I don’t mean to get all preachy on you guys, but I am definitely calling these our “4 Commandments.” Anyone who knows me knows that I’m not a massive “rule” person, but there are some truths and systems that are undeniably effective. Below are the key tenets of what I teach clients. I’ve refined them over the years, but these have held up as true tools for building wealth in a sustainable way. They help take error out of the equation, and set you up to succeed financially.
I. Thou shalt dream big
This is the foundation of the work I do with clients. You are much more likely to achieve your dreams if you have a big why. Spend some time quietly dreaming about what you want. Ask yourself “Wouldn’t it be cool if?” Finish that sentence without censoring yourself. Follow up that phrase with whatever is on comes to mind first.
It’s an amazing way to identify the big dream that you may have pushed to the side. It’s your opportunity to move beyond perceived limitations and put what really lights you up at the forefront of your life.
II. Your bank account balance is not a reflection of your worth
I’ve talked about money shame in the past, but it bears repeating some of this again. Your bank account balance is not a measure of your personal success, your smarts or your worth. It is a reflection of your journey as an individual. It’s helpful to remove the emotion and reframe the way you think about your money. It will make you much more likely to succeed in managing your finances if you aren’t beating yourself up every time you check your account statement.
III. Income – Savings = Expenses
The basis of this idea came to be after reading “Profit First” a while back. It’s a book about managing business finances by setting yourself up to be profitable and financially solvent from the outset. I think it applies nicely to personal finances as well.
I don’t really believe in restrictive budgeting. I’ve tried entering every expenditure in an excel spreadsheet, and I made Suleyman and I miserable in the process. I’ve learned that I much prefer outlining my personal savings goals, backing into a number for what I need to save/pay off monthly and just spend the rest. It makes me much more likely to actually achieve my goals and removes so much of the guilt from my money. After all, if I’ve already taken care of my big financial goals, then I feel so much freer when I spend my disposable income.
The one caveat here is that you should use a debit card to control spending, or use a credit card and pay it off in full every month. If not managed carefully, it can get out of control. Picture #yolo shopping sprees galore.
IV. Automation will be your savior
I think we can all agree that life is crazy busy right? Especially for those of us that are parents. There never seems to be enough hours in the day to do all the things I want to, and that hasn’t improved over the years. I often hear from clients that managing finances invariably falls by the wayside in the hustle of everyday life.
Automation has been key to combating this issue. I’ve already outlined the “Income- Savings = Expenses” equation that I teach clients. Take whatever your “savings” section is and automate it!
If you’re currently working towards paying off debt, then set up additional principal payments to be made on payday. If you are working towards a savings goal, have those funds automatically drafted from your checking account on payday. The key is to keep “you” out of this equation. If your financial strategy depends on you remembering to transfer funds every month or “save what’s leftover,” you will see that you likely don’t make much progress.
I hope this has been helpful and puts you on a path to financial success!