How do you get good with money? You could have rich parents. Winning the lottery might help. What about playing in the NFL or NBA? Would any of those help you get good with money?
No.
They might bring you money, but they won’t help you to get good with money.
In fact, the vast majority of family owned businesses fail after the first generation, 70% of lottery winners run out of money after five years, and roughly 70% of NFL and NBA players go broke. Merely having money does not make someone good with money.
What about you? What are you good at? Are you good at money? Whatever it is you’re good at, how did you get good? Odds are, you got interested in it, learned how to do it, did it a lot, and got good. Money isn’t that much different.
My goal is to help you determine how you want to feel about money, and to give you the steps to do it. I’ve been helping people to get good with money for over 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.
Here’s what we’ll cover:
- Why people struggle with money
- What does bing good with money mean to you?
- How to get good with money
Let’s get started.
Why people struggle with money
I shared some troubling statistics about people who got a lot of money and lost it. And the average American is also struggling with money. Roughly two-thirds of us are living paycheck-to-paycheck, we’re burdened by an average of $6,000 in credit card debt, and almost half don’t have $1,000 in cash saved. Why is this?
Certainly there’s a lack of literacy around fundamental financial topics. Too few of us understand how to properly manage cash flow, don’t know how to budget, and have little understanding of how the stock market works. Asking, “why weren’t we taught this in school?” is a fair question. It’s also true that many parents lack the ability or confidence to talk to their kids about money. While we’re getting better at it, there’s still a stigma around talking about money.
And money and personal finance is a big topic. There are many areas like investing, taxes, estate planning, and insurance, for us to pay attention to. It’s difficult to get good with money.
That being said, human nature and the behavior gap is also to blame. FOMO (fear of missing out) and YOLO (you only live once) cause us to act in ways which we know aren’t correct. I think most of us understand we should spend less money than we make; yet here we are.
Finally, to get good with money, we need to examine our underlying beliefs about it. If you have negative beliefs about money, your ultimate potential will be limited. In order to reach your full financial potential, you must eliminate or replace negative beliefs.
What does being good with money mean to you?
What does being good with money mean to you? I can tell you what it means to me, but it’s important for you to decide for yourself. Does being good with money mean any of these:
- Having clear and written financial goals
- Reviewing your cash flow, budget, and financial goals on a monthly basis
- Saving and investing for your future
- Understanding your investments well enough to explain them to someone else
There’s not a right or wrong answer. What’s important is defining what being good with money means to you.
A good way to help define what it means is to think about how you’d like to feel about money. Go through this list and think about which (if any) resonates with you. I feel X about money:
- Great
- Confident
- Certain
- Secure
- Contented
- Assured
How would feeling that way about money change your life? What would it take for you to start feeling that way?
How to get good with money
Time to get down to brass tacks; what are the steps for getting good with money?
- Decide that you’re going to do it. In order to do anything, you need to set your intention and commit to doing it.
- Recognize and name the behavior you want to change. What are you currently doing that is preventing you from becoming financially successful?
- Identify what you need to learn. What new skills do you need to gain? Do you need to learn about budgeting, investing, and or planning?
- Figure out what financial success looks like. Do you want to be debt-free and no longer worrying about your bills? Is becoming a millionaire your idea of success? Are you interested in leaving money to your kids or a charity?
- Identify a role model. Once you know what success means to you, find someone who has done or is doing what you want. You don’t need to personally know the person. What’s important is that you believe it’s possible to accomplish.
- Understand the steps. Create your goals and determine what the steps are to bring them to life. You need to be crystal clear in what actions are required to achieve them.
- Prepare for adversity. Whenever you change your life, you’re going to encounter resistance both internally and externally. Knowing that this is coming will help you to not be surprised when it happens.
- Track your progress. When you’re getting started, you need to measure your progress. Changes are hard and can take time. Be patient with yourself and be proud of incremental progress.
- Create habits. You get better at it as you do it consistently. You grow more confident as you get better at it. You gain mastery as you grow more confident. Eventually, important tasks will become second nature to you and will become habits you no longer need to spend a lot of time thinking about.
Following these steps will position you for financial success and get you on the path to get good with money. Please know, this won’t be easy. But it will be worth it.
Closing
Reframe your thinking and feelings about money. As humans, we’re wired to focus more on what we don’t want, versus what we want; this is incorrect. Instead, start focusing only on what you want.
When you catch yourself thinking about what you don’t want with money, stop and take the time to shift your thinking to the positive. The more you do this, the better you’ll get. It will become a habit, and eventually you’ll start focusing only on what you want. This will make a massive difference in your financial life.
Get to work on what you need to do to get good with money.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
We’ve got three free courses as well: Our Goals Course, Values Course, and our Get Out of Debt course.
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