Being financially fit means living a life of complete financial responsibility. The Center for Financial Services Innovation (CFSI) defines four basic components of financial health—spend, save, borrow and plan. These components reference everyday financial activities. Every choice you make in terms of these four activities either builds or detracts from your financial fitness. Like physical fitness, you can beef up those fitness muscles a little bit more each day. Here’s why and how being financially fit is crucial for a well-balanced life.
Expand your financial knowledge
A financially fit person is constantly broadening their money knowledge. They read personal finance books and blogs, attend seminars and are aware of the evolving state of the economy. This enables them to make money decisions from a position of knowledge and power.
Stick to a budget
A financially fit person knows that tracking monthly expenses is key to financial health. They’re careful to set aside money from their monthly income for all fixed and discretionary expenses, and to stay within budget for each spending category. Track your spending, set financial goals and establish realistic budgets with our free online personal financial management tool, My Financial Partner.
A financially fit person is committed to paying down debts and seeks to live debt-free. Constant budgeting, ongoing financial education and planning ahead enables them to make it through the month, and through unexpected expenses, without spiraling into debt.
A financially fit person prioritizes savings. This allows them to think ahead and build a comfortable nest egg or emergency fund. In turn, having a robust safety net means sleeping better at night knowing there’s money available to cover unexpected expenses.
Maintain complete awareness of the state of your finances
A financially fit person knows exactly how much money they owe, the accumulated value of their assets and the complete sum of their fixed and fluctuating expenses. This awareness takes the stress out of money management, allowing them to make better financial choices.
Maintain a healthy credit score
A financially fit person knows that an excellent credit history and score are crucial factors to long-term financial health. They’re careful to pay bills on time, hold onto credit cards for a while and to keep credit utilization low. This helps them qualify for long-term loans with favorable interest rates, which saves money for years to come. View your FICO® Credit Score using our Mobile Banking app.
Create concrete financial goals
A financially fit person has long-term and short-term financial goals. This enables them to keep their focus on the big picture when making everyday money choices and empowers them to realize their financial dreams.
Achieve financial independence
A financially fit person is independent. By sticking to a budget, prioritizing savings and maintaining an awareness of their finances, they are strong, secure and completely independent.
Being financially fit means living a life without battling anxiety about getting through the month or stressing about the future. You can achieve financial fitness by committing to making choices in each of the four components of financial health (spend, save, borrow, plan) that are forward-thinking and help to build your financial wellness.