I am worried about the economy, but … not sure how it affects my financial health overall.

Two years ago this month we launched our financial fitness tests. With the economy in its present state it is time to take a long, hard look at your own economic health. Over the past two years, many members have taken the tests and we encourage an annual financial fitness check-up. If you have not taken all of the tests yet, it’s time. If you have, but it’s been a while, it’s time to redo them. Click here for our Financial Fitness tests, or come into the branch and pick up a worksheet for each test.

The Economy and Your Financial Fitness
Every change in the economy affects financial fitness. Even if you are not worried about your job and are in good financial shape there are still effects.

Savings
This is the key concern for many members. With deposit rates and stock market values so low, your financial fitness is affected in several ways. First, your Financial Strength declines as your savings are reduced. Take the Financial Strength test to figure out what your savings gap is and redo your savings budget to reflect interest rate changes or decreases in the value of your investment portfolio. Second, since savings are considered an asset, the Financial Balance & Agility tests are also affected negatively.

Borrowing
Interest rates are down which is a good thing for your Financial Cardio & Flexibility tests. If you have been able to renegotiate your mortgage at renewal, you are likely reaping the rewards of a lower interest rate. What do you do with the difference? To get out of debt faster it is advised to maintain your current payment and pay your mortgage off sooner. If you have decreased your payment, make other healthy choices like increasing your savings budget or paying down higher rate debt.

Housing Prices
The Financial Balance test is where you will find the most significant hit to your financial health when it comes to any decrease in the value of your home. Your home is one of your biggest assets and losing value is a blow to your financial balance. For many individuals who were using their home as their retirement savings vehicle the economic downturn has been especially difficult. Look at your Financial Balance test and work with your financial planner to figure out ways to recover as quickly as possible.

Increasing Prices at the Pump and the Store
Budgets are hit hard in these economic conditions and your Financial Cardio test will tell the tale. Look for ways to shore up your budget, decrease spending and increase savings. For the next month track all spending to see where your money is going. Revamp your budget to get your financial cardio back on track.

Emergency Funds
Having emergency funds is more important than ever as the economic condition changes on what seems like a daily basis. Take a really good look at your Financial Agility and consider using any savings you can find to bulk up your emergency fund. While our economy is still considered one that will recover quickest, not all the effects have been felt and recovery will take some time.

As your financial advocate, we are committed to helping you each step of the way. If you need a hand or just want a second opinion, gather all your information (even if it is in a shoebox) and come in, give us a call or drop us a line.