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SMART INSIGHTS FROM PROFESSIONAL ADVISERS

Improve Your Physical and Financial Fitness

Whether you're focusing on your body or your budget, a holistic approach can help you feel better and live better.

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How do you rate your financial shape? After 20 years of helping people plan for retirement, I've learned there are some parallels between a person's financial fitness and physical fitness.

See Also: Kiplinger's Household Budget Worksheet

First, ask yourself if you keep track of the daily financial headlines and whether the inevitable market fluctuations make you uneasy or put you in a bad mood. You'd be amazed at how many people are like that. It's kind of like stepping on the scale every day when you are trying to lose weight. That can be a frustrating way to live.

Whether you're talking about financial or physical fitness, all of us can benefit from having a dependable professional to guide us, nudge us and offer new ideas.

I hired a fitness trainer four years ago because, even though I had my own workout routine at the gym, it was stale. I always did the same stuff: lots of upper body work and barely any leg days. I wasn't crazy about cardio either. And I missed workouts when things got busy on the job.

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My trainer changed everything. Now I get up at 5 a.m. every morning, do my pre-workout checklist, meet my trainer at 6 a.m. and crank out new and interesting workouts thanks to his plan. I show up every day because, if I don't, I still have to pay him, and I don't like giving money away!

Cardiovascular workouts are a lot like budget planning. Many people hate doing cardio, just as they hate creating a budget.

Put together a real budget; few people do so. When I ask clients how much money they need a month for basic necessities, they can't give me a number. Just as my trainer tells me I need to do cardio work, I tell my clients they need a budget.

When I build a plan for retirement, I break people's finances into two categories: the necessities and the discretionary spending. Examining exactly how you spend money can be a painful exercise, but it is pivotal to creating a solid retirement plan.

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Now I love leg day at the gym. I used to avoid it. Leg day is similar to estate planning. People tend to avoid estate planning because it makes them think about the end of their own race. The last time they updated their will was when their children were born. Maybe they never even got around to drawing one up.

It's easy to put off leg day, and estate planning, by telling yourself you'll get to it, eventually. That's when my trainer, and an estate planning attorney, can help. It's so much easier when the coach tells you, "Okay, today is leg day. We're not going to avoid this any longer."

Eating right is like having the right retirement plan. If you eat better, you build muscle, you get stronger, and you can run farther with less fatigue.

To help can create a better retirement plan you should focus on five key elements:

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  • Diligently follow a spending plan.
  • Have a cohesive investment plan, giving purpose to your money.
  • Improve your tax efficiency.
  • Prepare for health-related costs not covered by insurance.
  • Tackle estate planning to benefit your loved ones, churches and charities in a tax-advantageous way.

If you commit to these goals for your money, then you'll earn an off day! The off day, physically, helps your body relax and recuperate. In the context of your finances, it means having more confidence when the stock market dips. Now you can comfortably take your eyes off those bad headlines.

Remember, you want to be able to focus more on your life and less on your money. Just as being physically fit makes you feel better and live better, you'll reap the same rewards from your efforts to become financially fit.

See Also: How to Find the Right Financial Adviser for You and Your Money

Bill Smith is CEO of W.A. Smith Financial Group and Great Lakes Retirement, Inc., as well as an Investment Adviser Representative and insurance professional. His firms focus on retirement planning and wealth management.

Dave Heller contributed to this article.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff.