Financial Fitness: 10 Steps to Better Fiscal Health

In this article: A 10-step plan for taking charge of your finances and getting in better financial shape by year’s end.

by Andrea Norris-McKnight

Financial Fitness 10 Step Plan photo

If you’re like many people, you probably set one or more physical health-related resolutions each year — to lose weight, gain strength or simply eat better. But what about your financial health?

If your finances are badly out of shape or just in need of a makeover, this 10-step program can help you start losing the debt and getting your finances in shape so you can end the year in better financial health than you began.

Losing the Weight

Many of us have been carrying too much debt since the pandemic. Losing some or all of it can often make the biggest improvement to your financial situation.

1. Put a stop to unbudgeted spending.

Just as you need to cut back on overeating in order to lose weight, you need to cut out any overspending to improve your financial health.

A good way to get a handle on your spending is to get a handle on your budget. Not only should you track every cent you spend via your budget, but you should also plan how you will spend every cent. A spending plan can help ensure you prioritize debt repayment over discretionary spending and make sure any spending fits within your budget.

It can also help prevent you from using your credit cards to cover bills or make additional purchases when you’ve gone over budget for the month.

2. Come up with a pay-off plan for any credit card debt.

Sit down with all your credit cards and total the amounts you owe. You should typically prioritize this type of high-interest debt over your mortgage, auto loan, student loans and personal loans.

Every credit card payment you make will give you just a little more wiggle room in the budget each month if you don’t continue to use your cards.

There is a lot of debate over the order in which you should pay off your credit cards — the highest interest rate or the smallest balance first. Read Debt Repayment Strategies: The Snowball vs. The Avalanche if you could use some guidelines for choosing the best payoff strategy for you. You also may want to consider consolidating your credit cards. See The Pros and Cons of 8 Ways To Consolidate Debt to learn about some consolidation options.

3. Spend less than you make.

Living within your means has gotten tough over the past few years, thanks to inflation. But if you hope to improve your financial situation this year, you must find ways to cut the budget so your income exceeds your bills and spending. Otherwise, you’ll likely end the year in worse financial shape than you are in right now.

Many people get discouraged by the idea of cost-cutting because they assume it means cutting the fun from the budget. But you’re likely spending more on utilities, groceries, and other necessary expenses that you can trim, which will allow you to keep a little bit of discretionary spending in the budget.

4. Work on your credit score.

Your credit score is that number assigned to your financial health. It is used increasingly to determine how creditworthy you are and can affect the mortgage you qualify for, the job you land and the car you can drive. (See also: 7 Monthly Bills Affected by Your Credit Score.)

One easy way to boost your score is to pay every bill on time. On-time payments and gradually paying down debt will help your credit score increase this year.

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Developing Your Core

Once you’ve gotten some of your debt and your budget under control, you can begin focusing on building savings. Some solid savings habits can help you build a strong financial core.

5. Build an emergency fund.

If you’ve had to pull from your emergency fund to get by over this past year or you’ve never started an emergency fund, building one should be the first savings goal you set.

The thought of saving three to six months of expenses might seem overwhelming, so for now, don’t worry about how much you need to save. Just start saving a little each month. Find room for it in your budget to ensure you make saving a habit.

Equally as important, don’t touch the money unless a real financial emergency arises — and know what constitutes a financial emergency.

Build an Emergency Fund

With these simple tips and tools, you can build an emergency fund, even while living paycheck to paycheck.

6. Pay yourself first.

The easiest way to ensure you have money for savings each month is to move money into savings before paying any bills or making any purchases. In other words, pay yourself first. 

You may be able to have a percentage or set dollar amount directly deposited into your savings account each pay period by your employer. If not, you can schedule automatic transfers from checking to savings once a month or even weekly. You can learn more about how to make ‘pay yourself first’ work for you here. 

7. Ensure you’re insured properly.

We all hope that nothing bad will happen to us, but if we prepare for the worst by getting the proper insurance, we will be protected if it does.

You want to make sure you have enough coverage without overpaying for coverage you don’t need, so it is important to review your insurance periodically — including any type of insurance you may have, from home and auto to health and life.

You also want to get the best rate for that needed coverage by comparing rates from various providers and changing insurance companies as necessary.

Building Some Muscle

Once you’ve built up your financial core a bit, you can start building the rest of your financial muscles.

8. Start or increase retirement savings.

It’s never too late to start saving for retirement, but the earlier, the better, thanks to compound interest and average long-term investment returns.

If you don’t have an employer-sponsored retirement plan, consider opening a traditional or Roth IRA. If your employer does offer a retirement plan, especially one with matching contributions, sign up at the next open enrollment and work toward increasing your contribution each year until you’re receiving your employer’s maximum matching contribution.

9. Begin investing.

Learning the ins and outs of different types of investing and getting started investing small amounts is much easier now than it once was. You can find plenty of reliable investing resources online and apps and software that make it easy to invest a few dollars at a time and then increase the amount as you become a more confident investor.

10. Set other savings goals.

Once you’ve established a habit of putting money into your emergency and retirement funds each month, consider setting other savings goals. Maybe you want to save for a car or a vacation. Perhaps you have children you’d like to put through college.

It can be any big purchase — and anything you can save toward the purchase will mean that much less you’ll have to borrow when the time comes to buy.

Give Your Finances a Check-Up

It takes some effort to become financially fit, but it is worth it. When your finances are healthy, your life runs smoother. By taking charge and following these 10 steps, you can be the picture of fiscal health next year.

Reviewed December 2023

About the Author

Andrea Norris-McKnight took over as the editor of The Dollar Stretcher and After 50 Finances after working under the site founder and previous editor for almost 15 years. She has also written for,, and The Sacramento Bee.

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