"Financial Fitness"

By Christine D. Moriarty 

Would you ever think of going on a hike without water? Or head out without knowing how far or difficult a trail is? Yet, how many of us are venturing into the financial unknown with our finances? We often put more time and effort in to our next hike than balancing our checkbook. Our next vacation is more the focus of planning than retirement. And many of us have learned to rock climb before we have any understanding of our 401(k) investments.

Sure, our adventures are key to our health and well-being. But what about our financial health? That is an intricate part of our lives.

First, what is financial health? It is a combination of having an understanding of your financial situation and taking care of it in such a way that you are prepared for financial changes. This preparedness means:

  • You have cash available for emergencies
  • All your financial information is organized
  • There is a plan in place in case a crisis strikes

I have established a five-point plan to get you started on the road to financial well-being. Think of it as your training steps toward creating financial health on the hike of life. You do not have to do it all at once, but you do need to start and take one step at a time.

  1. Wills: This is a document that tells your family and the legal entities what to do with your possessions at your death. Everyone should have one. Is yours up-to-date?
  2. Insurance: This product protects you against the large cost of unexpected illness, property damage or death. You should have some insurance and know the answers to the following questions: Do you have: Health, Long-term, Liability, Car (if you own a car), Umbrella insurance? Do you have life insurance? Who are the beneficiaries? What are the specific details on all your insurance policies?
  3. Income and Expenses: List the following:
    • Income: It is important to know the sources of money coming into your home. List it all: wages, investment income or occasional gifts. Document when and how much so you can establish the full amount of income your household has available.
    • Spending: Review of where your money goes. To create a completed picture, include where all those ATM cash withdrawals are spent. (Hint: Do not have a large miscellaneous category.)
  4. Assets and Liabilities:
    • Assets: What do you own? Have one sheet that lists everything you own. Or you and your spouse if married. Include cars, property, real estate, retirement accounts, investment accounts, and bank accounts with the value of each asset
    • Liabilities: Where do you owe money? For what? Be sure to detail the full amount owed, the monthly payments, and the interest.
  5. Document all of the above information in one place. Think low-tech - a three ring binder will do for easy access.

Information is the key to maintaining financial balance and health. Once you have gathered and organized the above five-point plan information, you have laid the foundation for maintaining financial health.

Now, go ahead and go on that long hike - you have your financial health in order. Just do not forget the water!

Christine Moriarty is a financial coach and an avid outdoorswoman. She is a Certified Financial Planner as well as a financial speaker and writer. She lives on the edge of the beautiful Green Mountains of Vermont, fulfilling her dreams and supporting others to do the same.