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Financial Fitness - Published Jan 2018 by Raoul Ruiz Martinez

Whether you think you’re doing well or know you need help, it’s a good idea to assess your financial fitness at least once every year. By understanding your weaknesses, you can focus your efforts on improving your finances and prosper.

Getting your spending under control and in line with your income is an essential element to building a strong financial future. Analyse your spending (including what you put on a credit card) each month to make sure your cash flow is greater than what you spend. Once you’ve got that under control, consider placing what extra you have every month in savings. You’ll never know when you’ll need it, and it’s better to take money out of a savings account to pay for unanticipated expenses rather than adding it to a credit card balance.

Control your outgoings, lower your costs and don’t be shortsighted.

Here are three steps you can take to assess your financial fitness through the creation of a Budget Plan.

Step 1: Take Your Financial Temperature
You don’t have to be an expert to begin to analyze your financial health. To get a general idea of your status:
Calculate the total sum of your assets, such as bank account balances, retirement savings, real and personal property, and investments.
Subtract your liabilities, including credit card balances, student loan debt, car loans, mortgages, and any other loans that may affect your interest in real or personal property.
The result is your net worth.  A high, positive number generally indicates financial health, whereas a negative number generally indicates that there could be a problem.

Step 2: Set Your Financial Target
Everyone’s financial goals are different.
Think about where you want to be in five years and whats required financially to achieve that goal.
Write down those goals, along with a target date for achieving each.
Break your goals into itemised tasks that you can do on a weekly or monthly basis so as to plan your route clearly.
Track and celebrate milestones along the way.

Once you’ve established your goals, you may need to prioritize them in order of necessity.  For example, if your emergency savings aren’t sufficient in your estimation, you may decide that’s your top priority.

Step 3: Gauge Your Financial Fitness Progress

A key aspect of financial fitness is being able to stick to a budget and reach your financial goals. To assess your money management skills, monitor your monthly spending to see how closely it aligns with your monthly expenses. If you find you’re spending more than you need to, identify what you’re buying and think of ways to avoid making unnecessary purchases.  For example, if you’re
spending too much on weekday lunches consider other options.

Track your progress against your weekly and monthly milestones, as well as your projected end dates. If you frequently miss savings targets, determine where the Euros and cents are going. If unplanned expenses are eating up your disposable income, make sure future surprise costs are necessary ones only.
Proactive budget planning can help strengthen your Financial Fitness.

Happy Financial Fitness!

This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action.

Raoul Ruiz Martinez is a resident and independent consultant for Finesco Financial Services Ltd., Glasgow and advises clients on private financial matters in both the UK and throughout Europe under the MiFID regulation. Finesco Financial Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Some of the services provided are not regulated by the FCA because they are not included within the Financial Services and Markets Act 2000.  Raoul has a weekly radio feature (Raoul’s Rant) on the Owen Gee Solid Gold Sunday Morning Show as well as the Money Minute programme on the weekly Si Frater’s Breakfast Show, both on KissFM Portugal.