Financial Fitness: Exercises to Shape Up Your Spending
How is your financial health? If budget bumps and bulges or money worries are adding stress to your life, you may need to do an annual checkup to assess your financial fitness and start getting your family’s finances in good shape.
To take charge of your physical health, doctors encourage you to “know your numbers,” such as blood pressure, cholesterol, blood sugar, and body mass index. Financial advisers also encourage you to know your numbers and look for money management problems that might need attention.
Do an annual checkup to take charge of your financial health by answering the following questions:
- Do you spend less than you earn?
- Do you spend no more than 15 to 20 percent of your monthly income for credit payments, including car payments, credit cards, and all other debts (not including your house payment or mortgage)?
- Do you have an emergency savings fund to cover at least 3 months of your living expenses?
If you answered "yes" to all of the questions above, then your finances should be in great shape! If you answered "no" to any of the above, or you are unsure, you may need to complete a few money management exercises to shape up your spending.