Are You at Peak Financial Fitness?
Physical fitness and financial fitness are inextricably linked, says financial advisor Pamela Gilmour. Ignore your health or your wealth, and it can catch up to you.
The parallels are striking. When people live an unhealthy life in their 20s, 30s and 40s, the risk of disease and debilitating conditions grows. By the time people reach their 50s, medical care often becomes an expensive necessity.
Likewise, those who ignore their finances — keeping credit cards maxed out and living paycheck to paycheck — live with high levels of unhealthy stress. When they reach their 50s and start thinking about retirement, a new reality sets in: They may arrive at retirement without enough to live on.
Pamela Gilmour, CEO of Financial Fitness in Towson, Maryland, has been providing financial planning for over 25 years. A golfer, runner and certified Yoga instructor, she defines financial fitness as having the financial means to live the life you want without undue stress.
How do you know if you’re financially fit? She says the following warning signs suggest you may need to give your finances the same attention you give to your workouts.
Are you having trouble sleeping?
“Waking up in the middle of the night is an alert from your subconscious,” Pamela says. You may successfully rationalize an unhealthy financial situation during the day, only to have deep-seated nightmarish anxieties. In fact, in a 2017 survey, 65 percent of Americans reported losing sleep over financial concerns.1
Are you stuck in a viscous credit card cycle?
Pamela sees many young adults who fall for the lure of interest-free credit cards as a way to reduce debt. “They have a balance of $10,000 on one card, so they flip it to a new interest-free card with the idea they will pay off that amount without incurring more interest. Instead, they run up more debt on the first card, so they’re in even worse shape.” By the time people reach their 30s, Pamela says they should be paying off their credit cards fully each month.
Are you engaging in emotional spending?
Just as emotional eating can derail a health-conscious diet, coping with feelings of anxiety, boredom or unhappiness by buying things you can’t afford can seriously damage your finances. One client, after listening to Pamela talk about financial planning, said, “That sounds great, but it won’t work for me — I’m an over-spender.” Pamela replied, “Is that like having an incurable disease? If you keep saying you’re an over-spender, you’re going to be an over-spender.” Working hard to change your habits — to become an under-spender — can help build financial fitness, she says.
Are you passing-up good opportunities?
An inability to say “yes” to opportunities like sending your child to a top-notch university or buying a beach house with friends — even though you’re making good money — is a warning sign. If you feel you should be able to afford something but can’t, you need to explore why. Taking a tactical approach to personal finances could be the reason. “Many people do the ‘right’ things,” Pamela explains. “They eliminate credit card debt, set up a 401(k), buy life insurance, but they lack an overall strategy. What are your goals? If you put too much money into a house, for example, it will impact your ability to reach your other goals. A financial plan can help pull everything together to see if what you’re doing really works.”
The good news is that you can get more financially fit at any age. “Like a fitness trainer, the job of a financial representative is to take you from where you are today — your savings, your debts, your goals — and guide you to a better place.”
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2020-109422 Exp. 10/2022