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Monthly Financial Fitness Day

By Brett Danko, CFP^®

Welcome to the end of April (or early May depending on when you are reading this article). April is/was Financial Literacy Month. I realize you may have missed it, but we didn’t. Your financial health is very important to us and hopefully is for you too.

Our thought for this month is to start having a financial fitness day every month for the rest of your life. We want you to create the habit or discipline of looking at and touching base with your finances monthly. Just one day per month when you will commit to spending a few hours (up to 5 hours) that day (or over two days) on financial matters. This is more inclusive than just paying the bills BUT “paying the bills” could be part of your “finance day”. We will outline some items to do in those hours later in this article, but just work with me here regarding the concept.

Unfortunately, there is no magic bullet for becoming a millionaire. But it is worth noting that studies have shown that millionaires consistently spend time on and pay attention to their finances – much more so than non-millionaires. They essentially have financial fitness meetings on a regular basis. For most millionaires, their wealth and success is no accident.

Many articles I read say we should have a “mental health day” each month where we hang out and do nothing except watch old movies, curl up with a good book or meditate listening to Tibetan chants. Another concept is a monthly “spa day” where you go for a massage, manicure, etc. Others suggest an adventure/nature day where you go hiking and enjoy the outdoors. In the most basic Biblical sense, the Sabbath serves as a day off from work where one enjoys family and friends and goes to worship.

I have to admit, I do NOT do the things listed above and I tend to work even on the Sabbath. However, I recently did my first ever monthly “Financial Fitness Day” at home and it was AWESOME!!!!! Yeah, yeah, what was so awesome about it? I will tell you. I finally got through a bunch of old files at home and managed to discard/shred large quantities of outdated, worthless information. This freed up tons of space for my NEW filing system, though I will have to wait until next month to finish it (most likely) In fact, it went so well I am doing one at work for my office each month. Overall, it was a cleansing process of the highest order – seriously!

Most people do this type of thing once a season or once a year, though accumulating large amounts of papers gets me stressed and results in me creating even more piles. That gets overwhelming and then I end up putting off the day of reckoning (a.k.a. cleanup).

Below are some items to deal with on your financial fitness day. Items #1 & 2 should be done before going after the other items. Not all of these will need to be done each time.

1. Clean out old files and desk clutter of unwanted receipts, invoices, papers, etc.
   
   
2. Create new files with the information you want to keep organized
   
   
3. Organize the past month’s bills, bank statements, etc (this could be done online)
   
   
4. Set up a budget and track spending and savings each month using a service like www.mint.com, Quicken or even a handmade spreadsheet (just find some method that works for you).
   
   
5. Define some financial goals. Make the goals SMART – Specific, measurable, attainable, realistic and timely.
   
   
6. Review spending and saving projections for each month. Track your progress. How you are spending your money? How you are doing with achieving your financial goals?
   
   
7. Budget for the longer term for more expensive items such as home maintenance (new roof, water heater, brakes/tires for the car, bathroom upgrade, new fence, general home repairs, etc.). By knowing certain items are coming soon, you can start to save for these purchases ahead of time.
   
   
8. Look at your investments (if you are managing your own money) and re-balance them periodically based on a decided asset allocation. (yearly is fine for most people).
   
   
9. Order your credit report and FICO score (See 2nd article in this newsletter)
   
   
10. Review your 401K options and make sure you are taking advantage of the employer match (if available)
    
    
11. Review your Flexible spending Account (FSA) and other employee benefits such as short-term/long-term disability, life and health insurance
    
    
12. Maintain tax files for each year for easy reference if needed
    
    
13. Review auto/home insurance coverage with your agent
    
    
14. Research utility, phone and cable plans for possible savings

I realize it does NOT sound cool or sexy to spend a few hours each month doing financial fitness, BUT we all need it. I tend to get overwhelmed with the amount of paper in my files, on my shelves and around my desk (I am a big “piles of paper on the floor of my office” kind of guy). Getting through the morass one day a month allows you to be more productive as well as actually allow yourself to feel a sense of accomplishment.

I don’t know about you, but much of my work involves trying to plan for students’ and clients’ financial lives in the future. I come up with a game plan but rarely see immediate progress/success. When I iron a shirt, mow the grass, wash the dishes or vacuum a room, I feel as though I actually accomplished something. I feel the same about my financial fitness day! You can feel like you accomplished something.

An important aspect of your “fiscal fitness” is just making the time to consistently pay attention to this very important aspect of your life. Set a time to talk with your spouse about this so you both are informed. You want to know where you are financially and the steps you are taking to get you where you want to go. This is a process -- and just like you can’t lose 25 pounds overnight; it also takes time to accumulate wealth and keep it. Slow and steady wins the race. SO many people complain about not having enough money yet they don’t take actions to change that.

So get ‘er done . . . Put it on the calendar and make this a regularly scheduled time to look at your finances each month, Get into your home office and bust a move for Financial Fitness!

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