January is Financial Fitness Month
If you are like most people, your resolutions for the new year include improving your waistline and your bottom line. In honor of Financial Fitness Month, why not combine the two and perform some well-needed financial exercises? To get your wallet into shape, the experts at Money Management International suggest the following financial workout:
Exercise 1: Perform a check-up
To find out where your hard-earned money is going, start by listing your monthly, fixed expenses, such as rent or mortgage, utilities, cable television, insurance, loan payments, and minimum credit payments. Include every monthly bill, estimating those that are variable, including what you spend every month on groceries and gas.
Next, add up your expenses and compare the total to your monthly take-home pay; most people are shocked to see large amounts of "disposable" income they have to work with each month. Ask yourself if you can live on what's left over after the bills are paid. Most people find that they can, and have plenty left to build an emergency savings account or pay off debts.
Exercise 2: Trim the fat
If your budget is less than lean, it is time to take control. To do this, you will need to make very clear, conscious decisions about what is important to you and your family, and eliminate the rest. Start carrying a pocket-sized spiral notebook with you at all times, and write down every purchase you make, including the amount. Even if it is only a soft drink from the convenience store, or a trip to the drive-thru at a fast food restaurant, record it in your notepad. Most people discover that this exercise curbs spending automatically because it draws their attention to it. After two weeks, review your notes and ask yourself if you really need all the things you buy.
Exercise 3: Kick a habit
If you habitually carry a balance on your credit cards, make a resolution to pay down your debt. Reducing your debt allows you the freedom to make smart future financial choices. Start by focusing on your debt with the highest interest rate first, but do not forget to make required payments on all debts. Once that account is paid off, apply that amount to your card with the next highest interest rate. If this task seems impossible, you might also consider paying off your smallest balance first; seeing quick progress is often a good motivator.
Finally, keep in mind that reviewing your credit reports annually is a healthy financial habit. As a matter of fact, the newly-enacted Fair Credit Transactions Act grants consumers one free copy of their credit report from each of the three major credit bureaus. Visit https://www.annualcreditreport.com/cra/index.jsp to get your reports.
Content provided with permission from Money Management International of Massachusetts (MMI of Mass), non-profit community service organizations that provide confidential financial guidance, free consumer credit counseling services, educational resources, and debt management assistance.
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This content was last modified on: 12/12/2016