Fiscal Fitness: 5 Tips to Build a Better Financial Future

Move over, physical fitness—fiscal fitness is now the most sought-after personal goal in America. According to a Statista Consumer Insights survey, saving more money was the most common New Year's resolution in the U.S. in 2024, pushing pledges to exercise and eat healthier from their traditional top positions.¹

It's a laudable goal, given that poor fiscal fitness—including lack of savings, high debt and money management challenges—contributes to high levels of financial stress.² And financial stress is linked to negative measures of both physical and mental health.³ Of course, any resolution to change your habits needs a plan of action, and improving your fiscal fitness is no exception.

Here's how to start strengthening your financial health so you can get your mind, body and bank balance into tiptop shape.

1. Set Financial Goals

While improving your fiscal fitness is a worthy aim, it's missing a critical element that will help you stay on track: desired outcomes. Perhaps you'd like to become a homeowner, take a vacation, go back to school or save more for retirement. Setting specific financial goals can motivate you to change your ways, as well as let you measure your progress. It's like the difference between saying, “I want to be more physically fit," and a more specific goal like, “I want to play tag with my kids without getting short of breath."

When you're coming up with your financial goals, keep the following in mind:

• • Consider both short- and long-term goals. Some financial goals—say, saving enough money to replace an old appliance—are like sprints and may not take long to get to the finish line. Long-term goals, on the other hand—such as coming up with a down payment on a home or socking away enough for a comfortable retirement—are more like marathons, requiring patience and strategic planning.
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• • Prioritize needs vs. wants. Going on a lavish vacation might be a fun short-term goal, but not if it comes at the expense of a more critical short-term goal, like creating an emergency fund. Think of it like choosing between an afternoon spent on the couch binge-watching or going for a long walk with a friend. It's not about denying yourself, but making choices that align with your long-term well-being.

2. Understand Your Financial Habits

Picture this: You're on a quest to lose weight. How would you start? By getting an accurate picture of your eating habits to see what changes might help. It's no different with money, so take these steps to get a handle on your current financial habits:

• • Track your spending. Keep a spending diary for a set period to unveil the hidden patterns and identify areas where you can cut back.
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• • Create a budget. Allocate your resources to your needs and wants—and don't forget to include savings as a crucial part of your budget. It's like portion control for your finances, ensuring that each dollar has a designated purpose.
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• • Use an automated savings plan. By choosing the right savings accounts and then setting up pre-authorized transfers from your checking account, you can create a new habit of saving without spending much time or effort thinking about it. It's like packing your lunch and snacks ahead of time to ensure you stay committed to your goals even when life gets busy.

3. Manage Debt

Just as shedding excess weight improves your overall health, reducing debt is a game changer for your financial well-being. That's because every dollar of debt you repay will save you in ongoing interest charges, which you can then redirect to your various savings goals.

There are many different debt management strategies you can try, such as the avalanche method, snowball method and debt consolidation. Think of these as your financial workout routines. Choose the one that suits your style and individual financial situation. For additional support, tap into resources like the National Foundation for Credit Counseling or Debtors Anonymous. They can serve as a personal trainer of sorts, guiding you through the toughest debt-busting workouts.

4. Live a Lifestyle You Can Afford

Living within your means is the financial equivalent of maintaining a healthy diet. If you over-splurge (on spending or eating), your wellness will take a hit. So be sure to assess your spending habits against the lifestyle you're leading. As your income grows, revisit your financial goals. In the same way that you'd ramp up your workout routine as you build more muscle and endurance, challenge yourself to save more whenever your earnings increase.

5. Stay Educated on Your Finances

Once you map out a budget, start managing debt and get on track with your savings, don't drop the ball! Up your personal finance game by learning how to get your savings working for you. Use resources like Investopedia, MyMoney.gov and the National Endowment for Financial Education to educate yourself on the best savings and investment products to help your money grow. Attend financial webinars and workshops—consider them your fiscal fitness classes. Find a financial management app you like to chart your progress and keep strengthening those money muscles. You can also check out our Money Matters blog, which is full of helpful information.

Ready, Set, Grow!

Congratulations—you've just completed your crash course in fiscal fitness! Remember, just like sculpting the perfect physique takes time, so does building wealth. Start with small steps, like setting financial goals, tracking your spending and creating a budget. Make informed choices to tackle your debts and live within your means, and be sure to stay educated. With a little effort, you'll supercharge your fiscal fitness and watch your financial health transform.

 

Tamar Satov is a freelance journalist based in Toronto, Canada. Her work has appeared in The Globe and Mail, Today's Parent, BNN Bloomberg, MoneySense, Canadian Living and others.

 

Interested in learning more?

Personal Finance 101: Budgeting Basics

How to Save Money by Organizing Your Finances

11 Easy Ways to Save $1,000 in 30 Days

5 Tips to Help Reduce Your Debt

 

Sources/references

1. Anna Fleck. America's Top New Year's Resolutions for 2024. Statista. December 22, 2023.

2. Andrea Hasler, Annamaria Lusardi and Olivia Valdes. Financial Anxiety and Stress among U.S. Households: New Evidence from the National Financial Capability Study and Focus Groups. FINRA and Global Financial Literacy Excellent Center. April 28, 2021.

3. Piotr Białowolski et al. The role of financial conditions for physical and mental health: Evidence from a longitudinal survey and insurance claims data. Social Science & Medicine. May 2021.