What is one of the most common New Year’s resolutions? Losing weight and getting fit. If you were extremely out of shape and had excess weight to lose you would most likely set a target weight and setup a meal plan and exercise schedule. In addition, you might get a fitness checkup with your doctor first, correct? The same applies to getting your family into financial shape and shedding unwanted debt. Like weight issues, finances can also be a result of emotional stresses and immediate gratification. It would be very difficult to achieve your weight loss and fitness goals if your family wasn’t supportive. The same goes for financial fitness and eliminating bad debt; it needs to be a family affair and everyone participates!
You can achieve your financial goals for your family if you have a game plan like any good coach. If you don’t know where you are going then any road will take you there; and that applies to finances also… and sometimes the road taken can be hard and rocky.
Here is a 10 Step Financial Fitness Prescription to help your family get financially fit this year:
1. Get a Financial Fitness Checkup. What debt do you have? Is it good or bad debt? What do you have for investments? What is your monthly cash flow? Take stock of where you are at right now financially. What is your net worth? Be bold and include the family in the discussion. Hire an expert to assist you.
2. Have a Game Plan Strategy. What is your goal for this year? Increase your income by $10,000? Take a prepaid family vacation? Reduce bad debt by $5,000? Have an overview of where you want your family to be at the end of 2011. Revisit your family vision wall and bucket list and tie it into the money side of the equation – what is it going to cost?
3. Have a Money Management System. How are you managing your money? Use the Money Jars System. How are you ensuring that you are not spending more than you earn? Make sure you know what you spend on your children and allowances.
4. Get Proper Financial Equipment. All star teams don’t head into a season without adequate equipment. Ensure you and your family have the tools to keep yourself in the money game; get money jars for the kids, get an accounting program to track your expenses and income (Quickbooks, Excel, etc.) and learn how to use them properly.
5. Setup a Regular Training Schedule. That’s right you and your family are in financial fitness training and you need to schedule the time to do it! Use the 15 Minute Money Strategy and commit to 15 minutes each day to work on your finances with your family. Enter transactions into your accounting software, discussing what was spent that day and revisiting your financial goals.
6. Play the Game to Win. You are in the money game so why not set yourself up to win! If you are earning and spending money than be conscious of how you are doing it and how it is assisting you in achieving your goals? How much closer are you to that prepaid vacation? Are you getting closer to your Financial Freedom Day? Are your children involved and helping your family achieve their goals? Or is someone sitting on the bench and not participating? Find out why, and as a top notch coach, inspire them to win with the family team!
7. Measure Financial Results. Use your financial tools and equipment and measure how you are doing each month. Are you spending more or less? What areas need trimming? Is your family spending too much money on wants or do you need to re-evaluate to see if your needs are truly necessities or are they wants in disguise? Think of the balance between your needs and wants as being similar to veggies versus carbohydrates and fats… what tastes better? And when we are emotional, what do we reach for? Use the Money Jar system to help alleviate the emotional spending swings that can happen daily.
8. Have Feedback and Debrief Sessions. Setup weekly discussions with family members to discuss what is working and what is not working. Schedule your Money Talks for 30 minutes once a week and have everyone give feedback on what they find challenging and brainstorm how to make it work better.
9. Celebrate and Revisit the Game Plan. Like any fitness plan and training schedule, you need to rework your game plan to make sure it isn’t reaching a plateau. Spice it up! Do something to celebrate and excite the family to keep working the plan. Use your family fun money and celebrate! Challenge the family more as you hit the 90 Day mark and keep them motivated to reach the family financial goals. As the family financial coaches, parents need to keep the team motivated and sticking to the game plan when it gets tough, and celebrate the little wins when they happen.
10. Get Regular Financial Fitness Checkups. Check in at 90 Days, 6 months, 9 months and 12 months to see where you are at financially. Has your net worth increased? Have your eliminated some debt? Have you trimmed some unnecessary expenses, like the lattes and slushies?
Attaining financial fitness for your family requires similar effort to having a healthy and physically fit family. It requires planning, discipline, and communication as a family unit. Plugging the spending leaks, prioritizing family purchases and discussions about challenges and successes are all critical to achieving financial fitness as a family. You may also notice that when you eliminate the high priced convenience foods, eating out, and becoming more creative in how you optimize your fun money (family walks and bike rides, game nights), that your family also becomes more physically fit in the process…. what a bonus! Decide now what your family’s health and wealth will look like in January 2012.