Time To Get Financially Fit

A new year is upon us and while everyone makes New Year's resolutions to start exercising or stop smoking, no one seems to worry about their financial fitness. Becoming financially fit doesn't take a lot of work like most people think and with the advent of computers and the Internet it's even easier. Most banks have automatic withdrawals so people with absolutely no sense of financial control can save for a rainy day.

I'm amazed how so many people are apathetic when it comes to their finances. For the most part, I blame easy access to credit. Don't have enough money to make it through the month? Just charge it! People seem to think credit is the answer to everything, and the worst part is they don't seem to mind paying 19-30% in interest charges either. As long as they pay the $20 minimum on their $2000 balance, the creditors are kept happy and card holder is content paying up to four times the original purchase in interest. To me, that is ludicrous but sadly it's becoming common practice.

What's even worse is the attitude we have towards retirement. Why save my money for tomorrow when I can spend it today? Inflation increases on average 4% each year, and the amount it takes to retire comfortably is growing at an alarming rate. Just wait till the baby boomers start retiring in the next few years and how the lapse in the amount of taxpayers and the increase of health care demands are going to have a major impact on the economy.

So how does one become financially fit? I've created a list of just a few steps people can take to whip their finances into shape.

Step # 1: Choose To Change

Like any regiment, you must have the determination to succeed or you will never change your ways. Becoming financially aware is a life changing ordeal. I wish I had a crystal ball to show people that in 30 years it's going to take over a million dollars to retire comfortably and scare them into shape; but I don't and they are going to find out the hard way.

Step #2: Pay Off Consumer Debt

Pay off your credit cards! You're only hurting yourself with criminal interest charges. If you pay off your balance each month, you can use your credit card as an interest free loan for 6 weeks and really stick it to the man when you use their money and not pay them any interest.

Step #3: Live Within Your Means

Stop spending more then you make! Make a budget, pay off your bills, proceed to step #4 and then allocate any extra money on the frivolous things in life. "If you live by the label, you die by the receipt!™"

Step #4: Save Your Money

There's nothing more reassuring then seeing a positive balance in your account after the bills are paid. There is a definite high that one feels and I for one have felt it, and after getting married my wife said she started to feel it as well. Having a safety net protecting you from life's worries will not only cut down on one's stress level, but I guarantee it will help you get a better nights sleep.

 Step #5 Retirement Happens

Have a plan for the future. I hate working and I know I'm not alone. Pensions are a rare commodity these days and if your retirement plan only consists of relying on CCP, you are going to be homeless and hungry.

The company I work for has an RRSP matching program where they match up to $1.50 an hour in RRSP contributions after 3 months of employment. I started as soon as I could and have been doing so for over the last 10 years. I've talked to many co-workers who have been with the company for years and haven't started contributing because they say they can't afford to do it. One co-worker said he had worked for the company for 4 years and never even considered signing up for the RRSP matching program. I did a reasonable calculation of how much money a person would have in retirement savings after 4 years of contributing to the plan.

40 hours a week x 52 weeks per year = 2080 hours
1 Week of Holidays = 40 hours

11 Stat Holidays = 88 hours

Misc time off = 52 hours
Total amount of workable hours = 1900 hours x $1.50 = $2850
Employer Contribution = $2850
Total Amount of RRSP Contribution in one year: $2850+ $2850 = $5700
Total Amount of RRSP Contributions after 4 years = 4 x $5700 = $22,800


I wish I had a video to show how far his jaw dropped after I told him he missed out on over $20,000. That's not even considering how much more he could have had if it was properly invested!

If your employer has any kind of contribution matching program you'd be a fool not to enroll in it. Your return  is a guaranteed 100% without even investing the money!


Becoming financially fit is a state of mind. If you're happy paying thousands of dollars in interest, then you best not make any attempt at it. Most of my readers are already financially fit, so I hope they can pass on their knowledge and help others become "Financially Aware".

Here's to a happy and financially healthy new year!