Steps to Financial Fitness


Financial fitness is the real answer to a stress-free life. Finances should be well managed to avoid crisis in any point of life. To maintain a healthy personal finance the most important requirement is to save money to cushion you in troubled times. Saving money prevents from incurring debts. And invest money through proper channels to get the maximum possible returns without putting everything at stake.

1. Budgeting your domestic expenses

It is a good practice to budget your domestic expenses. Keep a tab of your monthly bills and also your fixed expenses. This will give you a fair idea of how much money you need to get your household running smoothly.

2. Plan your monthly savings

Each month set aside some portion of your income to be able to make the yearly payments for insurances, bonds, mutual funds and other savings schemes.

3. Plan your big expenses

The big expenses like investing on a new house or a new car or even renovation works or furniture, buying latest gadgets/electronic items, planning for trips or vacations, marriages and festivals call for money. So keeping in view of the events, funds should be arranged or the means decided beforehand and spending should be done accordingly.

4. Keeping track of your expenses

It is important that you keep a track of your daily expenses. Maintain a listing of accounts with all the different expenses under separate heads. That way you will come to know how much money you need for a comfortable living and how much is spent on luxury items and entertainment. You would know how much you are throwing away on parties, shopping, etc. to be able to control your expenses more effectively.

5. Planned use of credit cards

It should be remembered that credit cards are meant for deferred payments. And credit cards should never be a means of uncontrolled expenses just because you do not have to pay cash immediately. This dangerous practice amounts to huge credit card bills and takes the shape of financial liability in the future. Use your credit card judiciously.

6. Avoid incurring debts especially through credit cards

Debts through credit card are quite common. Do not shop with your credit card if you think you would not be having enough cash in your account to pay off your credited amount within the billing period.

7. Choose your credit card wisely

Choose a credit card that gives you cash back and has no annual charges. Some examples of cash back cards are (1) Chase Freedom Visa Signature Card (2) Blue Cash from American Express

8. Always avoid paying late fees

Usually, when we buy against credit cards we tend to forget that we might not be paying immediately but will have to pay in near future. Unplanned use of credit cards results in hefty outstanding bill amount. Make it a practice to pay off dues in time so as to avoid paying late fees.

9. Invest wisely

Contribute each of your hard earned pennies in traditional individual retirement (IRA) account or 401k where you would get maximum returns at minimum risks.

10. Open a checking account that pays interest

Most of the checking accounts do not pay interest. So try and find out a checking account that does so, for example, HSBC Online Payment Account.

11. Pool resources to create an emergency fund

Save a small amount when your cash flow is good to create an emergency fund. That ways you would not have to borrow money at high interest rates to cope up with any kind of emergency situation.

12. Take insurance cover

Typically, in case of health insurance coverage, premium amount goes on increasing with age. So make it a point to get yourself and your family insured when you are young and at the beginning of your career. Do also make a point to insure your household goods, property, house, etc. against damages caused by theft and fire.

Source by Micheal James

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