How to keep your finances in shape

Lessons I’ve learned from keeping in shape and living a healthy lifestyle that can be transferred to managing your finances.

Investing in your physical health is a no-brainer. We do this so that we can enjoy life more and set ourselves up for a better future – and the hours spent running, the gym memberships, and expensive personal trainers are all seen as worthy investments. 

So why don’t people look after their financial health in the same way? All it takes is a bit of planning and effort, but once it becomes a habit it’s easy, and your life will be so much better for it.  

Here are some tips for getting your finances in shape (or in even better shape!). 

1. Set incremental goals and have a plan

Setting a goal gives you something to work towards, and putting together a game plan helps you think about how you’re going to get there and how long it’s going to take. 

Targeting small incremental wins along the way enables you to track your progress towards the bigger goal and provides motivation to not fall off the wagon.

2. Think long term and avoid short-term fads

It takes time and effort to get and stay fit. There aren’t any shortcuts, unfortunately, and fad diets aren’t sustainable and any benefits are guaranteed to be short-lived.

The same goes for investing and growing your wealth. It’s all about thinking long-term when deciding where to put your money and not trying to chase the latest trend. It’s not easy fighting the temptation to follow fads when investing, which is why it’s important to know yourself and what you don’t know. 

3. Start as soon as possible, do it regularly – and don’t stop

Getting into a habit and building momentum helps to improve results in both fitness and when it comes to saving and investing. Doing a little bit each day makes more of a difference than you think. Investing $2,000 at 25 as opposed to 35 could double the profit you make by the time you’re 50.

You shouldn’t invest money that you need in the short-term, but, just like any work out program, it’s better to do a little more often than have occasional bursts of activity. If you can afford it, regularly depositing money – even small amounts – in to your investment account is a sound strategy. 

It’s called dollar-cost averaging and will help your investing become automated and stress-free.

4. Diversify your efforts 

When it comes to exercise, most personal trainers will advise you to vary your routine up across different types of training like cardio, weights, interval training, stretching and flexibility. This is so your body doesn’t get complacent and you’re always exercising all the important muscle groups. 

And yes, it’s the same with your finances. When you invest, it’s important to not just throw money in to shares and hope for the best. You might do very well, but it’s likelier that you won’t really get the results you hope for. 

The better way to invest and grow money is to spread our dollars across different assets like cash, bonds and shares in different companies, industries and countries. This can help reduce risks and optimise your investment performance.

5. Use your friends to motivate you 

Group fitness and training sessions let you exercise together with your friends, giving you the added motivation to turn up (you don’t want to pike out on your mates) and work hard. 

In the same way, surrounding yourself with at least a  few friends or family members who are open about finance and understand investing, is a key way to level up your finances. If you don’t have anyone like this in your immediate circle, there are Meetups where people talk about personal finance or investing or plenty of Australian personal finance groups on Reddit. 

Many people start on websites, forums, and social media and progress their understanding until their investment and personal finance muscles start showing some definition. 

Everyone will take a different route to personal finance fitness, but like physical fitness, the best plan of attack is to start as soon as possible – and remember, it might feel strange at the beginning, but it’s all for a greater good.

Good luck on your finance fitness journey! 

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  • Jessie Lin

    Jessie leads the marketing initiatives at Stockspot. She is passionate about empowering consumers to make the right financial decisions, using simple and engaging communications.

Jessie leads the marketing initiatives at Stockspot. She is passionate about empowering consumers to make the right financial decisions, using simple and engaging communications.

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