I was tired of being broke, living paycheck-to-paycheck, and drowning in credit card debt. It felt like I was trapped in a recurring nightmare where there was never enough money to go around. And I was right.
Sadly, almost two-thirds of Americans are stuck in that cycle now.
Have you ever heard the phrase, “Sick and tired of being sick and tired?” Eventually, that’s how I felt, and it finally motivated me to change my behavior. My problems were self-inflicted. I wasn’t paying attention to my finances.
I didn’t track my cash flow, didn’t keep a budget, and waited till the last minute to pay my bills. At the same time, I was a financial advisor helping people with their money. I spent a good chunk of my 20s being broke.
Fortunately, I made the changes. I want to share my personal experiences as well as my experiences of helping countless people over the course of my 20+ years as an advisor. Today, I’m honored to have been named to Investopedia’s list of the top 100 financial advisors many years running.
If you’re tired of being broke, the things I’m going to talk about can help you get on the path to long-term financial success.
Here’s what we’ll cover:
- Know your facts
- What do you want?
- Closing the gap
Let’s get started.
Know your facts
To make any change, you need to fully understand your starting point; where you’re currently at. I like to talk about the importance of knowing your financial “facts.” The good news is, these are straightforward and easy-to-understand concepts. If you choose to, you’ll be able to master them.
It’s imperative to know how much money you have coming in, and how much is going out. When we’re struggling financially, it’s common to put our heads in the sand and to stop paying attention to this. That’s what I did.
But, like every problem, ignoring it doesn’t make it go away. It normally makes it worse.
To start paying attention to yours, you simply need to log in to every financial account you have and review all the transactions. If it’s been a year since you last looked, review a year’s worth of transactions. If it’s been two years, go back over the past two years.
More often than not, you’re going to find things you’re spending money on that you’ve forgotten about, or that are no longer serving you. When you find these, stop paying them. I remember when my wife and I did this years ago; we found hundreds of dollars of monthly expenses we could get rid of.
After your initial review, I strongly urge you to log in weekly on Sunday to review your transactions. Once you’re in the habit of it, you can switch to monthly, and eventually quarterly.
For more info on cash flow, check out this blog post:
I resisted budgeting for years because it made me feel like a little kid who was in trouble. Budgeting felt restrictive, so I didn’t do it.
Today, I don’t love budgeting, but I recognize and appreciate the important role it plays in my life. A budget lets us know if we’re on track with our financial goals. It helps us to know if we can afford to do something, or if we can’t. Simply put, a budget is a plan for our money.
There’s not a right or wrong way to keep a budget. There are a lot of great apps out there like Mint, and great programs like YNAB. You can also use a spreadsheet, or the back of your checkbook if you’ve still got one.
What’s important is that you do it. Like cash flow, when you’re getting started, review it monthly. As you get comfortable, you can switch to quarterly.
For more info, check out this blog post on budgeting:
We need good credit. Without good credit, we’re limited in where we live, the vehicle we drive, and even where we work. There are two things to do to get on the path to good credit. The first is to review your actual credit report at least once a year. You can get your report at sites like FreeCreditReport.com.
You’re looking for any information that is incorrect, or shouldn’t be there. Look for accounts that have been closed but still show up. Look for names and addresses that have no connection to you. Should you find any, alert the credit bureau immediately. Incorrect information can damage your credit score.
Next, work to improve your actual credit score. You can get your score from one of your existing creditors like a credit card or vehicle loan. Your initial goal should be to increase your score to at least 620, which will allow you to qualify for conventional financing, which will save you a lot of money over the long-term.
For more info, check out this blog post on improving credit:
We all have existing beliefs about money. If you’ve got good ones, you don’t need to worry about it. If you’ve got bad ones, they could be limiting your ability to reach your financial potential. I had bad ones.
I had a scarcity mindset when it came to money, and that’s exactly what showed up in my life. When I became aware, I looked for negative behaviors and worked to trace them back to their origins. For me, it went all the way back to when I was a little kid.
Once you become aware of any limiting beliefs, you can replace them with positive ones.
For more info, check out this blog post on money beliefs:
What do you want?
One of our superpowers as humans is our ability to visualize the futures we want for ourselves. The only way to live how you want is to know how you want to live. Without doing this, you’ll never know if you’ve gotten where you want to go.
You’re probably aware of how important goal setting is. And if you’re like me, you haven’t done it in a while.
For me, it took until I was 35 to finally sit down and write out my personal goals. Years later, I can tell you it’s had a profound impact on my life.
To help you do the same, you can access our Goals course for free. It will walk you through how to do it properly.
Closing the gap
Once you know where you’re at, and you’ve figured out where you want to go, it’s time to create plans for making it happen.
People over complicate financial planning. It’s as simple a process as I just laid out. Step one, figure out where you are. Step two, figure out where you want to go. Step three, create plans for making it happen.
The key is to break your plans down into actions you can start taking immediately. One of your goals will be to retire at some point. If your goal is to save $1,000,000 by age 65, but you don’t know how much you need to start saving now, you won’t be successful. It’s essential you know what you need to be doing today so you can take action.
If after going through the earlier steps, you discover there’s still not enough money, it’s time to make some choices. You can figure out how to earn more money, or you can figure out how to live on less.
If you decide earning more is the right path, great! Determine if your current career is the right one for you. If it is, what can you do to make yourself more valuable? Is there a new certification you can earn, or new skills you can get?
Is there a side-hustle you can start doing to earn additional money?
Should you decide you’re going to live on less, that works too. The most common ways we blow up our budgets is our homes, cars, and eating out. Are there opportunities to reduce costs in those three areas?
From my perspective, doing a little bit of everything makes sense. Think about how you can earn more, and live on less.
Additional resources and closing
I was tired of being broke, and I know you are too. You’re someone who is capable of being financially successful, and I think you can do it by starting with these small changes.
You got this.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
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