I’m extremely excited to feature CSM’s very first guest post today! This is post is written by James Molet, blogger at RetirementSavvy.net and author of Rendezvous with Retirement: A Guide to Getting Fiscally Fit. You can follow James on Twitter @jcmolet.
Broke. That was my financial situation in 2001. Following my divorce, a close analysis of my monthly income and expenses revealed the ugly truth. I was broke. It was during that period that I first stumbled upon the idea that there are a lot of similarities between the concepts of fiscal and physical fitness. Just as being physically fit involves two critical components, controlling diet and exercising; being fiscally fit also involves two critical components, controlling debt and investing. That realization prompted me to immediately commit to fiscal fitness, just as I had always committed myself to physical fitness.
Not only are both concepts built around two components, the two are linked in key ways. First, the impacts from one often have similar consequences for the other. Second, people often have similar mindsets or beliefs about both concepts, which are apparent in their actions.
A few examples of the first phenomenon include smoking, a poor diet, and carrying significant debt:
- Not only are there numerous health consequences associated with smoking, it is an expensive habit. Money used to buy cigarettes cannot be used to fund an emergency fund or an IRA. Smoking is a sure-fire way to negatively impact your physical and fiscal well-being with one habit.
- A poor diet makes achieving/maintaining physical fitness much more difficult and often leads to health problems, which can be expensive to treat. The money that is used to pay for medical treatments – which could have been avoided or mitigated with a better diet – cannot be used to add to 401(k) contributions or saved for a child’s college education.
- Carrying significant debt impacts more than your fiscal well-being. Anyone who has found themselves in a debt hole understands the tension and anxiety that often comes with it. Adding to the woes, a recent study by the Feinberg School of Medicine at Northwestern University concluded that there are physical impacts as well, including the finding that individuals with greater debt were found to have a 1.3 percent increase (relative to the mean) in diastolic blood pressure. It isn’t enough that debt often prevents individuals from achieving financial freedom, it also negatively impacts their mental and physical well-being.
I think of Aesop’s fable, The Tortoise and the Hare, when I think of the second phenomenon, as it perfectly captures the mindset of some individuals and the different approaches taken with regards to fiscal and physical fitness. Those individuals that would rather try to win the lottery – instead of developing and managing a long-term savings/investment plan – as a means of achieving a comfortable retirement, are often the same individuals that would rather buy a “fit-o-rama magic abs & biceps” machine for three easy payments of $99 (plus shipping & handling of course), than engage in a lifetime fitness plan that includes better eating habits.
Savvy individuals understand that hard work is required, patience is a virtue, and there are no easy answers; slow and steady will win the race. Fiscal and physical fitness are linked concepts. The healthiest individuals are those that engage in behaviors that positively support both endeavors and disengage from those that do not. Every day, strive to do at least one thing, no matter how small, to improve your fiscal well-being and one thing to improve your physical well-being. Stay savvy, my friends, stay savvy.