Many people spend hours in the gym, playing sports or running. Many of them can tell you their weight or even their body mass index or fat percentage off of the top of their head. They might be able to tell you how much protein they should eat in a day or how many calories are in a packet of french fries as well.
The point is that people tend to know lots about their physical health while they tend to know very little about their financial health.
Do you have any idea how financially fit you are? In this article, Richard Cayne of Meyer International explains a bit about what he has coined “financial fitness.”
Financial Fitness and Spending Habits
One of the first things that Richard Cayne asks new clients to do it to estimate their spending habits and then to actually keep a notebook or phone app on them at all times and actually track their spending.
He said, “People are often very off from their guestimation of what they spend. Sometimes they are very surprised.”
He recounted an anecdote about a client he had in Tokyo:
“I had a client and I asked her how much she spent on transportation. She most often got around by taxi, which is very expensive in Tokyo. She guessed that she spent about $3,000 per month on transportation.
I said to her, ‘Ok, I want you to go home and track it for a month and let me know the true number.’ Now, this women is also very into fitness. In the same conversation, I asked her how often she weighs herself on the scale and she said ‘twice a day, sometimes three times per day.’ She admitted that she could probably tell you how much she weighed and be accurate within 100 grams.
When she came back at the end of the month with her transportation spending figures, she was spending twice as much as she thought she was and she was shocked!”
His advice to this client and lots of others is this:
Think of Financial Fitness as Often as you do Physical Fitness
Try measuring your finances as regularly as you do your health or physical fitness and you find yourself financially “fitter” and you’ll constantly be getting better at managing them.
Richard Cayne made another fitness analogy when he said, “It’s like every professional athlete. They have bounced that ball how many hundreds of thousands of times? And they get better each time. The more you play, the better you get,” he said noting that the same is true of measuring and engaging with your finances.
“If you think about something more, focus on it more, you get better at that game whatever it is. It’s that simple,” said Cayne.
For further information about financial “fitness” and other investment topics, Richard Cayne and Meyer International can be reached at (+66) 02 611 2561
