What if you thought about your finances like you think about your physical health? Are your bank accounts and credit cards well-balanced and disciplined? Or have you let them go a bit, and now you鈥檙e struggling to stretch your old monthly income to fit those higher balances?
The past few years have been tough on Americans鈥� personal finances. Nearly struggle to live paycheck to paycheck, and only can afford a $1,000 emergency expense.
Many consumers want a proactive approach to get their finances on track, according to recent surveys by and . However, creating a strategy to get out of debt, break free from the paycheck-to-paycheck cycle, and build up financial fitness requires effort.
This is why the Financial Counseling Association of America (FCAA) offers debt-challenged families and individuals tools and resources to get financially fit. Think of the 乌鸦传媒and our members as your non-judgmental, experienced debt help coaches.
Just as choosing to live a healthier lifestyle through diet and exercise requires breaking bad habits and forming healthy ones, growing stronger in financial fitness requires doing the same. Below, our team defines financial fitness and offers five tips to help you get financially fit.
What is financial fitness?
Financial fitness describes your overall financial health, including the knowledge, skills, and habits that enable you to manage money well. It includes understanding income and expenses, budgeting and emergency funds, as well as saving for retirement and long-term goals.
People with good financial fitness or financial wellness also regularly review their finances, check their credit score, pay down credit card debt and set financial goals.听The goal of financial fitness is to have a healthy relationship with money.
Similar to creating physical fitness and nutrition plans if you鈥檙e trying to lose weight, financial fitness involves discipline, goal setting and regular check-ins to achieve results. To cut back on an excess of debt or to save for a dream vacation, plans must be made for how much income you can make and how it will be saved or spent.
Five tips to get financially fit
#1 Create a budget and stick to it
Take some time today to identify where your money comes from and what you spend it on. Whether written by hand or drafted in a Google doc or spreadsheet, having a list of your income and expenses is foundational.
鈥淐reate and personalize a percentage-based household spending plan to identify financial activities you are over or underfunding,鈥� says Todd R. Christensen, author and Housing and Education Manager at Debt Reduction 乌鸦传媒.
If you need help figuring out what should be on your budget, try the FCAA鈥檚 budgeting calculator, the Debt Freedom Tool. Or, contact an 乌鸦传媒counselor to talk through your thoughts and receive non-judgmental, expert advice.
Once you鈥檝e noted your monthly income and expenses, check to see if your expenses exceed your income. If they do, see what you can cut out.
Then track your spending each month to see if you are within your budget. When you stay within your budget, celebrate! Choose a pre-determined small treat (renting a movie or getting a coffee), not a spending binge.
#2 Set up automatic deposits for your emergency fund, retirement savings and short-term goals
Designate a portion of your paycheck to go directly into your savings and retirement accounts. If your employer pays you by direct deposit, this is easy to do automatically. With this simple practice, you鈥檙e more likely to save and less likely to be tempted to spend.
Taking small steps like this sets you up to succeed and can make a significant difference in your financial wellness.
Why do you need to save for emergencies and retirement? Because both will happen at some point. Those who are saving and investing will weather the challenges much better than people who have not saved.
鈥淭hinking you can go another year without an emergency fund is one of the biggest pitfalls I see,鈥� said Christensen. 鈥淚f you aren鈥檛 directly depositing something into savings, you will likely spend every penny you earn and end the year the same as last year.鈥�
A good rule of thumb for how much money to keep in your emergency fund is three to six months of living expenses. Emergency savings will protect you from debt if unexpected problems arise. If the water heater goes out or you have an unexpected car bill, you will have a cushion of protection. It also gives you flexibility if you lose your job or a loved one has an expensive medical event.
#3 Check your credit report each year
Review your credit reports each year 鈥� for free 鈥� at . With the prevalence of identity theft and the changing nature of people鈥檚 credit, it is important to know what is actually on your report.
If you find accounts or charges that are not yours, contact the creditor immediately to dispute the charges and close the account. If someone tried to steal your identity, . They will create a personalized recovery plan for you. (Click to read more about how to protect yourself from financial scams.)
Reviewing your credit report can also lead to positive surprises.
