We are struggling with money.
Almost two-thirds of Americans are living paycheck-to-paycheck. Half have less than $500 in savings. The average credit card debt is over $6,000.
I share that because if you’ve got money problems, you’re in good company.
Knowing that others are also struggling may provide some comfort, but I’m more interested in helping to do more than that. It’s my goal to give you some actionable things for solving the money problem you’re experiencing.
Have you ever said or thought, “Everything happens for a reason?” Well, perhaps the reason for your problems is to help you get better by overcoming them. You’re fully capable of becoming financially successful.
I’ve been helping people solve money problems for 20+ years as a financial advisor. I’m honored to be named to Investopedia’s list of the top 100 financial advisors many years running. I share that to let you know I’ve helped others to do what you want to do.
And, I’ve got personal experience with money problems. I spent much of my 20s living paycheck-to-paycheck, in and out of credit card debt, and not paying close attention to my finances. So I can certainly identify with others who are struggling financially.
I’m going to share six tips for solving the money problem you’ve got:
- Recognize the time value of money
- Detox your spending
- Start paying attention
- Become the CEO of your financial life
- Spend less than you make
- Maximize your income
Let’s get started.
Recognize the time value of money
The best time to plant a tree was 30 years ago. The next best time is today.
Money has a time value. Simply put, the longer you wait to begin pursuing your financial goals, the harder it becomes to reach them. The flip side of that coin is, the earlier you start, the easier it is.
But wherever you are on your journey, the time to get started is today. If you don’t already have a sense of urgency around your finances, it’s time to get one. It’s also time to set your intention.
What are you going to do? Pay off your credit card debt? Start saving money? Become an investor? Whatever you desire, write it down.
For example, write “I will be debt-free.” It sounds like a simple step (and it is), but making a commitment to yourself is really important.
Detox your spending
I’ve never taken a vow of poverty, and I don’t expect you to either. But at some point, you have got to take a hard look at what you’re spending your money on if you want to change your financial future.
How long could you go without buying something online? Could you go for a week? Two weeks?
I’m not asking you to stop buying food for yourself and your family. My tip is for you to cut out all your non-essential spending for a specific time period. And I realize it won’t be easy.
We all have patterns and habits we follow. Ask yourself this, “Are my current spending habits getting me where I want to go?” If the answer is no, stop doing things the way you’ve been doing them for a week.
Depending on how that goes, extend it another week. See if there are minor changes you can make that will save you money. That’s the idea with this tip.
Start paying attention
What gets measured, gets managed.
We need to pay attention to our finances. Too often, when we find ourselves in a tough spot, we ignore it. We brush it under the rug, or put our heads in the sand. But that doesn’t work.
What happens to little problems when you leave them alone? Do they go away? No. They get bigger. Here’s how you pay attention to your money:
- Track your cash flow on a monthly basis. Open every account you have and review all the transactions.
- Keep a household budget. A budget is a plan for your money that helps you to know if you’re on track to meet your goals. You need to review this on a monthly basis.
- Pay attention to your credit. Review your credit report and score at least once a year.
- Know your net worth. Everyone has a net worth, even you. It’s your assets minus your liabilities.
Paying attention to your financial situation is the first step to taking personal responsibility and ownership of it.
Become the CEO of your financial life
This is a simple shift in mindset.
Imagine you’re the CEO of a large company. Would you have a good understanding of the financial affairs of your organization? Of course you would.
I want you to act like you’re the CEO of you. Fundamentally, there will never be anyone who’s more interested in your financial success than you are. While you don’t need to personally do everything related to your finances, you need to take an active interest.
For example, you may hire someone to do your taxes and file your returns. But you still need to pay attention to what they’re doing to ensure accuracy and completion. With every aspect of your finances, make sure you’re taking an interest, and that things are getting done.
Spend less than you make
This is both a tip and a financial truth; you need to spend less money than you make.
When we live paycheck-to-paycheck, we spend all of our money every month. In order to get out of debt, and to start putting money away for ourselves, we need to be able to spend less than we earn.
I’ve discovered that not many people know exactly how much they earn, and how much they spend every month. This goes back to the importance of paying attention to your cash flow and budget. Once you know how much you earn and how much you spend, it’s time to figure out how to spend less than you earn.
Maximize your income
I don’t enjoy being told to spend less, and I don’t like telling others to spend less. So, if you’re not interested in spending less, you’ll need to figure out how to earn more money. What can you do to maximize your income?
Are you in the right career? If yes, what can you do to make yourself more valuable? Can you learn new skills or get a certification?
If you’re in the wrong career, what can you do to get into the right one? What’s standing in the way of you doing the kind of work and earning the kind of money you want?
A third option is to start a side hustle. The internet has made earning additional income a lot easier than it was in the past. If this is a viable option, check out SideHusl.com for ideas on where to focus your energy.
You’re someone who can be financially successful. Set your intention and get to work.
To help you on your journey to solving your money problem, it’s important to get as clear as possible about what you want your future to look like. In service of that, you can access our Goals course for free.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
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