7 simple tips on how to become financially fit

Updated: May 22, 2019

Being financially and physically fit work hand in hand because your physical health and your financial health are arguably the most important factors affecting your wellbeing, security, and your quality of life. People spend a lot of time worrying about what they eat, how much they weigh, and how healthy their hearts are, but while we are all living longer and healthier lives, for many people, financial fitness still isn't a reality.

Being financially healthy has some of the same benefits as being physically fit. You will sleep better, be more energized, you can reduce your stress levels and ultimately have more control over your future.

But how exactly do you become financially fit?  Well, this doesn’t involve making you jog to the bank or squat press with piggy banks of coins in your arms, but there are a few key areas you can work on to get you on the right track.

A good starting point is to consider how athletes stay fit. Their fitness comes from eating and training right.  They carefully follow a strict diet and training schedule. By regularly following this they build up a level of fitness that helps them achieve success. In a very similar way you will build up your financial fitness by practicing good money management, being conscious of what you are spending your hard earned dirhams on, and how much you are or should be saving.  Being consistent, just like an athlete would follow a regime will give you the strength and stamina to achieve ultimate financial freedom.

1. Stand on the scales and measure up!

Everyone needs to start somewhere and in order to progress you need to assess where you are now. Only then can you map out your goals. Then, in order to set your goals you need to have a clear picture of your ideal outcome. Would you like to buy a house in 2 years? Would you like to retire early? Or do you simply want to be debt free?

Now that you know how much "weight" you need to lose or how much “muscle mass” you need to gain sit down and make a plan. Be conscious of time frames in which to achieve them. Without time as a driver you may find yourself never quite getting there. Break the goals down so that they are realistic and achievable.

2. Get a head start

We have all been there, the thought of hitting the gym after a hard days work. It is so easy to put it off another day.  Equally, we have a habit of putting off saving. There is always an excuse! “I’ll start in the New Year,” or “I will wait until I get my bonus.”

Most individuals will need a minimum of roughly 70% of their pre-retirement income in order to maintain their current standard of living during their years of retirement. By starting early, rather than delaying your savings for a few more years, you can considerably reduce the amount you will need to save every month to reach your retirement goal. So give yourself a head start! The longer you leave it the more you will have to save, the older you get. 

3. Keep track of your progress

People who are financially successful track their income and expenditure, just like keeping track of how much you bench- pressed last week or the distance you covered on your early morning run. There are several tools and apps available to help track expenses. They can help you to record purchases and keep an eye on daily spends. Check out www.mint.com or try out Expensity - a great app for business travellers. Just like keeping track of your training schedule you need to be committed to monitoring your cash flow regularly.

Remember discipline is key. The problem is there are relatively few people who are disciplined enough to know what they're spending. The people who do track their expenses are much more likely to be financially fit. Just like those miracle weight- loss pills or the promise of a juice that will reduce your body fat to 7%, there is no such thing as a quick fix! Be prepared to put in the hard work.  It is likely you will have to make sacrifices along the way. If you need to move into a smaller apartment or get a cheaper car then do it. The key to financial fitness is to set achievable goals and consistently work towards them.

4. Work with a trainer

To improve physical fitness, many of us will have a personal trainer. Why? Because they are specialists in their field and know how to get results. They will set you goals, keep you motivated and make sure you are on track to achieve them. Likewise, individuals should similarly consult with Financial Planner in an attempt to gain optimum results

If you don't know where to find an adviser, ask people that you know or do business with for recommendations.

5. You can still have a cheat day!

Becoming fit may involve belt-tightening in some spending areas, but it shouldn't mean you're forced to deny yourself of everything you love, You will just be setting yourself up for failure. Just like you would treat yourself every now again to something you wouldn’t ordinarily have in your day- to -day diet. Your financial fitness plan doesn’t need to be all hard work and you can make room for small splurges, just don’t go over board!

6. Sticking with the same routine and pattern will not deliver results

Just like fitness training to deliver results, when it comes to financial planning diversification is the key. In financial planning terms the goal of diversification is to reduce risk.  The logic is quite simple.  If you invest in things that do not move in the same direction, at the same time or at the same pace, then you will reduce your chances of losing all of your money at the same time or at the same pace. It’s one of the best ways to protect your portfolio from the many forms of risk.

Diversifying your portfolio demands that you hold many different asset classes to spread the risk. With this strategy, a significant loss in any one investment or class doesn’t destroy your entire portfolio.

7. It’s not a sprint finish – It’s a long distance run!

Remember to stick with it. Set yourself that goal and don’t veer away from it. Whether it is to accumulate a lump of cash by disciplined regular saving or to put aside a lump sum for greater growth, prioritize and think about what it is you are saving for, so that you have an end goal in mind. Remember financial fitness isn't achieved overnight. Just like achieving optimum health, it takes time, a sound plan, and strong commitment. 

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