鈥淚 had a couple come in to review their credit report,鈥� Christensen said. 鈥淭hey came in with shoulders a little slumped and eyes cast down when they told me there would be things on their credit report that they weren鈥檛 proud of. As we reviewed their credit reports, we quickly realized the items they were afraid to see had already been removed due to the seven-year reporting limitation.鈥�
Christensen continued: 鈥淭his couple had intentionally avoided looking into purchasing a home because they assumed their credit rating was too low. As it turned out, they had very good credit. When they left, they had a bounce in their step. Two months later, I ran into them, and they told me they were about to close on their first home.鈥�
#4听 Reduce debts and think carefully before taking on more debt
Over time, credit card bills can snowball and overwhelm people without an emergency fund or a plan to pay off their debt.
Debt can cause significant stress and physical and mental ailments. It can also cause people to miss out on vacations, family time or a better quality of life.
鈥淥verwhelming consumer debt equates to major opportunity costs,鈥� said Christensen. Households that are using their entire current income to pay off past purchases will miss out on:
- Investing in retirement plans, making retirement years harder
- Saving for emergencies, causing stress when the inevitable emergency comes
- Creating memories through shared experiences (travel, gifts, etc.); no cushion in the budget leads to missed opportunities
- Advancing financial goals, like replacing a vehicle, upgrading appliances and furniture or providing for children鈥檚 college education
To cut back on debt, consider which services and purchases you can cut and be cautious about taking on long-term financial obligations.
鈥淎void contracting for a gym membership you will likely never use,鈥� Christensen advises. 鈥淚f you can鈥檛 get yourself to exercise at home (calisthenics, walking/jogging, etc.), you鈥檙e highly unlikely to sustain any habit of going to a gym. Plus, many gym contracts come with onerous terms that don鈥檛 permit you to get out of the membership without paying the entire annual contract.鈥�
Also, watch out for tempting sales and offers. 鈥淏uy-Now-Pay-Later purchases are specially designed to get consumers to buy more than they can afford,鈥� Christensen warns.
You can try to reduce your debt on your own by using the debt snowball or debt avalanche methods.
The debt snowball method encourages you to pay off the smallest debt you have first. Then use the extra money to pay off the next smallest debt and so on. This results in immediate progress and helps many people keep going on their debt repayment journey.
The debt avalanche method focuses on paying off the debt with the highest interest first. This method saves more money, but may take longer.
Other debt help strategies include debt management plans through a non-profit credit counseling agency (like 乌鸦传媒members), debt settlement or bankruptcy. Learn more about each here.
FCAA鈥檚 non-profit members offer a free consultation and affordable debt and credit counseling as part of their educational mission.
#5听 Set financial fitness goals
Regardless of your financial situation, planning for your financial future is wise. Just like you set goals to reach a number on the scale or fit into a special outfit, do the same to get financially fit! Set a goal to save for a vacation, a downpayment on a house or long-term retirement.
Consider opening an additional savings account at your bank, and start saving! Set up a direct deposit to help you commit to your goals. Ask about a high-interest savings account to make your money work harder.
When planning for a large expense, reframe your thinking. Instead of putting a large expense on a credit card or financing, can you cut back and save aggressively leading up to the purchase?
鈥淐ar payments, just because they鈥檙e the norm, are a big pitfall. Big car payments are about the fastest way to get a household into financial trouble,鈥� said Christensen.
鈥淭he typical car loan payments are now over $500 per month, but that doesn鈥檛 mean they鈥檙e a good idea. The average household transportation expenses (payment, insurance, gasoline) should not exceed 10 percent of household gross income.鈥�
Good financial fitness provides benefits
Developing and maintaining good financial fitness builds the strength to overcome temptation, discipline to save, and pride in your good habits.
Healthy financial fitness also builds good credit. Higher credit scores allow you to obtain lower interest rates on car, home or other loans.
Financial fitness also allows for greater generosity, flexibility and enjoyment of life through leisure time, travel, hobbies and more.
Need help getting started?
If you need help developing healthy financial fitness habits, contact one of our member agencies. 乌鸦传媒member agencies are experts in budgeting, debt and credit counseling, and debt management plans.听
Don鈥檛 struggle to build a budget or get out of debt on your own. Tap our trustworthy network of certified, non-profit members whose mission centers around helping people get out of debt, not making money at your expense. Contact an 乌鸦传媒member counselor today!
Editor鈥檚 Note: This article was originally published in January 2024 and was updated in April 2026 with more current information.