The Importance of Taking Action to Achieve Financial Fitness

The Importance of Taking Action to Achieve Financial Fitness

It’s important to understand that your mortgage could be your largest financial investment. It can have a drastic impact on your financial health today, tomorrow and even through retirement. In this day and age, I believe it’s important to bring financial awareness to my clients so they can cultivate financial fitness. I see a lot of clients who are not financially healthy, and my goal is to educate them and make them aware of the tools they need to be successful.

I’m working with a book called Financial Fitness: 47 Principles by Chris Brady and Orrin Woodward that highlights every aspect of financial fitness. The book contains a section called Financial Offense that contains 17 very useful principles. In my last article, I discussed the first half of the authors’ principles for financial offense. In this blog, I want to highlight the second half of those principles.

But, before I do that, I want to expand a bit on a principle we covered in the last article, because I think it is one of the authors’ top three principles: principle #14, financially fit people analyze their life and financial habits.

Analyze your Life and Financial Habits for Better Financial Health

In the mortgage business, I see people who fall into a cycle of debt and I see people who fall into a cycle of savings. I’ve also seen many clients break their bad habits and start planning and saving. They get into a mindset of helping themselves prosper, which helps them achieve financial freedom.

They do this by constantly analyzing where their finances are and thinking of ways to improve their situation. They get help if they need it, and surround themselves with people and tools that encourage them to maintain the positive new habits they have acquired.

Let me repeat: The key is building the habit of making good financial decisions, so you put yourself in a cycle of savings instead of a cycle of debt. I believe anyone can do this at any stage in their financial lives.

More Intentional, Offensive Plays to win the Financial Fitness Game

The previous article covered the first half of 17 offensive financial fitness moves presented by Brady and Woodward. This article will cover the remaining offensive actions you can take to intentionally build your financial strength.

Financial Fitness Principle #17: Retirement is not about age; it’s about passive income
We all think of a certain age at which we expect to retire, but rather than using age as a measure of readiness for retirement, we should instead begin to think in terms of the amount of passive income we have to live on. Even if you are young, you could retire—which simply means retiring from doing things that are not a part of your ultimate purpose in life. Once you have enough passive income, you can focus on your real life’s work.

Financial Fitness Principle #18: Make a plan and focus deeply on each step
Several of the principles above can be combined to create a focused plan to get you to a destination most people crave: financial success. To reach financial success: 1) find a way to excel at your job and start a small business; 2) put in 10,000 hours to gain mastery over your business and financial fitness; 3) build enough passive income to cover your family’s needs; 4) once you are financially free, focus on building financial strength to fund your life’s purpose.

Financial Fitness Principle #19: Get good mentors and really listen to them
If you tried to learn every financial principle on your own, it could take generations. That is what it has taken for our society, by trial and error, to uncover proven principles of financial fitness. Instead of reinventing the wheel, choose financially successful mentors and intently listen to everything they are willing to teach you.

Financial Fitness Principle #20: Use money in ways that bring you more money
When you make choices about how you will use your money, identify the choices that could bring you more money than you put in. The best investment for you is yourself and your own business. Find ways to wisely and appropriately use some of your savings to increase your assets and returns.

Financial Fitness Principle #21: Put some money into preparing for a worst-case scenario
Emergency funds are critical, so when something unexpected happens you aren’t sabotaging your long-term plans. Some people save fanatically for a rainy day—don’t overdo it. But don’t ignore it. Emergencies happen to everyone.

Financial Fitness Principle #22: Build up a regular targeted savings fund for future expenditures
Compounding interest works in reverse, too. Financing consumer items, such as furniture, cars and vacations—even education—eats away at your financial strength for the future. If you know you will need a consumer item in the future, begin today to build a targeted savings account to pay for it, so you can eliminate the cost of interest.

Financial Fitness Principle #23: Only invest money you can afford to lose entirely
The shiny temptation of investment in popular industries or favorite brands leads many people to sink too much money into industries they aren’t familiar with. Doing this can greatly increase your chances of losing money. For that reason, invest only small amounts in speculation outside of your area of mastery.

Financial Fitness Principle #24: Don’t ever use your savings to speculate
If you speculate with savings earmarked for specific uses, it’s like gambling away your grocery money. Avoid it at all costs.

Carefully studying and finding ways to take the offense and implement these financial moves could help you gain financial fitness sooner and more confidently. You can’t do it all today, but you CAN get started today.