As a young female, I spend a significant amount of time focusing on my health and well-being ‒ whether testing out the latest fitness class or experimenting in the kitchen with the newest health food craze. Like so many females, I am consistently thoughtful about both diet and exercise ‒ investing the necessary time to stay in shape and monitoring what food I put into my body on a daily basis (while also treating myself to the occasional cheat day, of course!).
According to The Financial Diet: A Total Beginner’s Guide to Getting Good with Money, we should be treating our finances with the same respect we treat our body ‒ investing in and caring for our financial health now to ensure financial stability and freedom for our future selves.
Now, I think it is safe to say that this is no easy task. Many people (including myself) can find managing finances a daunting task, and at times, it seems like it would be much easier to avoid them all together, especially at a young age when the future seems like a distant dream. However, these years are in actuality the foundation on which that dream will be built.
The Financial Diet addresses this issue head-on and takes the taboo out of money talk. Through a series of interviews with gurus, spanning investors and MBAs to designers and even a domestic goddess, author, Chelsea Fagan, takes readers through all of the components that contribute to a healthy financial diet ‒ even the ones you may not have thought about.
So, what are some of the steps you can take to strengthening your financial health? Here are some of the basics to get you started from The Financial Diet:
1. Create a budget
Probably the most daunting task of all is creating a budget. However, to truly determine your starting point (even if it isn’t pretty), it is essential to know where your finances stand. While it may not be fun, budgeting can be a really eye opening experience, so whether using excel or trying out one of the budgeting apps (my personal favorite is Mint) this is something you must do, and consistently fine-tune, to really have control of your finances.
2. Build an emergency fund
Before investing or even paying off debt, make sure you have a fund set aside in the case that something goes wrong. The Financial Diet recommends having three months’ worth of living costs saved for this.
3. Do a credit card check up
It is recommended to only use 30% of your allocated credit, so frequently check your credit balances to make sure you are not over-extending and try to make credit card payments automatic and paid in full where possible.
4. Automate what you can
Credit card payments aren’t the only thing that can be automated. You can also automate savings payments to ensure that you are actively setting aside funds for your future before you even have the chance to second guess it.
5. Know (and build) your credit score
Your credit score is something that will impact you for the rest of your life, whether applying for a credit card or a mortgage for your dream home. Similar to setting a check-up with your doctor, check your credit score at least twice a year and decide on a plan to increase it. Depending on where you are starting from, this is something that may take some time, so determine goals for yourself along the way.
6. Plan for retirement
Aside from an emergency savings account, you must (I repeat, you must) proactively be saving for your future. Set up a retirement account where you can allocate a percentage of each paycheck to start investing. Many companies even offer a matching program for these accounts, so educate yourself on your company policies and set aside the maximum amount your company will match each month.
7. Run a career checkup
It is important to know where you fall within your peer group and within your industry in terms of what you are worth. Leverage sites like Glassdoor to benchmark yourself versus your industry peers. Run frequent career check ups to ensure that the skills you are developing now will help you land the dream job you hope to have five to ten years from now.
8. Add at least one source of extra income
Like any badass female, set yourself up for success by having at least one side hustle. This is not only helpful by adding an extra stream of income, but can also be extremely fulfilling and even turn into a full-time career one day.
9. Treat yourself
On any diet, you should be allowed to occasionally treat yourself and not feel guilty for doing so. Set goals for yourself and celebrate your wins!
These are just a few of the many takeaways from The Financial Diet. To learn more about fine-tuning your financial health and hear from the experts themselves, you can purchase the full book here.
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