensive gift in advance of your financial fast.

Pay only with cash.

Using a card to pay for items is easy – almost too easy. When you’re on your financial fast, leave the credit and debit cards at home and only pay for things with cash. A card makes it too tempting to keep spending. When you actually have to pay with physical money and see it disappearing from your wallet, that will have more of an impact on you and you’ll be likely to spend less.

Don’t get tempted.

While on your financial fast, try to stay out of places like the mall or other stores where you typically shop. You might even want to temporarily unsubscribe from advertising emails, and avoid viewing ads on TV or on social media. Try to escape from being tempted, and stick to your financial fast.

While it may be difficult in the beginning, after a short time on a financial fast – you’ll most likely see very quickly what some of your problem spending areas were. However, moving forward you’ll be able to pinpoint them, know what might be a temptation for you and how you can avoid it, as well as recognize the importance of setting a budget and sticking to it. You can do it!

Article Source: Emily Birken for Moneyning.com