Financial Workout – What’s Your Routine?

Financial Workout – What’s Your Routine?

Are you someone that is fairly health conscious?  Do you attempt to eat right, and exercise on a regular basis?  How about your mental health?  Are you taking time for yourself, doing some meditation or mindfulness, or even speaking to a therapist to keep your mind in the right place?  If so, I applaud you as it is critical to a long and prosperous life. 

Now, here is the real question, do you have the same or any regular routine to take care of your financial health?  The reality is that if you want that long and prosperous life being healthy physically, mentally, and financially are probably the holy trinity of your overall health.  That said, I all too often see people neglect their financial health. 

10 Steps to Financial Health

With how important one’s financial health truly is I figured I’d put down a training regimen so that even the most out-of-shape individuals can get healthy. 

Step One- 30 Reps of Cash:

This one is easy.  Every morning wake up and immediately log in to your checking/savings accounts.  This is a great healthy habit that accomplishes a handful of things.  For starters, gives you a gut check as to your daily cash position.  This can help you make financial decisions on purchases, money transfers, etc.  Additionally, in today’s cybercrime onslaught, you can keep your pulse on if any nefarious activity is happening in your accounts.  Usually, if there is and you catch it right away there is a very good chance the banking institution will refund you the stolen money. 

Step Two- 4 Cash Cleans a year-

Another simple cash tip.  If you tend to keep a decent enough amount of cash on hand you should likely have a portion of it in a liquid savings account.  Now every quarter it is worth seeing if that savings account is paying you competitive rates.  For reference, today you should be seeing rates at 4-5%.  If you are not, I’d highly consider looking around and opening an easy-to-use online bank.  This way your cash reserves will have some earnings, and thus be all around healthier.

Step Three- Credit Card Curl-

If you are using credit cards there are plenty of good regular tips here. 

1. Check them weekly to make sure you understand what you are spending, and if any unauthorized transactions have occurred.  Much like your cash accounts, if you catch these quickly enough, almost every credit card will end up refunding you.  Plus, you can stop it in time before they really get away with doing serious damage.

2. If you have credit card debt it is critical every month to see what your outstanding balance is, how much interest you are paying, and which debt to overpay first.  It is absolutely essential to have a steady and consistent plan to pay down these debts each month. 

3. Points are the last thing I’ll comment on here.  Once a month I’d look at the charges and see if you are maximizing your credit card rewards.  Many of these cards offer different promotions, different rewards, and different incentives.  If you want to maximize your “free” money keep a steady pulse that you are using your cards correctly.

Step Four- Investment Kickbacks-

There are a few healthy things to focus on when it comes to your investment health.  First, on a monthly/quarterly basis, it is worth understanding what you have and where.  Also, are they trending in the general direction of the markets?  If markets are up 20% and you are down 10% time for a new routine.  However, if they are trending in a similar direction as the markets then you are likely on course.  Additionally, are you comfortable with your overall risk allocation?  It makes good sense to check your risk allocations, likely quarterly, to align your risk tolerance with your risk allocation.

Step Five- Retirement Account Squats-

I’d say monthly it is worth logging in to your 401(k)’s or IRA and making sure you are trending to put in your desired amount.  Remember limits go up each year and you want to make sure if you are able that the percentage being allocated is enough to max out each year.  Additionally, do an audit to assure you are getting the appropriate match dollars on your contributions.  These two things will keep you on cruise control for your financial health.

Step Six- Mortgage Mile-

As we know paying off one’s mortgage is a daunting task.  It is also one of the things that most bother people, having this big debt hanging around their necks.  Do yourself a favor once a month, after you pay your mortgage, log in to check your new balance.  It is therapeutic to watch the balances go down each month.  In addition, you can decide if you want to round up each month or throw a few extra dollars at the balance.  Simply having a pulse on one’s mortgage will help them feel comfortable with their payoff date and take a level of ownership they likely didn’t have before.

Step Seven- H.S.A Hustle-

My favorite vehicle is the Health Savings Account!  On a monthly basis, I’d suggest making sure you are trending to max out your contributions for the year.  These are some of the best dollars to stow away, thus I want to make sure you are taking advantage of every last bit.  I would also take stock if there is an investment account option within your H.S.A., if so do your best to keep the appropriate amount there vs. in your cash portion for medical expenses.

Step Eight- Expense Push-up-

You know how they say if you write down and journal everything you eat, you’ll be much healthier?  Well, the same thing happens if you do the same with your expenses.  Now, depending on how much you believe you would benefit from a detailed accounting of your expenses, I’d suggest doing the same thing (daily to weekly).  The good news is there is some easy-to-use software that can track this for you with little work on your behalf.  That said these technologies do need some TLC to stay accurate.  In the end, if you have a good pulse on where your money is going you will be the master of your domain!

Step Nine- Modeling Mountain Climbers-

I’d recommend once to twice a year running full-on financial modeling.  This is a great use of our resources and something we love doing here at Diversified, LLC.  You’ll be astonished at what regular modeling can do to your finances.  It will give you confidence you are trending in the right direction.  It will notify you if you are not trending in the right direction with actionable steps to get back on the right track.  It will give you a clear snapshot in one spot of your entire financial picture.  It will show you the limits of possibilities to your financial future.  Finally, it will motivate you to make the necessary changes to have all your dreams come true. 

Step Ten- Take a Rest

Much like working out physically, even your financial health needs a break.  You certainly don’t want to get to the level of neglect, but don’t beat yourself up too badly if you are a slow starter, or need a little extra help.  It is what we are here for, to take some of the onus off of you and also to keep you encouraged so we can accomplish these goals together.  Also, all work and no play makes Jack a dull boy. 

In other words, you don’t need a six-pack and chiseled biceps here.  Sometimes good enough is OK.  Thus, although this is serious stuff, you’ll have that proverbial donut, you’ll skip a workout, and sometimes you simply need a break.  I’m here to tell you that is fine and dandy, as long as you have a steady pulse on the above you can certainly afford to take a break.

Your Financial Health

Hope you enjoyed this financial workout blog.  It is amazing the difference I see in people who have a pulse vs not have a pulse on their financial health.  As different as night and day.  One thing of warning before I let you go.  If you are now taking on a newfound ownership of your finances, please don’t get discouraged or anxious.  Markets, cash, and finances are not a straight line.  They will ebb and flow on a month-by-month basis.  DO NOT LET THESE THINGS DISCOURAGE YOU OR HAVE YOU OVERREACT.

Go get yourself healthy, wealthy, and happy.