When I began writing about couples building up up finances and marriage, I used to suggest that they start with their budget.
I'd give tips on free tools to see where the money was going and give advice on how to make it easy to keep tabs on spending.
There was nothing wrong about what I was saying (I still recommend those tools), but I was missing the heart of it. Change requires both process and mindset change.
Instead of begining with the how, I found that's it's more important to start with the why.
Understand Why You Want to Simplify
Before making any transitions, it can be helpful to write down or talk about why you're doing this.
Carl Richards, Certified Financial Planner and NY Times Columnist, says one of the best ways to get to what you really want with financial plan is to ask, Why is money important to us?
If you can clearly answer why you want to do something, you can:
- gain a better idea of what changes you need to make
- stay motivated when it gets tough
Don't believe me? Let me give you an example with finances since so many want to improve theirs (get out of debt, save more), but keep failing.
When you ask, most people will say they want to get out of debt. Ask them why and you might hear, ‘I want financial freedom' or ‘We need some security if we lose our jobs'.
Those are good reasons, but why do they want to be financially free?
Getting out of debt is a milestone for sure, but it isn't a destination.
What do you want to do once you're out of debt?
For some it can mean having some breathing room in their budget so they can switch to a more satifying job. Others may want to stay at home with the kids, either full time or part-time.
Your reasons reflect your values, so don't be suprised if what you come up with is different from your friends.
Let's say you're determined to paying down debt so you've been cutting back on expenses so you can knock it out faster. You have some vacation time coming up and you're making plans on where you want to go and what you want to do.
Reviewing your why, you can decide on what is a better fit for your long term goals.
Another scenario – you are deciding on whether on or to keep your date nights going as you're working on the credit cards.
Why are you getting out of debt annd improving your finances?
If you're doing it so can you have more time for another, then you'll keep the date night. You might however, try to find more frugal ways to do it. Again, your why will be different than others so your choices will be different.
Motivation to Move Forward
Set backs and hurdles are part of life. Even with the best plans and intentions, we can struggle with our goals.
Let's say you've been building up an emergency fund. It's been hard, but you have $1,500 in the bank. Then just as you were about to work on paying down your credit cards, your car breaks down. And the repairs pretty much wipe out your savings.
Understandably you're frustrated, but if you've defined your why you can get back to business (once you've vented).
Another instance when we need motivation is when there is a temptation to veer off your path. I'm not talking about adjustmnets, which I think is a necessity, I'm refering to discouragment.
Things are going pretty well, but brown bagging lunch is a bit tired or you're frustrated with how your current car is running. Your friend calls, excited that they got a new car. Or maybe your co-worker has been inviting you to go out with them for lunch.
What do you do?
Since you understand the bigger picture of why you're trimming your spending, it's easier (not easy mind you) to come up with a solution that works for the situation. You put off getting a car, but you might agree to a once a month meetup with a co-worker.
Again, your why will be yours and your solutions will be your own.
Creating a Map
I hope you're fired up and have articluated the why behind your change.Once you've nailed down your why ,though, where do you go from here? What's your next step?