Around the globe each day, we see noticeable changes in the financial climate. Many people are struggling financially. Not just those on lower incomes but middle earners too.
Maybe they are facing uncertainty at work, difficulties in keeping up with mortgage payments, rent, bills, their children’s education and no matter how frugally they live their costs keep spiralling
It can often feel like you are on a treadmill, living to work rather than working to live, only just managing to keep financial disaster at bay.
What most people don’t realise is that the rules have changed and we are entering an entirely new financial game.
Financial instability has become the new normal so we all need to better prepared to handle economic uncertainty.
Just like working out helps you get physically fit, you can also tackle your finances in the same way. There are many little changes you can make right now to get financially fit and ready to handle tougher times should they arise.
Let’s look at 6 tips that can help you ensure your financial fitness.
1. Set Spending Limits and Financial Goals
Spend in a manner that works.
You do this by creating spending limits within different areas of your life.
For example, groceries, entertainment, travel, utilities, rent/mortgage, etc. Some of these areas of spending are set such as your rent/mortgage but other expenses are truly controllable.
Perhaps you’ll trade your gas guzzling SUV for an electric car or even a bicycle depending where you live. Perhaps you’ll take just one holiday a year rather than three or four, or maybe rather than buying coffee every morning on your way to work you will make it at home and carry it in your own reusable mug – saving money and saving the planet!
You get the idea! You have plenty of options. The thing is once you set these limits it will be easier for you to be more financially responsible.
2. Create a Debt Management Plan
If you have loans, credit cards, student debts and the like, it’s time to create a debt management plan.
Remember not all debt is created equal. There is such a thing as ‘good debt’ alongside the bad debt. Some debt will help to increase your credit rating, while other debt does exactly the opposite.
You need to understand the difference and find out what your debt is doing to your credit rating, what debt is costing you the most, and what debt is worth carrying.
Then create a debt management plan that will work for you.
3. Resist the Plastic
If you are using too much plastic, it is an example of out of control spending.
Try this test:
For 30-days remove all of your credit cards from your wallet, wrap them in plastic and stick them in the freezer. This will keep them out of reach for the next part of the challenge,because for those 30 days, you are going to use straight cash to make any purchases.
Very quickly, you will see where you are spending your money, and what frivolous purchases you are making.
You can also start tracking your spending using an app like or in a journal, or even a good old spreadsheet. By tracking your spending, you will see where your money is going and where you can make the necessary changes.
4. Identify Emotional Triggers
Just like emotions can trigger unhealthy eating habits, they can also cause us to spend unnecessary money. Often this is referred to as ‘retail therapy.’
A bad day at work, kid trouble, fighting with your partner, gaining weight, missing family… the list goes on.
Emotional triggers can be just about anything that leads you to go spend money that you normally wouldn’t to help you feel better emotionally.
Once you identify what your emotional triggers are, you are far less likely to waste your hard-earned money. It’s ok to occasionally treat yourself after a hard day or an emotional event, but once you are aware what triggers you, chances are you will resist the urge to splurge.
5. Save 3 Months as Contingency Fund
Anything can happen in life and it can happen fast.
Illness, layoffs, emergencies can all lead to a change in your earning powers and can cause a sudden financial crisis.
This is why experts recommend that you have at least a 3-month contingency fund. It can buys you time to change your lifestyle, find a new job and cut costs. It also means you will be far less stressed or panicked should something go awry in your life.
Being prepared really is the best medicine.
6. Invest a Portion of What You Make
If we leave it to what’s left of our pay packet then most people will say that they don’t make enough money to put anything aside for investments.
So how do you combat that?
Create an ‘investment’ bank account that is separate to your emergency or rainy day fund. Decide in advance how much you are going to put away and then automatically transfer that out of your bank account into your investment account.
It might be a £10, $10 or $1000, depending on what you earn. It could even be a percentage.
It doesn’t matter how much you set aside, just as long as you do it every month.
Consistency beats quantity.
Ans when it comes out of your salary right away before you even have a chance to spend it, you won’t even miss it.
What is your financial fitness like?