Financial Fitness and you

Across our working lives there are competing demands on our usually limited resources. Costs of living, mortgages, raising families and providing education, or perhaps wider demands such as caring for others. This is also the case in retirement, as the balance between lifestyle and preservation of capital comes sharply into focus.

It can be difficult to maintain a plan, and without focus bad financial habits can emerge. It is, however, never too late to work towards your financial fitness. Consider starting with these Seven Steps to Financial Fitness:

Step One – Know your budget

Charles Dickens wrote in David Copperfield, on the relationship between money and happiness:

“Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

As relevant today as it was when it was first penned in 1849, highlighting the importance of living or spending within your means and budgeting. It’s important to keep track of your income, and consider your outgoings over a period of months. Are you regularly over, or under, your budget?

Budgeting is a foundational tenet of financial fitness. Your ability to generate a surplus from your income, and make that surplus work for you, will unlock opportunities for wealth building.

Step Two – Review your expenses

Most of us have a finite income source, typically comprising either wages, a pension, or incomes from business and investments. Once you understand your budget, it is important to ensure your expenses are controlled, and working for you.

Consider each of your outgoings. Are your utilities expenses the best deal for you?  Are you spending too much on a particular item that is otherwise affecting your finances? Think about each item on your budget and ask if it’s a necessary expense, or whether it could somehow be reduced.

Step Three – Manage your debts

Debt can come in many shapes and sizes. Longer term debts such as home loans are designed to be paid off over a longer term. Car loans and personal loans tend to be set over a 5-7 year range. But what about credit cards or buy-now-pay-later facilities? These are each forms of debt, and require payment over a much shorter timeframes to avoid fees, interest or other penalties.

Other items such as unpaid fines and council rates are another form of ‘debt’, and can lead to bigger issues if left unaddressed.

So, consider prioritising the repayment of debt in line with its nature. Debts based on spending and consumption are typically designed to be paid over a shorter period. And the added benefit is that once they are paid, that part of your income can then be directed to your longer-term goals rather than your shorter-term expenses.

Step Four – Build your rainy-day fund

The old adage of putting money under your mattress for a rainy day will always be relevant, because we never know what’s around the corner. Not that we are advocating for stuffing cash under your bed, but keeping an amount of money in a designated account for unforeseen expenses can make a real difference.

Life can throw up many unforeseen events: job loss, a period of ill health, emergency house or car repairs. Events which can come from nowhere at any time with negative impacts on your finances. So, be prepared for the unexpected by keeping an amount aside and work to keep it at a level that you believe is sufficient to deal with most unexpected things that might come your way.

Step Five – Invest with purpose

Whether it’s with the assistance of a qualified financial planner, or going it alone, invest with purpose. Know why you are investing, what your desired outcomes are and when you want to achieve them. Understand your tolerance to risk and what an investment loss might mean to you. Once you know this, carefully select assets which align with your risk appetite, return requirements, and investment timeframe.  It’s never too early to start, but it’s also never too late.

While we are in the neighbourhood, tax planning can make a huge difference to investment outcomes. What structure is best for you? Have you considered investing outside of your personal name with the development of a trust, a Self-Managed Super Fund, or some other entity? Speak with your financial planner or accountant to check which may work for you.

Step Six – Seek knowledge

Some of the brightest financial minds read both widely and with focus. But what does this mean? It means to actively pursue knowledge, while knowing what to filter in and filter out. With the proliferation of the internet, there is a range of financial education available. Likewise, there are financial experts everywhere and financial commentators are a dime-a-dozen. Who are your trusted or go-to commentators?

Building knowledge takes time, and it’s not easy. Read widely enough, for long enough, and you will develop an intuitive sense of what is genuine content versus content designed solely to sell product (i.e. ‘clickbait’). Talk to your friends and family about current economic and financial events to test other views, and your own. After a while you will develop a keen radar of who and what to filter out. This is a critical step to stay across current matters which can impact your portfolios.

Step Seven – Protection

If you have followed the first six steps, you are well on your way to achieving financial fitness. So, it’s important to protect your progress. This can take in a range of factors.

Insurance.  It’s likely that your car and home are insured. But what about your income? Your health? Your life? Each can impact you or your loved ones and make a material difference to your financial wellbeing.

Estate planning. Do you have a will with designated beneficiaries? If not, why not? These are all key to peace of mind for your family and loved ones and also can have tax implications.

Fraud protection. Older investors are often targeted by scammers. Educate yourself and be cautious about sharing personal and financial information to avoid losing your hard-earned money.

Long term care planning. Have you discussed your longer-term ambitions for living and lifestyle later in life, and what income or wealth this may require? The higher the level of care you may require or desire, you can expect to pay more for it.

These steps are certainly not exhaustive, and may prompt you to receive professional financial advice if you haven’t already done so. After all, we all aspire to achieve financial independence to meet our income and lifestyle goals.

This is best achieved through a focus on staying financially fit at all times, and regularly reviewing your progress. It’s never too late to work towards it, and it is key to enjoying financial security and a fulfilling retirement lifestyle.


La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence 222213 Australian Credit Licence 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important for you to consider the Product Disclosure Statement for the Credit Fund in deciding whether to invest, or to continue to invest, in the Credit Fund. You can read the PDS and the Target Market Determinations on our website or ask for a copy by calling us on 13 80 10.

La Trobe Financial Services Pty Limited ACN 006 479 527 Australian Credit Licence 392385.

To the extent that any statement in this article constitutes financial product advice, that advice is general advice only and has been prepared without considering your objectives, financial situation or needs. You should, before deciding to acquire or to continue to hold an interest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and obtain and consider the Product Disclosure Statement for the Fund.

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