It’s everyone’s favorite time of year to talk about resolutions, and one of the biggest ones is typically in the area of money and finance. But there’s a problem with resolutions from the way that I see it – the energy of the word “resolutions” is just so HEAVY and people don’t know where to start.
I prefer to think about new possibilities instead of resolutions. Inspire yourself instead of feeling heavy about making what can sometimes be a scary change if you’ve never learned how to manage your money. And if you’ve never been taught how to proactively manage your finances, you’re not alone – 70% of people live paycheck to paycheck and 76% of people feel out of control when it comes to their money (including people earning $100,000 and more).
If you’ve always wanted to get a better handle on your finances, ask yourself this question – what would life be like if I knew how to intentionally, authentically, and proactively manage my money?
And if you’re an employer reading this, ask yourself this question – what if my employees all came to work fully engaged and performing at their best without letting financial overwhelm run as an undercurrent sapping their energy throughout the day?
Because let me tell you, there’s an energetic saboteur coming to work with most employees called financial stress. He causes all sorts of problems – lack of sleep, physical ailments, worry and concern, and distraction – and no matter how he shows up, he’s negatively impacting performance and ultimately, the bottom line.
So, how can you start to eliminate financial stress? What are the key steps to developing a financial plan that works for your life?
As the saying goes time is money, so it’s time to quickly and efficiently help you get your arms around the state of your financial affairs and start proactively managing your money. Here are 5 steps to develop a savings and spending plan to begin eliminating financial stress:
STEP #1: Set goals and dream big – I’ll spare you the studies behind the facts that people who set goals are more successful (because you already know that, right?). When it comes to finances, though, I can 100% assure you that people with defined goals on how they want to use their money feel financially aligned and move more powerfully in their life. When you understand how you want money to support you in your life, it’s amazing how you all of a sudden stop unconsciously using (and sometimes abusing) money and instead find a way to allow it to be the tool it’s meant to be to support your goals and dreams.
STEP #2: Understand where you are – I like to use the concept of “Financial GPS” to explain the importance of this step. It’s great to understand where you want to go financially, but how can you get there if you don’t understand where you are right now? When you’re taking the first steps to understand where you are, I recommend reviewing at least 3 months of your cash flow to see how you used your money. Once you understand “Point A” of your financial GPS you can then map yourself to “Point B” (see Step #3 below).
STEP #3: Decide where you want to go – When you align your new plan with your goals, it’s a bit like being on a diet for a reason – you’re more likely to stick with your new plan if you’re happy about where it’s taking you. Using a savings and spending plan won’t feel so restrictive if it’s moving you toward the life of your dreams. This is the “Point B” of your Financial GPS, and it should include making sure that you’re balanced between paying the bills, saving, eliminating debt (if applicable), and living your life. Use the financial history that you put together in Step 2 to help you determine what you need to adjust to get to your ideal plan – you’ll be surprised just how much you’ll notice that you want to change just by looking at how you’ve used your money in the past!
STEP #4: Watch your weekly cash flow – This is, by far, the step that is most often missed in setting up a solid monthly plan and it might just be the most important. Map out your income and expenses on a week-by-week basis to make sure you understand your future cash flow. It’s amazing how many people see money in their checkbooks and just decide to go ahead and use it without realizing they will need it for something else later on in the month. By mapping out your weekly cash flow, you’re forecasting ahead how you need your money to support you so that you can make smart decisions along the way.
STEP #5: Measure, monitor & adjust – Under the heading of “life happens,” simply because you’ve designed a financial plan doesn’t mean that you can “set it and forget it.” Financial fitness is sort of like physical fitness – you need to regularly work out to see the results. Set up a money date once a week to handle all of your financial affairs (paying bills, calling about bill errors, etc.), and once a month review how you actually did against the plan that you took the time to design. The key is to measure how you’re doing against your plan, monitor your progress against your plan and then adjust accordingly if you start to see that your plan needs a few tweaks.
So, are you ready to get started on your own journey to financial freedom and independence? Financial clarity and knowing your numbers is only the beginning of strengthening your financial foundation so that you can be more, do more, and have more in your life. Is it time for you to eliminate financial stress once and for all and stand tall with everything that you are?