Money – and the conversation surrounding it – has both an emotional side and an actionable side. Emotions and patterns fuel our views about money, while our actions regarding money physically affect our bank account.
It can be easy to throw our hands up in the air and give up when we find ourselves in undesirable circumstances. We can succumb to always making the same amount, always being in debt and never seeming to create wealth. We can get anxious, freak out and have a complete meltdown. We can ignore our credit card bills when they come in the mail. We can pretend we don’t care.
We can reclaim our relationship with money. We can break our old patterns. We can tackle our financial issues with patience, perseverance, and positivity. You can make the commitment to fix your money problems once and for all.
How do we do this?
Well first we have to clean house. We have to get our emotional stuff sorted out before we can even think about taking any action.
Below you’ll find my approach to conquering my finances. Note how I really emphasize coming from a place of openness and abundance first so that you can later take the right necessary action.
The Emotional Side
Step One: Know that you are valuable.
Regardless of whether you’re in debt up to your eyeballs, living in your parents’ basement or working a measly hourly job you have to be very clear on one thing: you have to know that you are valuable. You have to believe in abundance. You have to get in a mind set where you are confident about your finances regardless of what is going on right now.
Without this sense of knowing it will be very hard to get a handle on your finances. You won’t be able to forgive yourself for getting into debt. You’ll become anxious, manipulative and controlling instead of coming from a place where you can witness the money issue for what it is and then come up with solutions
I know I’m beating a dead horse here, but we cannot allow our outside circumstances dictate what we think. Instead, we need to change the internal conversation so we can truly have better outward experiences. It’s no different when it comes to money.
Step Two: Understand your relationship with money.
Money is a lot romantic relationships. It’s great, it’s wonderful and it can really enrich your life – if you treat it with respect and understanding. It also comes with a lot of old patterns, hang ups and attachments.
(You can learn more about this concept by reading my Amazon best-selling book. Click here to find Make Money Your Honey on Amazon.)
The good news is, that, just like in romantic relationships you can change your views and patterns about money. It may take some work, but Terri Cole has an awesome resource you can use to figure out your financial blueprint. Once you have figured this out you can start seeing where some of your patterns come from.
Maybe you have a lot of consumer debt because you saw your parents putting things on shiny plastic. Maybe you grew up with less money than your classmates so you always have an underlying sense of lack. Whatever the case, as soon as we find our blueprint we can start changing it.
Step Three: Cultivate patience.
After you’ve changed your mindset you have to cultivate some patience. Money problems don’t get fixed from one day to the next – it just doesn’t happen. In fact, it could be a while before you truly have financial independence. So what do you do?
Well, we’ve already learned that we need to change our internal conversation. We also learned that once we figure out our financial blue print so we can notice our patterns around money and begin to change them.
Now you just need a heaping dose of patience. Fortunately, there are tools that can help you change your habits, build patience and start small. You’ll find them listed below:
- The first tool is Digit, which is a service that automatically finds small amounts of money in your checking account and moves it into savings. Digit helped me painlessly save over $1,000 without me having to lift a finger and without it affecting my budget.
- The second tool is Acorns, which is similar to Digit except it invests your money into the stock market. It’s another easy and painless way to change your habits. Within a few months, I had over $600 of loose change invested into Vanguard index funds.
Click here to sign up for Acorns via my affiliate link and we’ll each get $5 deposited into our accounts.
The Actionable Side
Okay, so you’ve done some work to clean house in regard to your funky emotional money stuff. Now we can get down to the practical nitty gritty stuff. You know – the bills and the budgeting.
Step Four: Figure out how much money you’ve actually got coming in.
How much do you make on a monthly basis? How about weekly? No, seriously, how much? Is it just a base salary or do you get commissions, bonuses or tips? How much do you roughly get in commissions?
You’d be surprised how many people I interview can’t tell me how much they make. It’s not good people! How are you supposed to know where you’re money is running off to without first knowing what’s coming in!?!?
Sit down, figure out what you’re actually bringing home (let’s not forget about gross and net income) and write it down somewhere.
Step Five: Figure out where your money is going.
Pull out your bank statements, get out the credit cards, whip out those bills and find out what you are roughly spending each month.
How much are you spending on groceries? Are you eating out a lot? What’s your regular cell phone bill? How much do you owe on the credit cards? What are you paying in interest? Car payments? Your car insurance? (If you don’t have a car see how much you’re spending on public transit) What do you spend on miscellaneous items?
Figure it out. Write down. Compare it to how much is coming in.
What do you see? Are you in the red month after month? Where is your money going?
Personal Capital is my current favorite tool for budgeting. It helps you track income, spending, investments, debt and your overall net worth.
Once you figure this out you can move on to step three.
Step Six: Where can you make some cuts?
Chances are you’re spending too much money somewhere. How do I know? Because we all do this.
First check your bills to see where you can make some spending cuts. Maybe you can start cooking at home more rather than buying lunch. Maybe you can buy less clothes on a monthly basis. Maybe you aren’t really using your Netflix account so you can cancel it. Remember, even little things make a big difference.
Step Seven: Check in on your fees.
How many of you have fallen victim to some random fee you didn’t know about or ask for? I’m guessing about 90% of you have your hands raised.
Check your bills on a regular basis to see if you’re being charged for things you are unaware of (this used to happen to me all the time with a big bank and a large phone service provider). Once you have identified these fees start calling billing departments to remove the stuff. Ramit Sethi of I Will Teach You To Be Rich has some great scripts for this stuff. You’d be surprised at how much money you’re wasting on these useless fees on all of your accounts.
If your retirement account is eating up your fees, I highly recommend checking out Betterment. I moved over to Betterment when I realized my original IRA would cost me over $25,000 in fees. Betterment is low cost and it allows you to invest whatever extra money you have into reputable Vanguard Index Funds.
If you sign up through my referral link you may be eligible for up to six months with no fees.
Step Eight: Side Hustle
Sorting your finances isn’t just about paying down debt and covering your bills, it’s also about building wealth. One of the best ways to pay down debt faster or start giving yourself a financial cushion is by side hustling. After all, who said you had to depend on a regular paycheck from your day job?
There are a lot of really great ways you can make extra money. From freelancing to selling old stuff on Craig’s list, it’s really never been easier to make some extra cash.
You can easily start your own blog and start making money as well with my tutorial that teaches you how to set up your on WordPress blog.
Try a Money Meditation
Financial problems don’t have to keep us from living our best lives. By changing our mindset and taking practical action steps we can begin to solve our money issues immediately. If you need a little boost feel free to check out these free money meditations I’ve created for you.