There are few things many people universally regret in life, and bad money habits are surely at the top of the list. Here’s the problem: Managing your personal cash flow is treated with a one-size-fits-all approach—emergency fund, retirement fund, no debt, etc.…but in reality, we know that maximizing your money just isn’t that simple.
There are many different variables that can impact your finances. People earn vastly different salaries; have varied financial responsibilities and differing amounts of debt. Perhaps the most trying issue to unwrap is our often complex relationships with money itself.
Think About Your Relationship with Money
This must be the first step. Why? You can’t get a handle on your money until you understand the role it serves in your life. Start by thinking about the lessons you learned about making, spending, and keeping money as a youngster and how any of these actions makes you feel. Next, consider the value you place on money today — what are you buying and why? Last, think about whether your present values and behavior around money align with the goals you truly want to attain this year.
Whether you’re the epitome of a spendthrift or a super thrifty saver, it’s important to tally all of your monthly and yearly assets, bills, and savings. This can be done on a spreadsheet, smartphone or notebook but the most important thing to add is a column for predictable but inconsistent expenses. You know, like when your cousin periodically asks you for a loan. Approximate how much money you will need for each column and then you’ll have a better, clearer idea of your cash flow.
Putting pen to paper—helps make things real. It also serves as a consistent reminder of your goals and the whys. Place your goal statement in a space that’s easy for you to access every day so your priorities and reasons are always top of mind in 2020.
At your next Saturday brunch or friend’s night out, bring up your big picture financial goals with trusted friends — and if they don’t like to discuss funds, find a few friends who do. Why? These conversations are great opportunities to reinforce your priorities and create accountability; they also give your circle a forum to share goals, insight, and information.
You don’t have to be rich to speak with a financial specialist — and they’re relatively easy to find. The Financial Planning Association offers a location-based directory of certified financial planners. For a one-time fee, your planner can help you adjust allocations to your long-term and short-term goals, including retirement, home ownership and stock investment that will fit your needs. S/he can also help level set on where you should be based on your age and income, which helps you re-evaluate your current values and goals.
Make this year count!