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Pattie Lovett-Reid

Chief Financial Commentator, CTV


It is spring, and many are out there training for a marathon. We have four members of our family running one this upcoming weekend. The training has been tough, they have tried to follow best practices and discipline is mandatory. There is an interesting correlation between getting physically strong and financially fit. The strategies for achieving financial fitness are very similar to running that marathon, according to the CFA Institute. Here they are:

1. It all begins with a goal. You can’t reach a goal if you don’t set one. When it comes to money, you need to determine how much you need to save over time to finance your dreams – and that includes setting aside some money for an emergency situation.

2. Understand where your money is going. Create a budget and track your spending.

3. Manage your debt. Curtail the use of debt to consume what is crucial and avoid high-interest rates and potential fees by minimizing the use of credit cards. Build a debt management strategy to reduce and eliminate high-interest debt and to accelerate the payment of debts like student loans and your mortgage, if they are a priority.

4. Put your finances on autopilot. Put your deposits, payments and contributions on autopay.

5. Maintain a steady lifestyle. Spending should not grow at the same rate as income. Growth in income, bonuses and other windfalls can increase savings and investment accounts. Keeping expenditures relatively constant over time is a key method in achieving a secure financial future.

6. Invest wisely. Establish a low-cost, globally-diversified portfolio that’s appropriate to achieve both short and long-term goals. Use a broadly diversified portfolio of global stocks and bonds to obtain a proper return in regards to your attitude about and ability to take financial risk.

7. Obtain knowledge and advise. Being financially fit means understanding and utilizing the main principles and best practices in saving and investing. Don’t be afraid to ask for help.

Like any type of training, taking the steps to financial fitness isn’t easy. It takes time, energy and the discipline to obtain and hone the necessary skills over time. The best part of the CFA’s seven steps to financial fitness, is that they apply to anyone – regardless of age, where you come from, or how much money you have.