Financial diet – a menu tailored to your financial goals

When was the last time you went on a financial diet? Have you ever thought that money could be compared to food? Some say is an exaggerated comparison. Experts instead often talk about the concept of a financial diet.

Financial diet – a menu tailored to your financial goals

According to Chelsea Fagan and Lauren Ver Hage, authors of The Financial Diet, money is like food.

When we consume inappropriately or too much, the result is that our quality of life is significantly reduced. Just as you can diet to maintain your weight, you can also set yourself a financial diet to have more financial security in the medium and long term.

Now let’s think!

Any food diet comes with some rules and restrictions but also with a lot of will.

The same happens with food diets. It’s good to keep in mind some basic rules to be able to stick to them for a long time.

The recommendations are ones that anyone can apply in everyday life, but at the base of all the advice are the four things that you should never do, or at least as rarely as possible. Whether they are right or not, here are the “financial diet” principles on which they are based!

Reducing calories in the financial diet

The comparison between saving money and cutting calories beats all analogies.

Some principles have a lot in common, such as the slow-is-the-best approach. Fast weight loss and sudden money-saving ideas can produce short-term results but rarely address the underlying conditions where effective and ongoing changes could be made for financial well-being. Like dieting, spending works best with a plan. When your bank account gets fatter instead, it’s a good thing!

Step on the scale – Analyze your finances!

Understanding where your money is going is essential as your first line of attack when cutting your expenses. Many weight loss plans involve keeping a food diary, and this is a good strategy to apply to a financial diet as well. You may find that sometimes less obvious expenses are not taken into consideration.

Let’s start easily if you are a beginner! Keep a record of all your purchases for at least one month.

Ok, we can talk about small purchases, but also some that put a serious hole in the budget. It includes the essentials like your mortgage, car payment(s), and occasional clothing and grooming costs, as well as discretionary spending for small pleasures with big effects, like that daily latte or other larger, impulse expenses. Identifying each financial “calory” creates a resource that helps you prioritize spending and exclude it from your menu.

Make stocks, the financial diet cupboard – Gather the financial tools at hand

Create a dedicated file for bills, invoices, and receipts and use it daily. Not only will this help you keep track of your expenses, but it also has other benefits that can lead to saving more money.

If you often make mistakes and forget about utility bills, monthly late fees start to add up. Everything must be in one place for detailing expenses.

You don’t like paper? Billing can be electronic. Keep at least one separate folder for financial content. Better yet, use personal finance software that lets you connect electronic bills right into the app. You can also make payments directly from the app, saving time and some resources, not to mention the sustainable part of the story. Less stress, but also less paper!

The main menu on the financial diet – Budgeting

Online apps can make the budgeting process more accessible, but even if you use the famous, envelope, creating a budget is essential. “When you go out to eat, you can’t make an intelligent food choice without a menu,” says financial planning consultant Terry Baker.

“Cutting the fat from your finances requires a budget, a place where you can see all your options and consider all the trade-offs.”

Choose the right portions – setting realistic spending goals

Every plan needs a criterion to measure success, whether we are talking about large amounts or saving 50 euros/250 RON per month, but it is important to be realistic. List your long-term goals, whether they involve a down payment on a house or paying cash for a new car, then break the big goal down into viable chunks that fit your monthly budget.

A commitment to save a predetermined amount means nothing without a time frame. It probably won’t happen in the next 2 months, but six months / a year from now is a reasonable goal. Avoid unrealistic goals that lead to discouraging results.

Cut the fat in your financial diet – Target your debt

There’s a reason financial coaching advice always mentions getting out of debt. Interest is the equivalent of hidden, harmful calories in your diet. Left unchecked, debt spends money in your place. While debt such as a mortgage may be necessary, unpaid credit card balances and other high-interest loans are prime targets for an effective financial diet.

The relationship with the financial diet

As you turn a financial diet into a healthy financial habit/lifestyle, celebrate your wins. Your relationship with finances is forever – it doesn’t just end or take a break – so it’s even more important to make it less a love/hate relationship and more of a growing & fulfilling one.

Since everyone is different – with unique situations, interests, and financial strategies, it’s essential to diversify. Just like you try other foods or diets, you’ll learn what works and what doesn’t resonate.

Your strategies may change as your needs, circumstances, and financial picture evolve. The key is always to be consistent and find the right balance to achieve a healthy and happy financial relationship.

In 1-on-1 financial coaching sessions, we can discuss your personalized diet and track results. We analyze long-term progress to turn everything into a financially-healthy lifestyle. The only one who will put on an extra pound will be your income!

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