The Ultimate Checklist to Becoming Financially Fit
Alysse Godino, Saffron Money Creator , Cornell University alum, and former investment banker. One year ago, Alysse moved to Maui to take a break from the Wall Street world. There she discovered a lack of financial education and literacy, especially within women, and decided to do something about it. Now, when she’s not surfing or skating, she is working one-on-one with clients all over the country to provide financial education and empower women to take control of their finances and make great financial decisions.
Get Fit Stay Fit - The Ultimate Checklist for Financial Health and Wellness
We all have a general idea of what it means to be healthy - exercise and eat well. But do we know what it means to be financially healthy? Probably not. Unfortunately, there are no "financial health and wellness” classed taught in school and your feed isn’t filled with Insta models advertising their financial fitness and health routines.
Get Fit Stay Fit with this ultimate financial health checklist so you can get your money in shape.
8 Ways to Get Financially Fit 💪
1. Prepare for emergencies
Emergencies happen. It shouldn’t be an emergency as to how we pay for them. Using a credit card is 100% not the answer. Everyone should have an emergency savings fund. If you don’t already have one, starting one should be a priority. How much? To cover 6 months worth of recurring monthly expenses. For example, if you spend $2,500/ month for rent, food, utilities, car, commuting, etc., your emergency fund should have $15,000 set aside. Where? This money should be kept in an easily accessible or “highly liquid” account, separate from your checking, retirement, or other investment accounts.
2. Spend less than you make
No secret sauce here - don’t spend money that you don’t have. It’s a simple concept; yet in today’s society with our desire to buy the latest clothes, phones, bags, cars, etc, all at the convenience of a credit card swipe, this can be more difficult than it seems. If you don’t have the money now to pay for it (all of it), you can’t afford it. Just remember: money looks better in the bank than on your feet.
3. Save money
20% of your take-home income each paycheck, to be exact. Savings are often overlooked and the first causality of budgeting. Don’t let your savings die. Regardless of how much money you make or have, everyone can save, even you. It’s just a matter of making savings a priority and “paying yourself first”. Even if you’re not hitting the 20% goal, start small. Any savings are good savings. You work hard for your money, you may as well save some of it.
4. Think before you swipe
Credit cards: friend or foe?
If I leave you with anything let it be this: if you use a credit card, pay it off in full every month. Not the minimum payment, the whole thing, meaning there is a $0 balance. From now until forever, no exceptions. If you are unable to pay off your credit card in full each month, stop using it until you’ve paid it off completely and only purchase items with cash or a debit card. See checklist item #2.
Why are you so aggro about this?
Because credit cards can be deadly and charge you insane interest, up to ~30%. That means if you buy a chair for $100 and you don’t pay off your credit card in full each month, you are actually paying $130 for that same chair. Or if you buy the whole furniture set for $2,000, you could be paying up to $600 extra for that same set, for no reason. If you carry any balance at all, you are being charged interest, even if you are making the minimum payments, so make sure to always pay it all off.
5. Know where your money is going
Feel broke at the end of the month and don’t know why? That could be because you don’t actually know where all your money is going. Things like automatic payments and monthly subscriptions could be bleeding you dry without you knowing… I’m not saying to get rid of auto pay or your Spotify subscription, just make sure to take a look at all your recurring charges, transfers and monthly subscriptions on your credit card or coming directly out of your checking account. You may be surprised. Anything you forgot about or no longer use, cancel ASAP.
Investing seems scary … but in reality, its actually scarier if you're not investing your money. Why? Because your hard-earned cash could actually be losing value each year due to inflation and increasing cost of living, AKA inflation. And as Warren Buffett puts it: "If you don’t find a way to make money while you sleep, you’ll work until the day you die”.
Wow, that is scary. How do I start? Investing is definitely a lot of responsibility so understanding the basics of investing and different investment platforms is the first big step in getting on the investment train.
7. Know your worth
Know what you own versus what you owe. This requires digging into your accounts and debts (and knowing your online log-ins) to look your money in the face, dead on, so you can assess your current financial situation. No shame from whatever the numbers tell you. This is your starting place, your “before” picture. It’s important to strive to keep your finances moving on a positive trajectory: keep your assets going up while making your debts go down.
8. Make #moneymoves together
Surround yourself with people who inspire you to be the best version of yourself. Your money is no different. Make sure to find a money friend or mentor who can support and guide you through your money’s ups and downs, just as a coach or personal trainer can help hold you accountable for your health and fitness goals.