Americans say their financial health is a top priority in 2024. Nearly 70% have financial regrets from 2023, and most plan to focus on building better financial fitness in the new year. Getting fit and stronger in any area of life takes effort, especially if you’ve neglected it for a while. The Financial Counseling Association of America (FCAA) offers 5 tips to help you get financially fit in 2024. 

What is Financial Fitness? 

Financial fitness means effectively managing your money to meet your short-term and long-term needs and wants. It involves handling your finances in a way that allows you to achieve your immediate and future goals. This includes both the things you need to survive and the things you desire to improve your quality of life. 

Financially fit people know where they earn their money and where they spend it. They pay off debts, save for emergencies and retirement, and regularly evaluate their financial situation. People sometimes refer to financial fitness as financial wellness. 

Americans Are Financially ‘Out of Shape’ 

Many Americans today struggle to get their finances in shape. 

• 60% of adults are living paycheck to paycheck.
• One-quarter of Americans are still paying off holiday credit card debt from 2022.
• Despite this, 96% of shoppers said they planned to overspend this past holiday season.

74% of Americans feel stressed about finances, and for a good reason. As a nation, we have over-consumed, and many of us have become financially unhealthy. This presents an excellent opportunity to practice healthy habits and get back on track. 

People who are financially fit do not obsess over finances, fear them, or let their finances control them. Financial fitness or wellness simply means being aware of your finances and remaining in control of your spending habits. 

Top 5 Tips to Get Financially Fit in 2024

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 recorded on a computer, having a list of your income and expenses can be useful. 

“Create and personalize a percentage-based household spending plan to identify financial activities you are over or underfunding,” says Todd R. Christensen, author and housing and education manager at Debt Reduction Services. His company provides a handy financial planning tool called Money Pie.

For help with this, check out FCAA’s budgeting calculator, the Debt Freedom Tool. 

If your expenses exceed your income, see what you can cut out. Then, track your spending each month so you can 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 into Your Savings Account for Emergencies and Short-Term Goals 

Another way to get financially fit is to direct deposit into your retirement account! 

If your employer pays you by direct deposit, this is easy to do. If a small portion of your paycheck goes directly into savings and retirement accounts, you’re less likely to spend it. These small changes can make a significant difference in your financial fitness. 

“Thinking you can go another year without an emergency fund is one of the biggest pitfalls I see,” said Christensen. “If you aren’t directly depositing something into savings, you will likely spend every penny you earn and end 2024 the same as you ended 2023—in debt and without any savings.”

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 to replace your tires, 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 to Stay Financially Fit 

Review your free credit reports each year at www.annualcreditreport.com. With the prevalence of identity theft and the changing nature of people’s credit, it is important to know what is on your report. 

“I had a couple come in to review their credit report [following a course I taught],” Christensen said. “They came in, shoulders a little slumped, and eyes cast down when they told me there would be things on their credit report that they weren’t 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.”

“This 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,” shared Christensen. “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.”