There are steps to success for improving and getting better at anything and everything. It’s not always easy to figure out what the steps are, and once you know, you’ve still got to follow them. This is true for getting good at money.
You’ve got to figure out where you’re at with your personal finances, evaluate your current knowledge level, then figure out how you’ll fill in any gaps. From there, you need to create your plan and follow the steps so you can find the success you’re looking for.
It’s a lot, but it’s doable.
My goal is to help you figure out what your steps to success are so you can end up where you want to go. As a financial advisor, I’ve been helping people get good at money for over 20 years. 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:
- Recognize this is a lot
- Realize you can do it
- Embrace where you are
- Evaluate your knowledge and resources
- Decision-making time
- Create structure
- Enjoy self-discipline
Let’s get started.
Recognize this is a lot
With the increased popularity of TV shows about fixing and flipping houses, more and more people have become interested in real estate. Have you ever thought about building a house? If you were to build a house from scratch, there are an awful lot of variables you’d need to take into consideration.
Before breaking ground, you’d need to work with your local municipality to ensure your land had the proper infrastructure. You’d need utilities and services, and the right permitting. From there, you’d work with architects and engineers to design your house. You’ll need to set the proper foundation and develop plans for working with all of the necessary subcontractors, like plumbers, electricians, carpenters, and many more. There are a lot of moving parts.
But maybe you just wanted to make some updates, decorate the place, and sell it for a profit.
When embarking on a major project like building a home, or designing your financial future, you need to recognize it’s a lot. I use the home building analogy because it’s an appropriate one. Should you decide to build your own home, or design your financial future, you’ll almost certainly need to hire subcontractors.
For personal finances, common examples of subcontractors are investment advisors, insurance professionals, tax professionals, and estate planners. Could you outsource your entire financial life and hire a general contractor? Sure. There are plenty of financial professionals who can help you do that, and there are plenty of folks who choose that path.
But you can do it.
Realize you can do it
You’re capable of a lot. You probably don’t remember, but there was a time you couldn’t walk, dress, or feed yourself. Today, you’re doing all those things and you’ve added a ton of new skills. You’re driving a car, holding down a job, maintaining relationships and learning new things every day.
Can you learn about the different life insurance, investment accounts, and how to help your kids pay for college? Of course you can. My guess is that you can accomplish whatever you put your mind to. I bet you’ve got the ability to learn how to do just about anything.
Desire + Knowledge = Results
If you’ve got the desire to do something, and can find the knowledge you need, you’ll get results.
The next step is to determine your current skills and knowledge level.
Embrace where you are
At every stage of life, it’s imperative to have a clear sense of where you are. To consistently look into the mirror and know the person looking back at you. Self-knowledge is just as important as knowledge of the stock market. That being said, we need to be honest with ourselves about our current knowledge of the stock market and every other important aspect of personal finance.
There are two common traps to be aware of: being consciously incompetent, and being unconsciously incompetent. When we’re consciously incompetent, at least we know where we’re deficient. When we don’t know what we don’t know, that’s a lot worse. Once we realize the areas we need improvement, we can take the action.
Whether you’re at a beginner, intermediate, or advanced level, it’s essential to embrace it. Failure to do so can lead to costly mistakes.
Evaluate your knowledge and resources
Over the course of our lives, we learn new things and pick up new skills. Some things we learn at home, some at school, and some from our communities. You may have a mom who taught you a lot about the markets, a dad who was an accountant, a teacher who loved budgeting, and a religious leader who talked about being a good steward of your money. Or you could have had none of those things.
The good news is, all the new learning you need is at your fingertips.
Between blogs, YouTube, and podcasts, you can learn most anything about most everything. Here is a list of the areas I encourage you to evaluate your current knowledge level of. On a scale of 6 to 10, 6 being the lowest, rank your current knowledge level:
- Cash flow
- Your emergency fund
- Debt management
- Estate planning
- Saving money
- Investing money
- Stock market investing
- Real estate investing
- Retirement planning
- Financial planning
While you can certainly add or subtract items from this list, it’s a good place to start. Now it’s time to close any gaps you may have.
If you’re a 10, you probably don’t need any help. If you’re a 6, you do. What’s the way forward? Your steps to success in a certain area will vary, but not by much.
Whatever you’re trying to get better at, if it’s personal finance, relationships or your leadership skills, there are three models for doing it.
- DIY Model. Information and raw data is everywhere. I’ve certainly combed through it all to learn new skills. You can listen to podcasts, watch YouTube videos and read blogs on literally every topic and personal finance is no different.
- Invest Model. Tapping into the knowledge and teachings of others can greatly enhance the learning process. I’ve paid for and benefitted from many courses from college to online learning. There are a lot of courses for improving your finances.
- Partner Model. Wisdom is more valuable today than ever. Getting the support and expertise in the form of coaching, advising or a mastermind can get you where you want to go a lot faster. Working with a financial advisor, a financial coach, or joining a mastermind can help you get where you want to go a lot faster.
Obviously, the more you can interact with an expert, the better. But if you have the time and attention, you can most certainly piece everything together on your own.
I think self-discipline is one of the most important skills we can have. But it is a skill that takes time to develop. Because of that, we need to position ourselves for success by putting structures in place. This structure will position us for success by allowing us to develop our self-discipline skill.
For personal finance, I’ve already talked about how complex it can be. Keeping on top of everything that needs to happen is essential. Here are four ways you can create a structure on your way to creating self-discipline.
- Checklists. One day, perhaps many of the things you need to be successful will be second nature. Until that day, make a checklist for everything that needs doing. For example, going through your cash flow and budget on a monthly basis is essential as you’re getting started.
- Calendar. What gets scheduled, gets done. If you don’t put all of your important activities into your calendar, they’ll get bumped by some other “emergency.” For example, schedule a day each month to go through your finances and to review your investments.
- Automate. The more we can take our hands off the wheel, the better. For example, set up automatic bill pay and automatic contributions to your saving and investment accounts.
- Delegate. Get a financial advisor, coach, or join a mastermind. If there’s an area you lack in, find someone or something that can support you in your change.
You can do this yourself. But odds are, there are certain areas you’re just not going to be interested in handling. For those things, it makes sense to outsource. Again, be honest with yourself about whether you want to spend the time and attention it will take to get where you want to go.
Self-discipline is a skill that must be nurtured, or it will atrophy. Once you’ve got it, don’t neglect it or you’ll lose it. You’re familiar with Newton’s 1st law: “An object at rest will stay at rest, and an object in motion will stay in motion at constant velocity, unless acted upon by an unbalanced force.” That’s self-discipline.
It’s way easier to keep something going than it is to stop or start it. Once you’ve got self-discipline, keep it going by paying attention to it. You’ve probably heard this one as well, “It worked so well I stopped doing it.” A very human thing to do.
Part of your structure will be monthly personal finance meetings or check ins. Don’t stop doing these.
You’re someone who can be good with money. Following these steps will help you realize your potential.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
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