Every year, we start anew on January 1, with resolutions and goals and intentions to make this year the year we get our lives in order, to pay off all the debt, to have rock hard abs, to meet our one true love, to quit drinking, to eat only organic whole foods, to sleep 8 hours a night, to read a book a week, to change careers, to travel, to … you know the drill. Let’s start with something within our immediate control and get a holistic view of our financial health.
Start with listing your bank accounts, credit card accounts, personal loans, car loans, home loans, retirement plans & funds, savings, investments, cash on hand (including the change jar you’ve been meaning to go cash in), money owed to and from others, current income, bills and expenses, and any other monetary items you can account for. We want to get a true holistic picture of where you are, so we can navigate a plan to where you want to go.
Your method of capturing and organizing this information. For my own, I use an app called Personal Capital, and a Field Notes journal. Personal Capital is free and gives the broadest view I’ve found thus far. You might also enjoy plain ol’ pen and paper, a whiteboard, Excel or Google Sheets, or another medium to capture your numbers and related info. Whatever feels good, and is easily accessible for you anytime, anywhere, go with that. Don’t put much thought into it, go with your first instinct and start.
1. Start with entering in your income, savings, debts, and goals. It might look like this:
Green = current income
Red = Current expenses
Orange = Current Debt Balances
Blue = Goals
*FU Fund = f$*k you fund, or an emergency fund. If you ever get into a place you need to say fack off, I’m quitting, this is the fund you’d be able to live on for 6 months, or whatever amount of time you’re able to save and fack off for.
2. Take a pause, admire your handy work here. Now, these are fictitious numbers, yours might look similar or wildly different. Whatever they are, it’s okay, even if it doesn’t feel okay. How does this feel? How do you want to feel?
3. Looking at your spread, observe what makes you feel joyous and appreciative, and what lines make you feel like you’d rather go out and get sloshed? Make note of these, as these will be your starting points for where to implement changes into your daily routines. Example: if you’re spending $200/month on coffees out, and could make better at home for $50, there’s an extra $150/month you can pop into savings, towards debt or into your travel fund. You don’t have to decide now, but keep this in mind for the next steps.
4. Think about your ideal life. Take a piece of paper, write out the date 6 months from now, and write about where you are, what you feel, what your bank account balances are, who you’re with, where you’re living, what your income is, what your freedoms are, what you’re eating, smelling, where you’re walking, what your daily routine is and how happy you feel. Write until your hand falls off, or until you’ve described every detail you can think off of your dream life. Tuck this away and go back to read it in 6 months. You can do this exercise for any facet of your life you’d like to implement and instigate some change into. Take action, write it down and then make decisions along the route to get yourself there.
5. Now, you know where you are, and where you want to be. Let’s work on navigating our way there. Take stock of the items you CAN change – eating out, coffees out, drinks at the pub, subscriptions, new clothes you’ll toss away next month after wearing once, and the like. These will vary for everyone, but also will maintain some flow of familiarity if you do this exercise with a friend. The goal is to trim the things that don’t bring value to your life for spending the money you are spending on them, in order to save or spend it on something that does bring value and happiness to your life. Sort of like Marie Kondo’s approach to tidying up, but this is for our finances and is a longer, life-long road of financial mindfulness, health and happiness.
6. Starting right now, what decisions can you make to improve your financial health? With your next meal, what can you get that is the most healthy, for a reasonable cost? For me, it is almost always a bowl from Chipotle. It’s less than $10, fresh, organic, locally sourced and absolutely consistently delicious. For you, it might be a salad instead of a bowl of cereal. Or a baked sweet potato with grass-fed butter and spices instead of a microwaved meal. Or ancient grains bread and fresh garlic dip instead of ordering in another pizza. Whatever it is, make the next best decision, and the next best decision, and the next best decision. I’m not saying never have junk food again, by all means, please do, just gain and carry an awareness of the short-term and long-term cost of these decisions. Another tub of ice cream now is the cost of diabetes and obesity later. Another soda is another migraine. Another drink is another hangover. Another cigarette is another asthma attack.
7. List the areas of your life including habits, relationships, subscriptions, places you go, people you hang out with, how you spend your time, your word choices, your feelings and routines that aren’t getting you closer to your goals. Beside those, write in replacements and new feelings, experiences, habits, relationships, word choices, etc of more propelling and impactful in getting on with it, to where, who and what you want to be.
If all of the above makes you cringe and think “someone else will do this for me,” reach for help. This stuff jazzes me up like a proper cup of coffee, and I’d love nothing more than to help you get a handle on it and map out your (financial) goals and life plan.