It’s so simple to tell if someone is physically fit. Just size them up from head to toe to get a rough idea of whether or not the person works out regularly.
If you still can’t confirm how fit the person is, get them to run around a track or ask them to do 20 burpees. That ought to do it, right?
How about being able to tell if someone is financially fit? How would that look like?
Would he be living in a big house? Is she driving a beautiful C class Mercedes Benz? Is he decked out in offwhite sneakers and she’s slinging a caviar leather medium Chanel single flap with matching yellow gold hardware to her Cartier love bracelet? Do they go on exotic vacations 5 times a year, documenting the best moments on their Instagram accounts? #livingmybestlife
Er, here’s a resounding NO.
It is not as straightforward as that. Being flashy does not always translate to being wealthy. Given how taboo it is to talk about net worth, most of us are hiding more than just financial flab when it comes to the matter of finances.
We can lie to others for sure, but it is more difficult to lie to ourselves.
Here are 15 simple checkpoints to see how you fare on the financial fitness scale. Have a look at this checklist below, and give yourself 1 point for every criterion that is true for you. Total up your score afterward.
I have $2000 in my Bank account.
I have an Emergency Fund.
I save regularly.
I save >10% of my monthly income.
I invest my money consistently.
My Investments return me >6% per year after fees.
I can pay off my credit card(s) in full each month.
I control my debt more than it controls me.
I know exactly how much I spend each month.
I don’t over-splurge on eating out, drinking or partying.
I plan for my big purchases.
I am medically insured.
I have more than one stream of income.
If I stopped my primary source of work, I’d be able to get by for > 2 months on my other income
I have positive cash flow (income > expenses) even if I choose to stop my primary source of income.
Financial Scale Guide:
So, how did it go?
And more importantly, what can we do to get into better shape financially?
Being great with our finances can be achieved by honing two very actionable activities:
1. Practicing good money habits
2. Growing our wealth
1. Practicing Good Money Habits
Utilize the Bucket Systems (full credit goes to The Barefoot Investor, Scott Pape) to save more money. Feel free to tweak the percentages further or add a different bucket label to suit our lifestyle needs.
The first step is to divvy up our income(s) into separate accounts the moment it arrives. Stick to it.
To put this into context, here is how we can split our money into buckets:
|Daily Expenses||40%||Utilities, food, petrol, you name it|
|Splurge||10%||Treat ourselves, it’s essential to do it for our sanity|
|Debt Detonator||10%||Use this to hose down our debts, starting with the smallest one|
|Smile||10%||For saving for those bigger, longer-term purchases that will make us smile, like a holiday|
|Emergency Fund||10%||For emergencies, shocker|
|*Growth||20%||Our investment-waiting room before investing it into assets with higher returns|
* ensure these are placed in no-frills, high interest-bearing saving accounts
2. Growing Our Wealth
Now then, how do we grow our wealth?
There are two parts to this workout plan:
I) Grow what we currently have
II) Grow our income
PART I: Grow What We Currently Have
Reminder: The money we save each month in our Growth Bucket is merely sitting in a waiting room. A mere 2% per year interest-credit is not going to cut it.
So start by learning up on how one, two or more of the asset classes can help you grow our buckets of wealth. The main three wealth-generating assets are Businesses, Stocks, and Real Estate.
Choose to master those that suit your personality and risk appetite and then go and kick inflation in the ass!
PART II: Grow Our Income
Focus on growing our skill sets that may grow your income within our employment, side hustles, or even within our businesses.
Some skills to consider picking up and refining here are the art of negotiation, coding and programming, audio-visual editing, content creation, and digital marketing; ultimately, learning to make more sales.
There you have it!
At the end of the day, being financially fit remains to be just another aesthetic, feel-good state of being if we do not choose to use our wealth meaningfully.
As we progress along this financial fitness journey, think about what kind of life it is we really want to create and live out. Find our WHY, our purpose; and what we truly value in this lifetime.
Because when we do, when we (truly) want something, all the universe conspires in helping us to achieve it.The Alchemist, Paulo Coelho
At age 24, Suyin stumbled into investing and now hopes to inspire people of all ages to get into having good money and investing habits. She shares what she knows on her Youtube channel and believes that money is the tool that we need to utilize to create the great lives we so desire.