I want to get Control of my finances!!
As a personal finance coach, I hear this comment a lot, almost daily. I want to get control over my money. We live in a society where they don’t teach this stuff in school. You either were lucky enough to be raised in a family that talked about money and how it works, or you didn’t. If you didn’t, you're not alone. Something like 64% of Americans live paycheck to paycheck, according to this CNBC STUDY. I was a financial advisor for over 22 years and realized you can’t out earn bad habits. There are so many underserved overlook people by the financial industry. If it doesn’t produce revenue, they aren’t interested in spending the time and resources in helping provide solutions. Teaching people what money is, what you can do with it. How to be proactive and tell your money where to go, versus wondering where it went. Yes, I am referring to the “B-word” Budgeting. I like to say get a money plan, which is a plan for your money. How to get out of debt, actually eliminate it, not consolidate it to make money but remove it from your life. Imagine what your life would look like if you had no payments…what would be possible.
People are thirsty for education, especially when it comes to money. Since it doesn’t pay to take the time to sit down and truly meet people where they're at and teach them how things work and not what they need but the why behind things, it doesn’t happen. They put profits ahead of people. Look around, we have a student debt crisis, credit card debt is at all-time highs, and Congress is looking to solve the very problem they help create. I can go on and on, but you see it and feel it.
Most of all these reasons and may more are why I became a financial coach. I realized no one was truly doing anything about it. They were treating the symptoms, not the disease. Personal finance is 80% habits and behaviors and 20% knowledge. I wanted to set out to help as many people as possible win with money.
It starts with understanding what money is, and what you can do with it: Save it, Spend it, Give it. Instead of one piggy bank, have three.
Start teaching your kids this way of thinking also. While on the topic, let’s talk allowance vs. commissions. What does allowance teach you? I made it through another week breathing, I get paid, versus commissions that are paid for jobs you do around the house. You don’t do your chores, you don’t get paid. Connect work with money at an early age. Dad, I need money!! Sounds like you’re broke, you know where you go when you’re broke? - TO WORK you need to go to work.
Once you have enough, yes, you can have assets work for you to make money.
Not my Front Yard !!
Money is a store of value that represents Time, Labor and Skill. I mow your lawn, and it takes me 2 hours, that’s 2 hours you can do what ever you want. That is sweat off my brow where you were in A/C catching up on writing thank you cards. Since I put pinstripes in the pattern of your lawn, yes, you need to pay me more for my skill.
Be intentional, proactive versus reactive. Anxiety comes from the fear of the unknown and things that haven’t happened yet. If you could start the month before and plan out the month coming up and plan out exactly where every dollar is going, more than half the battle is won. Pull out the calendar, look at the month. What Birthdays are there, Holidays, School events, date nights with friends etc. Put them in the money plan. Start with NEED vs. WANTS your needs are Shelter, food, utilities, transportation, clothes and medicine. Once you have that taken care of, basically everything else is a WANT. Really, if you think about it. Then start with prioritizing your wants, list them out.
List your take home PAY
Minus your NEEDS
Subtract your WANTS
If you have money left over, you're not done!! - GIVE every dollar a Job. Tell your money where to go. What is your next goal? Debt, Emergency Fund, Savings for a trip what is it? You should have zero dollars left at the end of the budget. Congrats, you’ve made a zero based budget.
If you run out of money before the wants are funded then you need to start up top and go down the list and ask what can be held off, reduced and or eliminated.
There is so much more to cover, but for the sake of your time, let me list it out in order: This is the what not the WHY!! If you want to know the why behind things how it works, reach out and let’s have a conversation. I don’t sell you anything except Education, Empowerment and Equip you with the tools and resources you need to win with money.
Emergency Fund-get one, cause if you don’t you’re going to go into debt.
Sinking funds-Start saving for things you know are coming up like say….CHRISTMAS!!!, Tire replacement, Vacation…you get it.
Debt elimination- Credit cards, Student loans, car loans, basically everything outside your mortgage for now.
Retirement - Get to saving 15% of your income towards retirement.
Insurance-Get it and review it, learn about the rules of the game of all types: Home insurance, Auto, Life, Health etc..
Legacy-Get the documents you need in Place ASAP and communicate where they are with loved ones. Make, a I LOVE YOU DRAW. Where you list out all your important information. Agents, advisors, bank accounts, saving box keys etc.
It’s sad that our system is set up the way it is. You either learn as you go through fees, fines, and penalties, or you had positive role models that taught you this stuff. I would have given up say Chemistry for a year-long course in personal finance 101. I believe it’s set up this way on purpose it’s kind of like politics, they don’t want to have a well-informed engaged population. Think about the amount of money they make every day from just overdraft bank fees!! That’s just not being able to balance your checking account. How about the IRS penalties 10% for early withdrawals, on and on. Any way that list above is not complete by any means, there is so much more we as Money Coaches cover like Marriage and Money, employee benefits, buy or lease a car, mortgages, medicare, how to teach your kids about money, social security, your money mindset, and so much more.
