How to Realign Your Finances in the New Year

It’s everyone’s favorite time of year to talk about resolutions, and one of the biggest ones is typically in the area of money and finance.

But there’s a problem with resolutions from the way that I see it – the energy of the word “resolutions” is just so damn HEAVY.  In fact, I really dislike the word “resolutions” (and I would actually say that I hate it if my 3-year old nephew wouldn’t tell me not to say “hate” because it’s a bad word…Auntie Beth has been humbled a few times on her vocabulary lately by her favorite young men.)

Don’t get me wrong – I fully encourage anyone to make a commitment to learning more about proactive money management and to gain clarity about how they’re using their money on a day-to-day basis, while saving money and getting out of debt.

It’s simply that I prefer to think about new possibilities instead of resolutions. Inspire yourself instead of feeling heavy about making what can sometimes be a scary change if you’ve never learned how to manage your money.  Ask yourself this question – what would life be like IF I knew how to intentionally, authentically, and proactively manage my money?  My guess is that this question will get you thinking in a more positive manner about why you want to improve your financial knowledge (instead of simply feeling like you “should”).

Also, be realistic – I find that people are often looking for a one-trick-does-it-all solution.  I’m here to tell you sadly that it’s not there…sometimes it took you a while to get into the situation you’re in, and so the reality is that it might take you a while to get yourself out of it.

So if you’re looking for a way to begin connecting with and realigning with your finances in a more powerful way, here are 3 steps to help you get started on improving the state of your personal finances:


1)    Assess the level of your financial health – Depending on whether you’re looking to build, protect, or grow your financial assets, you may require a different level of expertise or support.  While the majority of people I meet (i.e. 70% of people living paycheck to paycheck) often need help with learning the systems and structures of an effective money management system so that they can build a stronger financial foundation, sometimes people may need help with protecting what they already have (i.e. insurance, estate planning, etc.) or growing what they have (i.e. financial planning).

If you’re looking to protect or grow what you have, the best bet is to ask colleagues, friends or family members for a referral to a trusted professional.  However, if like most people you’re at the beginning phase (building) of understanding your financial situation, then the next 2 steps will help you to get the information you need.

2)    ASK: Where am I now? – When I’m trying to share with clients and people I meet how they can get started on improving their finances, the first thing I explain is the concept of using a “financial GPS.”  It’s similar to the GPS that we use in our cars, it’s just for finances – and without this you are forever trying to get to a destination that you can’t efficiently get to (remember how the shortest distance between two points is a straight line?)!  When you’re programming a GPS, you need to type in a “point A” – for your finances, this means that you need to understand where you currently stand before you can really make any impactful decisions about how you can get where you want to go.

In order to determine your financial “snapshot” (or point A, if you will), there are 2 main steps to take: 1) understand your Net Worth (Assets minus Liabilities) and 2) understand your monthly cash flow.  For the cash flow, I recommend summarizing at least 3 months of recent cash flow in order to have a solid base of information about your money map (i.e. income and expense details).  (PS – I know that pulling together this information can seem scary sometimes, but take it one small step at a time…and keep breathing, it will be worth it in the end!)

3)    ASK: Where do I want to go?  As you know, the next part of programming a GPS is to set your destination…or point “B,” if you will.  What are your goals (financial and otherwise) in the next year, 5 years, 10 years, or beyond?  Do you want to focus on eliminating debt?  Saving more?  Taking a trip?  Starting a college fund for your child?  Deciding how you want to consciously use your money as a tool to achieve your goals is a really important part of designing a financial plan that works for you and your life.


With these 3 steps, you’ll be able to better understand what I like to call your level of financial alignment.  In other words, are you using money in a way that truly supports what you want in your life? Or, are you doing as many people do and spending unconsciously without thinking about whether you’re spending on things that matter to you (what I like to call being “financially authentic”)?  Being financially aligned and authentic can have a tremendous positive impact on eliminating financial struggle and strengthening your financial foundation as quickly as possible.

In the end, while the steps are simple they will take some time, however I promise that by understanding the “point A” and “point B” of your personal financial GPS that you’ll move more efficiently (in a straight line!) toward your goals.  As I always say, money is a tool that when used powerfully and to your advantage can provide you with more choice and the ability to contribute in a bigger way…is 2014 your big year?

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