Finances & Money

Beef Up Your Personal Finances with These 10 Tips

(Guest Post by Alban)

If you have ever marvelled at and admired the motivation and dedication of athletes performing at their best, you have probably also wondered whether you had it in you to apply the same passion and achievement in your own life.

For most of us, the part of our lives which often feels the most out of control is our finances but if you are willing to whip them into shape with some basic personal training principles, you can transform your personal finances into the buff, toned and in control finances your friends will envy. Getting your finances into shape applies the same principles as getting your body into shape because no matter how long the road seems, you can be motivated by the feeling of accomplishment at having achieved your goal.

When it comes to personal training there are two main types of motivation:

1. Showing the benefits of getting into shape.
2. Showing the dangers of not getting into shape.

Training your personal finances is no different and whether you would be motivated by having healthier finances and less stress about money, or you are brought back into line by the thought of not being able to afford to retire until you’re 70 years old, or having to sell your home if you lose your job, starting a healthier personal finance regime is an investment in your future, so you can live the way you want.

Motivations to Get Your Personal Finances Fit

In personal training, you can be shocked into shape by a number of motivators, with different fears striking a chord with different people. You can apply the motivations used by personal trainers to your personal finances and use:

• Statistics. The fact that two out of three adults in the US are overweight may be enough to motivate you to look after your health and not be one of those statistics. Some scary statistics which can encourage you to beef up your personal finances include the fact that you should have at least three to six months worth of living expenses saved in case you are unable to work; or the fact that with basic unemployment and government assistance, you would only be able to survive financially for up to a year without your regular income.
• Golden years without the shine. You work hard throughout your life so you can enjoy your golden years with your loved ones, spoiling your grandchildren and doing all the things you wanted to do but never had the time. Well, if you don’t look after your health you won’t have the strength or independence to do any of those things as you get older, and if you don’t look after your finances, the glow of your golden years could be a little dull. As frustrating as it is, most of the activities we want to enjoy in retirement will cost money, not to mention you’ll need money to maintain your home and your everyday bills and by whipping your finances into shape, you know they’ll be there for you later in life.
• Immobility at a young age. Another motivator for people looking to get into shape is the fact that they feel much older than they really are. It is easy to get stuck in a sedentary lifestyle in middle age, and just as the kids have left home and you have time to get out and be active, you find you don’t always have the energy to get off the couch. Plus, if you don’t plan financially for the coming years, it is easy to squander those extra funds which are available now that the kids are off the payroll. Instead, get your finances beefed up now, and don’t wait until retirement to enjoy life.

Personal Finance Training

Now that you have pinpointed a motivation which works for you, it is time to apply some of the most effective personal training techniques to beef up your personal finances. Being financially responsible and in control of your monetary destiny is much like gaining control over your weight and your health – once you are able to instil good habits back into your lifestyle, the benefits will follow. You simply need to apply these training techniques:

1 – Some is better than none

As your personal trainer will tell you – they don’t mind that you’re only exercising at 60% capacity because that is better than nothing, and the same goes for your finances. There is no perfect financial program or shining light which will erase all of your mistakes and set you on the path to riches, and if you wait for it to come along, your finances are going to stay flabby and unfit.

Instead, just get out there and start saving, even if you can only put aside $10 each week – every little bit will help. The sooner you sit down and write out your income and expenses, the closer you are to sticking to that budget – even if you slip up every once in a while.

2 – Look for the positives

While it is important to understand your weaknesses so you can overcome them, don’t spend too much time focussing on those weaknesses. Instead, concentrate on the positives of your new personal finance fitness regime and you’ll stay motivated, and keep reaching for more. At the same time, don’t expect to see results right away, when you start a new fitness program you will need to wait around two weeks to see results, so don’t be too harsh on your personal finances if you don’t have mounds of money in the bank right away – it could take several months to get debts under control and build up an emergency fund.

3 – Reward yourself

Don’t be too hard on yourself when you’re starting out on training your finances, and instead, set realistic goals along the way which you can then celebrate. For example, aim to save $100 in the next two months, or pay off half of your credit card debts in six months. Then, when you achieve those goals you can reward yourself – with an affordable treat so as not to undo all of your hard work. In the same way you wouldn’t celebrate losing ten pounds by eating a tub of ice cream, do something financially responsible to treat yourself like having a relaxing bubble bath or going to see your friends.

4 – Be clear on why you’re getting beefed up

While the original motivating fears may be enough to get you started on your new personal finance fitness program, you also need to maintain that clarity to keep on track. Therefore, make a list of the reasons why you want to look after your finances better, and set a tangible end goal, within a realistic time frame.

To reinforce your reasons, you may want to stick these goals next to your bed, on your bathroom mirror or in your wallet to remind you every day, before you make a financial decision why you’re doing it. Keeping these reasons in the front of your mind in this way helps them to become a new habit and is especially important during the first three weeks of your training.

5 – Focus on the benefits

The benefits and the reasons are slightly different motivators, and you need to be clear on both. for example, the reason you want to lose weight may be for your daughter’s wedding next year, and the benefits are feeling healthier, having more energy and more self esteem. Therefore, don’t let the benefits of beefing up your personal finances get lost in your reasons. Where the reasons may be to get out of debt, and save up an emergency fund, these don’t always have tangible benefits you can see in your everyday life. Instead, identify the benefits such as less stress, a greater sense of control, and more freedom in not having to live week to week.

6 – Take notes

Keeping track of your progress on a fitness program shows you how many more push ups you can do now than when you started for example, and taking notes on your personal finance training can be just as helpful. Keep a journal of the training experience so you can see how far you have come, and identify any problem areas or traps you fall into.

7 – Be informed

Get your hands on all of the finance information you can because just as knowing how many calories are in a banana and whether it is more effective to work out before or after breakfast, the more you know about money and financial markets, the more in control you can be. Therefore, read personal finance magazines or blogs and even sign up for subscriptions as this will get you up to date with the industry, and keep you informed of new developments.

8 – Don’t go it alone

A personal trainer is a great addition to any personal fitness program as they keep you motivated, push you further and offer advice and assistance along the way. To train your personal finances you can cast your net of help wider and make sure all of your friends and family know what you’re trying to do. This will hopefully garner support and encouragement, as well as understanding if you decline a dinner invitation to a new restaurant, or want to borrow a friend’s new boots rather than buy your own.

9 – Train every day

Your personal trainer will probably tell you to exercise five to six times a week for the best results, but on your off days you’re still not encouraged to splurge. Instead, try and do something each day to keep your finances healthy, such as resist a cafe coffee on the way to work, or put the change from your fuel into your savings account.

10 – Fight when you can win

This final step is about knowing your limits and just as it may be unrealistic to cut junk food from your diet all together, limit yourself to just two pieces of pizza instead of four and that is a start. Don’t try and get fit in a way which works for everyone else and no matter how toned everyone else is at the gym, if you just can’t drag yourself out to the car and through traffic every morning to exercise, ride your bike to work or go rollerblading at lunch time.

The same goes for getting your finances fit because there are some expenses which are essential and can’t be cut back such as school fees and fuel, however, if you buy your lunch just twice a week instead of everyday you’re saving more than half your lunch money easily. You can also make your saving fun, for example, invest in a funky coffee thermos and make your own brews at home before you leave, and you’ll smile each time you see your gorgeous coffee mug, while everyone else is drinking out of paper.

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Guest post by Alban — a personal finance writer at Home Loan Finder, a home loan comparison website.