It’s a new year and a great time to get your financial house in order. I believe one of the best gifts you can give yourself and your family is to be financially fit and regain control of your money. So let’s make 2013 the Year of Financial Fitness.
Being financially fit is a large task, but it is doable. The key is to break it down into bite-size, manageable pieces. Right now I’m going to focus on three areas: have a plan, set family goals and teach children about money.
This is probably the biggest and hardest task: you have to know where you stand financially. What is your net worth? Do you have too much debt? Are you saving enough money for your retirement? Are you properly insured? Do you have a will? Whether you do this by yourself or with the help of a financial advisor, you need to find the answer to these questions. They form the foundation of your financial well-being.
To help you get started, I’ve created a basic budget worksheet, which will give you a snapshot of the money coming in and the money going out. This worksheet will take a few minutes to do, but it is worth the time and effort. It can help you identify areas that you can reduce your expenses and areas that are at risk, such as low retirement savings or lack of insurance. Now you can take action to resolve those problems.
SUCCESS TIP: I’m a Certified Financial Planner, so it’s fair to say I’m biased, but don’t be afraid to ask for professional help. People hire trainers and join Weight Watchers to help them lose weight, and it is okay to hire a financial advisor to help you get financially fit.
We’ve set family goals in our home for several years, and it is one of the best things we have done. It unites us as family when we have a common goal to work towards together. Your family goal should be realistic (i.e. something you can achieve without going into debt) and something your children will be wildly enthusiastic to achieve. Plus, it gives you the best answer when your kids get a case of the “I wants”. For details and tips on how to set family goals, please read my Setting Family Save, Spend and Share Goals post.
SUCCESS TIP: Your family goals are a good answer when you get a case of the “I wants” too. When you find something you want but don’t need, weigh the item against achieving your family goal. You are not being deprived when you chose to honor your goals.
We teach our children how to count their money, but spend very little time teaching them how to use their money. Children today are becoming increasingly financially illiterate, which dramatically affects their long-term financial well-being. It’s up to parents to stop this downward trend. Money can no longer be a taboo topic. I started talking to my daughters about money when they were toddlers by teaching them how to save, spend and share their money and to align how they used their money with their goals and values.
Today the girls are masters of save, spend and share and are learning more complex financial concepts, such as budgeting and basic investing. At ages 7 and 9, my girls are more financially literate than most adults. Lauren and Taylor are comfortable making smart money decisions, and I am confident they will continue to do so when they are on their own. You can use The Heavy Purse and my new downloadable e-workbooks to help your kids become money smart.
SUCCESS TIP: Your children are always observing you, so be sure you are a good financial role model for them. Don’t argue about money or complain about a lack of money in front of them. Don’t ask them to “not tell Mom or Dad” about a purchase. Let them see you make value-based decisions and appreciate what your money does for you and your family.
I’m creating a checklist to help you put your financial house in order, which I will share exclusively in the January edition of The Heavy Purse Newsletter. You can subscribe to The Heavy Purse Newsletter at the end of this post.
I hope you’ll accept my invitation to make this The Year of Financial Fitness in your family. Don’t worry—I’ll be here providing weekly tips and ideas to help you become more financially fit.
The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you raise Financially Confident Kids. Please check them out in The Heavy Purse Store.
SHANNON RYAN, CFP®
It took me a while to finally setup a budget because I just didn't want to face reality. I was stressed out and I knew that we had let things get out of control finance wise but for the longest time I just cried about it instead of doing something about it. Once I did the work, the crying stopped. Things aren't perfect yet, but at least we now have something to work with.
The one thing I still procrastinate on is getting our wills done. They will be simple to do, I just need to make the time.
My children are very young now, but I can't wait to be able to teach them about how money works. I feel like they are going to have a huge leg up in life because of it, as in sure your kids will as well.