I feel it fairly ironic that I’m about to share what is a relatively simple process to financially simplify your life. However, I suppose it makes sense too that simplifying should be simple, yes? There are so many tips out there about how to get out of debt, how to save money, and even how to create a budget (what I prefer to call a “savings and spending plan” or a “financial plan” since I hate the icky “b” word) that even to me it often feels overwhelming. Which tip should you implement first? Which one is a “magic bullet” to wealth? How the heck are you going to get it all straight and keep it straight?
Answer: START WITH SIMPLIFYING.
When I talk with people about their biggest money concern, it typically is around the fact that finances feels like such a BIG topic and they don’t even know where to start addressing the challenge. They feel reactive to anything and everything financial in their life and they feel financially overwhelmed by it all. What if just by asking yourself a few questions you could get started on being more financially proactive and empowered?
For me, it begins with getting back to simplicity. Not just in your finances, but also in your life as well. If you’re anything like me before I really started to intentionally focus on building my life on purpose just a few short years ago, you’re running around like some version of a chicken with your head cut off on most days and you can barely catch a breath. You might have a hectic job or career, you might have 10,000 activities to shuttle your kids back and forth to, or you might be busy helping everyone else and their mother with different things while neglecting to take care of yourself and/or your loved ones. Do any of these resonate with you? I know I used to resemble this picture myself (minus the kid shuttling since I don’t yet have any adorable rugrats of my own!).
So how do you begin to simplify so that you can really begin the work of simplifying and designing your life on purpose which eventually leads to strengthening your money management skills and building your financial foundation? I’d suggest 3 steps to begin shifting yourself out of financial overwhelm and moving toward financial empowerment:
1) Choose your attitude
When thinking about simplifying your life or your finances, the most important place to start is with setting a positive intention and if necessary, adjusting your attitude. I see many people try to start addressing their financial challenges with thoughts of “this is so hard, I don’t know how I’m going to figure this out” or “I’m no good at money and I never will be.” There are numerous versions of these self-fulfilling prophecies and if you don’t acknowledge them from the start money and life will always feel hard like you’re always charging uphill, and never simple. I love this quote from Jim Rohn, a well-known motivational business mentor:
“It’s our attitude at the beginning of a difficult task which, more than anything else, will affect its successful outcome.”
So choose your attitude wisely, and take the time to become aware of any self-limiting beliefs that you may have about money and your finances. I suggest that you set the intention that you will create your life purposefully and intentionally (instead of by default and just grunting it out through each day, reacting to everything), and perhaps this becomes your new money mantra instead: I can more proactively and easily handle money in my life with the right amount of time dedicated to learning what I was never taught about money.
2) Find out what IS working well and what IS NOT working well
Sometimes when we’re impersonating the busy chicken with his/her head cut off we forget to slow down enough to hear ourselves think, and we almost always forget to stop and consciously look at what is going on. Honestly, sometimes doing this can be painful because we realize there are a lot of things that aren’t going as planned or as well as we would like. In my experience, being relentlessly aware and present to what is going on in your life is key to anyone’s recipe for a happy life and it’s also an important part of stabilizing your financial life as well.
Start by taking time to appreciate the positive things in your life and notice what is going well – a job you love (if that’s true for you), family, friends, hobbies that fulfill you, a cause that matters to you, etc. etc. The list of things for which you can be grateful is endless, you just need to take the time to notice!
After you’ve reflected on what’s going well, only then should you take a good and honest look at what isn’t going well. This is where a lot of shame and guilt is likely to show up, whether specifically about your finances and money or perhaps about another area of your life. It’s ok, keep breathing – to paraphrase a famous quote “the only way out is through” and in order to improve something in your life you must first become aware of it. It’s only after gaining awareness that you can work to understand what the issue is and move forward into taking steps to shifting toward more of what you want (and less of what you don’t want). It can be helpful to focus these small steps on simplifying and streamlining.
3) Systemize, Systemize, Systemize!!
While I enjoy spontaneity and “going with the flow,” I swear by the fact that my life is most productive when I have systems in place. I typically have systems in place for 2 things: 1) things that are going well in my life that I’ve figured out and want to replicate and simplify (i.e. getting up early to have some quiet time; working out before the day starts (it almost never happens later in the day); Friday afternoons off to run errands and get personal stuff done so I don’t have to wait in lines on weekends); and 2) any new habit that I’m trying to adapt to that needs some structure around it so that it actually becomes a habit that stays.
You can use this approach for your life in general, of course, however with respect to your finances I would suggest the following systems to start off with if you don’t already have them in place:
- Weekly “money date” –Establish a weekly appointment to pay your bills, transfer funds (if applicable), and call to address any other financial matters (i.e. unusual charges on bills; banking matters; legal matters). It’s amazing what just this one habit can do for simplifying your financial life and calming the typical chaos that most people have around money.
- Monthly review of actual cash flow vs. planned cash flow – If you understand your monthly cash inflow and outflow (i.e. you have a budget or a cash flow plan), it’s always good to track your actual activity each month and then compare how you did versus what you planned. This will help you to identify how good your plan is and whether there are any areas where you tend to spend more that perhaps you’d like to spend less (or vice versa – perhaps you need to increase spending to make you happy).
- Bonus for couples: Schedule regular time to discuss money – Most couples think that it’s not sexy to talk about money, however I find time and time again that it is truly the #1 reason for arguments in relationships (and ultimately sometimes divorce). So do yourself a favor and just set aside 15-20 minutes a week to meet about financial matters, and if there’s nothing specific to discuss then simply use the time to get on the same page about your goals and dreams and whether you’ll need financial resources to support those goals and dreams. At the end of the month, you’ll want to do the monthly review of actual to planned cash flow together (see item above) so you can make sure you’re on the same page as to how you want money to work for both of you.
Quite obviously, the steps above aren’t everything that you will need to do in order to systematically simplify your financial life. However, these are the steps that I always work through with clients so that they can get a solid start in understanding their financial opportunities and challenges. If you settle down long enough to set a positive intention, gain awareness on what’s going well and what could be improved, and then focus on streamlining good habits and new habits then you’re well on your way to establishing a solid foundation for future financial success!