Train like Rocky Balboa: the 90-day financial fitness program

Remember the training sequence in “Rocky?” He starts with a short run and small weights, then heavier weights, then there’s the climactic moment when he runs up the steps, with kids cheering in the background.

Each of us can be our own financial Rocky, beginning with relatively easy things like defining goals and making a budget, working up to heavy lifting like balancing a checkbook and investing. (It’s unlikely, however, that crowds of children will be screaming, “Go!” when you open your 401(k).) Here’s your own fiscal training program – 90 days to financial fitness.

Step One, Week One: Set specific goals
Rocky Balboa wanted to win a professional boxing match. What do you want to accomplish? Would you like to take your family to Disney World for a vacation? Or maybe you dream of buying a house. Decide what you would like to achieve, and find out how much it will cost.

Step Two, Week Two: Make a budget
Now it’s time to make a budget. Once you know how much you have coming in and how much you must spend every month, you can see how much is left for saving. You already know how much you need to meet your goal. This step will help you figure out how much you can save every month.

Write down your expenses and your income, using this budget worksheet. Now, see which expenses you might be able to reduce or eliminate. For example, you could lose the daily $4 mocha grande cappuccino and just drink the free office coffee. Or bring your lunch to work.

Step Three, Weeks Three and Four: Living Within Your Budget
Now, here’s how to see if your budget is practical. Write down everything you buy in one week. You can use this handy form. You may be surprised at how much you spend on things that don’t really matter that much to you.

Step Four, Week Five: Putting Money in Savings
Now you have a better idea how much money you can save. Armed with this knowledge, decide how much to save every month.

Most employers can set up an automatic withdrawal from your paycheck into a savings account. That way, the transfer happens automatically and you never even have to worry about it. Here’s a rundown on different types of savings accounts.

Step Five, Week Six: Balancing Your Checkbook
By now, you’re cruising along like Rocky, making gain after gain. If you haven’t already, celebrate with friends and family. And now that your confidence is high, grab your checkbook, your monthly statement and a calculator for the next step, balancing your checkbook.

In this process, you’re comparing the monthly reconciliation worksheet your financial institution sends you against your check register. That worksheet often has instructions on how to balance your checkbook; or for a more detailed, step-by-step guide, click here. One of the easiest, quickest ways to manage your checking account is online – you can do all your checkbook balancing without the bother of paper and pencil.

Weeks Seven, Eight, Nine: Stay Balanced
Keep balancing your checkbook, and don’t hesitate to ask for help if you run into problems. You can get assistance from your financial institution, or contact BALANCE at (888) 456-2227.

Week Ten: Take Stock
It’s entirely understandable if you hit a few snags along the way. In fact, it would be surprising if you didn’t.

Take a good look at things that you have not been able to achieve on a regular basis, and figure out if it is realistic to think you can achieve them in the future. If not, then do what the GPS unit always says when you miss an exit: “Recalculate.” For more tips, click here.

Week Eleven: Investing in a 401(k)
Now it’s time to take advantage of your employer’s tax-deferred investment plan. These accounts, known as 401(k) or 403(b), are a good deal. No taxes are due on your contributions or earnings until you retire and begin withdrawing the funds. Tax-deferred savings means that your investments can grow much faster than they would otherwise.

The same is true of IRAs, although the maximum amount you can invest annually in an IRA is substantially less than what you can put in a 401(k) or 403(b). So if your employer doesn’t offer a tax-deferred plan, open an IRA or a Roth IRA and reap the tax benefit come April 15.

Week Twelve: Congratulations!
Pat yourself on the back, Rocky – and take a run up those steps if you like. You did it. Take a moment to look back on all you’ve learned, and keep up the good work!

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