The concept of total fitness is important to all of us. When you engage in physical activity, the goal is to provide benefit to the entire body. Even our brains benefit in so many ways from regular exercise. Taking a holistic approach is the best way to benefit our overall health.
I want you to apply that same mentality to your finances. The goal is to achieve total fitness for your money. As a financial planner, one of my main objectives is to help you get a clear vision of your entire financial picture. It involves looking at all aspects of your financial life. It is also important to anticipate events you may face later on in the future.
A good personal trainer will start out by having a meaningful conversation with you. Your trainer will want to know what your specific goals are. They also will ask about the things you like to do on a daily basis. What physical activities do you participate in? What types of exercises do you enjoy doing? These are all important questions when you are starting out.
This is important when you start any form of financial planning. What goals would you like to achieve? Do you know what you like your money to do for you? What areas of your financial picture do you feel strongest in? What financial decisions do you feel most comfortable making? These questions are critical in order to start with a solid foundation.
All of us have strengths and weaknesses to address. It is human nature to do the things you like to do. If you have some favorite exercises, you will naturally want to do those as often as possible. One of my favorite old Saturday Night Live sketches is called “How Much Ya Bench”? It pokes fun at a lot of bodybuilding stereotypes. The panelists all have huge upper bodies with pencil-thin legs. All they talk about is their bench press and how much weight they lift. Of course it’s taken to the extreme, but it is very funny since there are people like that at the gym.
You probably can relate since all of us have certain exercises we avoid. I have found over the course of my career that those are usually the exact exercises people need to incorporate. If you hate training legs, it is probably a weak spot that needs immediate attention. It is all about bringing balance to the body. Total fitness requires it!
The same thing goes for your money. If there is any area of your finances you have been avoiding, it is time to address it. One of the biggest enemies of progress is procrastination. It is not a criticism, it is simply human nature! Total fitness for your money involves a holistic approach. We want to apply your strengths to help improve your weaknesses. Money involves a great deal of emotion. When you start to address the negative things in your financial life, it helps strengthen your overall health with money.
Total Fitness for Your Money Involves Priorities
Once you have an idea on the issues that need priority, you can begin the process. Another key element is getting a current snapshot on your finances. When you start out with a personal trainer, it is likely they will take measurements and have you get on a scale. This is a very effective method of measuring progress. Most people who work with a trainer have specific weight loss goals in mind. They may also have a certain pants or dress size they would like to reach. That information helps you understand how much work is ahead of you. It also helps with motivation, because you can look back and see how far you have come.
Total fitness for your money involves a similar process. Do you know what your current net worth is? I encourage everyone I work with to keep in mind the importance of their net worth. This is the financial figure that truly matters when it comes to building wealth. Net worth is simply taking all your assets (everything you own) and subtracting your liabilities (everything you owe). My in-depth financial plan example has a free tool you can use to quickly calculate your current net worth!
Net Worth – The Key to Total Fitness With Money
I like to use this example to help people appreciate the importance of net worth. Imagine you have two good friends named Benjamin and David. Benjamin makes around $75,000 a year at his job. He is very frugal with his money, lives in a small house, and drives a very practical car. Benjamin has $500,000 in the bank and in his retirement accounts. His house is now worth $250,000. Benjamin bought his car with cash and just paid off his mortgage on his house. He has zero debt.
David earns a lot more money than Benjamin. He makes around $200,000 a year at his job. David is a generous guy and likes to spend his money on things he enjoys. He just bought a $750,000 house and took out a $750,000 mortgage on it. At the same time, he went out and bought a $100,000 car and has a $100,000 car loan. Unfortunately, David is not a saver and only has $10,000 in the bank. He keeps putting off contributing to his retirement accounts. He always says he will worry about it later.
Who Has True Financial Fitness?
At first glance, you might think that David is in much better shape financially. He has a beautiful new house and an awesome new luxury car. However, looking at the quick math, it is evident that Benjamin has a much stronger financial picture. With a lot of assets and no liabilities, his net worth is around $750,000. David obviously is way behind him. With debts that equal the value of what he owes, all he has to show right now is the $10,000 he has in the bank.
This example is not intended to being critical of having nice things. It is simply to help you appreciate how net worth is the true indicator of wealth. Benjamin is in much better financial condition than David. David makes a lot of money, but also spends a lot. His lack of savings and large amount of debt really impact his overall net worth. If both Benjamin and David were laid off at work tomorrow, who would be able to better handle the temporary loss of income?
Meaningful Change is Possible
Regardless of your current situation, remember that change is possible. If you aren’t happy with the shape your money is currently in, you can make the right adjustments. In my personal training career, I have worked with some clients who overcame significant health and weight issues. They are some of the most inspiring people I have ever met in my life.
One thing I appreciate about them is that they made a lasting commitment to making positive change. It takes time to build new habits and make significant adjustments to your lifestyle. Was it going to be simple and easy? No, not at all! Nothing truly meaningful tends to come easy in life. We all have to work hard to achieve our goals.
Money works the same way. If you decide that your net worth is not where you want it to be, you can make changes. I work with people every day who have made some major adjustments to their finances. They have paid off thousands in unwanted debt and changed their financial lifestyle. They started saving and planning for the future and changed their relationship with money.
Total Fitness for Your Money Involves Goals
I discuss goal setting on a regular basis. Goals are the fuel to any meaningful change you want in your life. Whether it’s losing 10 pounds or saving $100 a week, goals help provide you direction and a road map. Unfortunately, the vast majority of people never really decide what they want from their money. Money is a tool, and either we manage it, or it manages us. All of us should have a strong desire to be the master over our money instead of a servant.
Goals should be specific and have a time frame. In my personal training career, I always loved working with people who came in with a very specific goal in mind. One example I can relate is a client who wanted to lose two dress sizes by her daughter’s wedding, which was in six weeks. That gave us a clear goal and a deadline. She was totally committed to making it happen, and she accomplished her goal before the six weeks were up.
Take the time to think about what you want out of your money. Goals involving money usually involve so much more than simple dollars and cents. For example, what if you would like to make a career change? What would need to happen in order to achieve that goal? Goals that are dependent on money are typically a very long list. What if you want to retire at age 50? I know people who are doing all of these things. It is all a result of goals and executing a game plan.
A Holistic Approach to Your Money
Total fitness for your money involves your entire financial picture. My commitment is to help as many people I can take control of their finances. Build Financial Muscle is all about helping you achieve financial fitness for a lifetime. Sign up right now for my FREE eight lesson mini-boot camp video series for your finances!