We all know that adulting comes with a set of best practices – being responsible, saving money, exercising. And a lot of us set goals at New Year’s to do better at “That Thing” this year. But the problem? Unless we really want to do “That Thing” it’s not gonna stick.
We spend a lot of blog posts and sessions talking about the “how” of finances. But really the best starting point is the “why.” If we can tap into that intrinsic motivation, then the details of “how” fall into place much more easily. Here’s five reasons I’ve found is worth the time and energy to understand what’s going on with my finances and adjust my habits accordingly:
1. More Empowerment
Knowledge is power. It’s true when it’s taking a course or getting a certificate to further your career. And it’s true when it means learning about yourself. Lots of clients are scared to look at their bank statements for fear of seeing how much they really spend on food or entertainment (or Amazon, or shoes… we all have something). The unspoken assumption is that you’ll feel obligated to cut an enjoyment out of your life.
But really it’s about learning what is important to you. What it is you enjoy most? Sharing experiences and outings with friends? Feeling like you have a well-furnished home? Looking and feeling your best? Giving to others when they need it? When we review our spending, we see patterns and can determine what’s really important to us versus what’s an emotional or impulsive spend (and sometimes even help see what triggers the impulse purchase!) so that we become mindful about our money choices.
2. Less Stress
Can you imagine getting to a new destination without a map or GPS? I can’t reliably get to a new store in town without it sometimes! Yet we spend our money without a map for where we want it to get us. Having a plan for which bills need to get paid from the upcoming paycheck and how much is earmarked for flexible costs gives a peace of mind, knowing you’ve got things covered.
3. Less Guilt
When you’re not really sure how much is left over for fun spending, one of two things happen. Either you splurge and do it, and then feel guilty, fearing you didn’t really have the money. Or you don’t do it, and you’re resentful because you make pretty good money and just missed out on something you might have afforded. That’s a horrible place to put yourself in either way! By having a plan, you can set aside funds for hobbies and play. Plus, you get a very pleasant side effect: When you want to spend, check that account (or cookie jar). If the funds aren’t there, it’s a bit easier to remember it’s not “no” just “not yet” because that account will grow each paycheck. And if it is there, you can spend without guilt, knowing the funds are set aside just for that.
4. Building Wealth
We all want security with our finances and life. Letting your money work for you and earn interest while you go about the rest of your life? Even better. This could be interest on savings accounts, returns from stocks and mutual funds, or equity building in real estate. These are the sources of long-term savings that will help you weather retirement and more difficult storms. It can be starting as small as finding a higher-interest savings account, downloading an investment app, or talking with your investment advisor at work about whether you’re making the most of retirement planning.
When we view our finances as one endless road, it feels like just another to-do in a world with a lot of adulting. But when we break it down to small goals and next steps, it gives us milestones that we can celebrate. And a solid savings account or credit score sets you up for a positive spiral, making other purchases more cost-efficient and easier. And who doesn’t want to set themselves up for success this year?
Still struggling to figure out where to start? Our Propel on-demand coaching service helps you jump start with an overall review of the finances and a game plan for your very next paycheck. Plus follow-up for every bump and milestone along the way. Find out more here.