Are You Financially Fit?
October 29 2014 Posted by Pauline Hardy
Are you financially fit?
February 5th, 2014 by Pamela Plick, CFP®
Typically, the beginning of the year is a time when we sit down and plan our expenses for the
year. You have probably made some New Year’s resolutions related to your health or other areas
of your life. Why not make a resolution to also become financially fit?
Here are a few tips to help you achieve this year's financial goals.
9 tips to measure your financial goals
1. Know your finances
Before you can put a plan in place, you need to organize and understand your expenses, savings,
debt, etc. You should know exactly how much is coming in…how much is going out… and how
much is left over. Not only is it important to take the time to create these cash
management statements so you have a starting point, it is also important to include your spouse
or significant other in this process. For various reasons, sometimes we have a tendency of not
wanting to talk with our significant other about financial matters. It is important that you both
have an understanding of the family finances and be able to set goals as a couple. Either of you
should be able to step in and be knowledgeable about everything from the monthly budget to
insurance and investments.
2. Create a monthly spending plan
Do you know where your money goes? Do you have a positive cash flow? If your answer is 'no'
to either of these questions (or I don’t know!), you need to create a spending plan (budget). We
all know how important it is to live within our means, but it is equally important to identify
where your money is being spent. Creating a spending plan also helps you identify areas where
you can potentially reallocate to fund your goals.
3. Examine your credit history and insurance coverage
Making sure that you maintain a good credit history is one of the most important steps you can
take. Take steps to reduce credit card and other high interest debt. Questions you need to answer:
• Do you have credit in your own name? You should have at least one credit card solely in
• Are you using credit wisely? Do you pay off your balances monthly or carry them from
month to month?
• Is your credit report accurate? You don’t want to wait until you apply for credit to find
out your credit report is inaccurate. A good practice is to request a copy of your credit
report at least annually. In the U.S., go to: AnnualCreditReport.com. In Canada, visit
TransUnion or Equifax.
Protecting your assets in case of an unexpected illness or other event is important. You need to
make sure that you have adequate insurance in place. This includes:
• Car, home, personal articles
• Long-term care
You should review the cost and terms of your current coverage with a qualified
professional. Also, if you are employed, don’t forget your group policies.
4. Set clear financial goals
As you start thinking about your goals, there are three factors you want to consider: your
priorities (values and beliefs), your responsibilities (items that may be part of your monthly cash
flow) and your dreams (vision and aspirations).You should go through the process of setting and
prioritizing your goals by utilizing all three factors. It is also important that your goals be
specific, measurable and realistic.
5. Organize your recordkeeping
Most of us find it a chore to organize our financial documents and other important papers, but it
is critical to be able to locate documents in the event of a disaster or death. You should be able to
answer these questions:
• Do you have all the records you should?
• What documents should you keep and for how long?
• How should the records be organized?
• Where should you keep the records?
To answer these questions, start with a good document checklist.
6. Work with a financial planning professional
A financial planning professional can help you translate your information into realistic goals so
that they can develop strategies that make sense for you. It is important to work with an advisor
you trust and that truly understands you, your goals and your situation. When choosing an
advisor make sure that you:
• Get advice based on what’s best for you
• Partner with your investment advisor
• Understand what you are paying for
7. Create your strategy
Based on your goals and priorities, your Certified Financial Planner™ professional will take all
your finances into account and determine how to meet your goals. Their analysis may cover your
assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
8. Protect your assets
If you don’t have a strategy for your estate, the government will. Here are some key actions you
• Meet with your attorney regularly
• Prepare estate planning documents
• Review and update beneficiary designations
• Make sure investments are titled appropriately
9. Schedule a year-end review
Just like an annual trip to the doctor can provide vital health information and help identify issues
before they become serious, the same can be said for annual financial reviews. In addition, goals
and priorities sometimes change, so it is important that you review your financial plan on an
annual basis to make sure you are on track to meet your long term financial goals.
Bonus: Time to celebrate!
If you follow the above tips throughout the year, rest assured you’ll have worked hard and
made tremendous progress towards becoming financially fit. Feel free to give yourself a pat on
the back - you earned it.