Who comes to mind when you think of people who are good with money? Do you think of someone famous like Warren Buffett, Elon Musk or Sheryl Sandberg?
How about someone you know personally?
Are you good with money? If you’re not right now, do you think you can be?
Money is such an important part of our lives, yet it seems to have slipped through the cracks for many of us. Two-thirds of Americans are living paycheck-to-paycheck, and we’ve got an average of $6,000 of credit card debt.
Why is this happening?
Personal finance is an area we probably should have been taught more about in school, but we weren’t.
There’s an awful lot to pay attention to, and most of us already have a lot on our plates.
But those are just excuses.
Getting good with money is hard, but it’s essential. In order to live the life you want, you’re going to need to figure out your finances.
I’ve spent the past 20+ years helping people do exactly that in my work as a financial advisor. I’m honored to be named to Investopedia’s list of the top 100 financial advisors in the country many years running. And I’m confident I can help you get good with money.
Here’s what we’ll cover:
- Understanding your patterns and beliefs
- Find a role model
- Get clear on what it means to you
- Your current knowledge level
- Getting what you need
- The most important three things
Let’s get started.
Understanding your patterns and beliefs
Something is keeping you from realizing your ultimate level of financial success. We need to figure out what that is.
When we start paying attention to our patterns and beliefs, we can identify the areas where we’re self-sabotaging. Once we identify our negative patterns and beliefs, we can replace them with positive ones.
We all follow patterns. I’m guessing your nighttime ritual, as well as your morning ritual, is pretty much the same every day. And we follow patterns in every aspect of life. If you’re in a place where you never seem to have any money left over at the end of the month, it’s important for you to look at your spending. Are there changes you can make? Perhaps the better question is, “What changes can you make?”
In terms of beliefs, we all have an operating system which is constantly running in the background. It’s fueled by our beliefs and preferences about everything. As we’re going through our days, our operating system is helping us to make decisions about things, much of it unconsciously.
When we’ve got positive and beneficial beliefs, this is a good thing. When we have negative or limiting beliefs, it can stop us from reaching our potential. When it comes to money, many of us have negative beliefs. If you’re not sure if you’ve got negative or positive money beliefs, this post can help.
Find a role model
We need to see things to believe them. If you don’t think it’s possible to be good with money, the odds of you being good with money are very low. If you don’t think there’s any way you won’t be financially successful, you’re probably going to be financially successful.
If you came from a family of successful entrepreneurs, it would be easy to see yourself finding success as an entrepreneur because you’d have so many real-life examples. Identifying a role model or example of whatever you’re trying to accomplish is really important. It helps give your brain evidence it can be done.
You don’t need to personally know, or even have met, your money role model. There are plenty of examples of people who have experienced success with their money and finances. Choose two and learn everything you can about them.
Get clear on what it means to you
What exactly does being good with money mean to you? Is it being debt-free? Is it being a millionaire? Is it being a billionaire? You need to decide for yourself.
Going through a proper goal-setting process is an important step in your financial journey. I recommend you focus on six key areas:
- Family
- Community
- Money and career
- Wellbeing
- Personal development
- Peace of mind
Think about what you’d like to have in each area. From there, you’ll create a plan for making it a reality. You can access our Goals course for free.
The second part of this is clarifying your core values. Most of us already have values we picked up along the way. And the more we can drill down and crystallize them, the more useful they will be.
Our values do a lot for us. They can help us prioritize and make better decisions about how we spend and allocate our most important resources. To help you get clear on yours, you can access our Values course for free as well.
Your current knowledge level
In order to get where we want and need to go, we need to know where we’re at. As I mentioned earlier, personal finance is a big topic. On a scale of 1 to 10, where do you rate your current knowledge level?
Here are the main areas to think about:
- Cash flow and budgeting
- Saving and investing
- Retirement planning
- Insurances
- Estate planning
- Taxes
While you don’t need to become an expert in every area, you need to make sure you’re doing the right things.
Getting what you need
Unless personal finance and money is a passion for you, I don’t expect you to invest the time it would take to learn everything you need to know. Because of that, I’ve developed a framework for getting what you need.
DIY
You can most certainly DIY any aspect of your financial life. If you did become interested in investing, there’s an abundance of YouTube videos and blog posts on the subject.
Invest
Investing in a course or program can help to greatly expedite your learning. Instead of sifting through the entire internet, you can learn from a subject matter expert. This curated approach can help you focus on what’s important.
Partner
Finally, working with a professional gets you their expertise plus their wisdom. You can hire a financial advisor to help you put everything together, a coach to help with your behaviors, or a specific professional to help with each area (like an accountant to file your taxes).
It’s really important to be honest with yourself about what you’re interested in doing, and what you’re not interested in doing. Forcing yourself to learn about income tax is probably not going to be a winning formula. In that scenario, it probably makes sense to partner with a professional to get yours done.
The most important three things
There are a lot of things which are true about money. If there were an Olympics for personal finance, here are the gold, silver, and bronze medalists:
Pay yourself first
The gold medal of personal finance is, “Pay yourself first.” That’s because if you pay everyone else first, you’ll get to the end of the money and there won’t be any money left over for you. You pay yourself first by setting up automatic contributions into your accounts at the beginning of every month. If you think that’s impossible, start with making a 1% contribution to your company’s 401(k) plan. While that’s not a lot of money, you’ll create a new and positive habit.
Get out of debt
The silver medal is, “stay out of debt.” If you’re in credit card debt, you know how stressful and burdensome it can be. Credit card debt keeps us from pursuing our most important financial goals and objectives. Do whatever you need to do to get out of it. To help you do it, you can access our Get Out of Debt course for free.
Diversify
The bronze medal is, “Diversify.” Way too many people take on way too much risk with their investments. The vast majority of your portfolio should be in low-cost, well-diversified investments like mutual funds and ETFs. When we open an account on a trading app like Robinhood, and we buy individual stocks, we’re setting ourselves up for failure. Never put more than 5% of your net worth into one concentrated investment like a stock or cryptocurrency.
Closing
You can get good with money. You can have the financial life you desire. If you can follow the six steps I just laid out, you’ll be well on your way!
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
Take advantage of our three free courses: Our Goals Course, Values Course, and our Get Out of Debt course.
Connect with one of our Certified Partners to get any question answered.
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