DJC#006 – Financial Fitness: Stretch Your Financial Muscles Starting with Awareness

Financial Fitness

When it comes to providing for our children, our families, one of the most important things we can do is be financially fit. Having control over our finances can help us avoid unnecessary stress and anxiety and ensure that we’re able to pay our expenses, save, invest and spend in a responsible way. Not only that, we also have the responsibility to teach these money lessons to our children because unfortunately they’re not likely to learn it in school.

It all starts with financial awareness, and just like with any exercise or physical activity, it’s always a good idea to stretch first.

If you’re not already on top of your personal finances, this can seem like a daunting task. So, where do you start? The first step to achieving financial fitness is to know your income and expenses. It may sound simple, but you’d be surprised how many people don’t have a clear understanding of their financial situation. Without this information, it’s impossible to make informed decisions about how to manage your money. I know this because 15 years ago I was once one of those people. In my head I knew how much we spent on everything, but my reality was much different.

Here’s an important disclaimer: The purpose of this exercise is for your own benefit. So be honest with yourself and your spending. And most importantly, there is no shame and no judgement during or after this process. Become aware, learn and move forward.

A Picture Is Worth A Thousand Dollars

To get started, grab a pen and your journal or open up Excel and make a list of all your sources of income. This could include your salary, any side hustles you have, and any other money that comes in on a regular basis. If you have income that comes in on an irregular basis, you can average it out over the course of a month – this can be especially normal if you’re in sales where commission checks can fluctuate from month to month. Once you have a clear picture of your income, it’s time to look at your expenses.

Start by listing down all of your fixed expenses. These are your monthly bills that are the same amount each month such as rent or mortgage payments, utilities, car payment, internet, streaming services, mobile phone, house services, childcare, and for some Dads, child support. These should be easy to figure out and for the most part be the same amount each month.

Next, look at your variable spending, such as groceries, dining out, gas, miscellaneous shopping and entertainment. Look back at your last 3-6 months of expenses and take an average to give yourself a monthly amount for these categories. I’d recommend to really separate out those categories and drill down as much as possible. Remember that the whole point is to be aware of what your spending habits are. Once you’re aware, you can decide if you want to make any changes or not.

You may be surprised to find that you’re spending a significant amount of money on eating out, on Target runs or on Amazon purchases. You may discover that you’re paying for a subscription service that you don’t really need and thought you had canceled, or that your internet company raised your rate because your promotional period has ended. There are so many purchases that have become easy to make because of online and digital payments, that you can not realize how much money you are actually spending.

In addition to looking at your monthly expenses, it’s also important to take into account any irregular or unexpected expenses that may arise. For example, car repairs or house maintenance. While these expenses may be difficult to predict, you can try to get a rough miscellaneous category together.

You Don’t Know What You Don’t Know

Once you’ve completed this simple audit of your personal finances, look it over and reflect on your findings. What did you notice? Are there any trends that you’re now aware of? Are there any purchases you weren’t aware of?

This is just the start of diving into this topic. You have to start somewhere and this is the simplest place. Life is hard and busy. It can be easy to flip on the autopilot switch to get through the days, the weeks, the months and eventually the years. If you’re on autopilot, you’re not aware of your spending habits, you can’t properly evaluate if/what you need to change. Even if you are generally on top of your finances, I recommend doing this exercise once a year to reevaluate any changes in your financial picture.

Start with this exercise and make it your homework assignment over the next week. If it pertains to you, schedule a time with your spouse/partner to do this together. Remember the no shame/judgement disclaimer at the beginning? That especially goes when you’re doing this with someone else. Make sure to communicate that before beginning.

Money is a stressful component to our already stressful lives as Dads. If you can get more financially fit, some of that stress can be eliminated. And who doesn’t want less stress in their life? Just like lifting weights or running for the first time in a while, you don’t lift the heaviest weight or go for the longest run. Start with this, and we’ll add the weight and distance next.