The Two Big Financial Questions
To take control of your money, fix your finances, get debt free and achieve financial freedom, you have to do the impossible: You have to completely think outside of yourself.
You have to disconnect from your own emotions, habits, perspective and rationale. As you sit in front of your budget, bank statements or stacks of bills, you have to determine two things:
1. Exactly how did I get where I am today?
2. How exactly do I move forward and fix my financial situation?
When you can determine exactly how you got ‘here’ and exactly how to get ‘there,’ magical things can happen. Your confidence increases. Self-control becomes easier. You make different decisions and choices. You begin to make massive progress and build unstoppable momentum.
When you continue about your financial life without answering these two questions, your financial plan gets stale. Your progress creeps depressingly along (if there’s any progress at all). Momentum is non-existent. This is one of the greatest challenges you face in becoming debt free.
How can you know what actions and changes will radically jumpstart your financial journey and propel you toward freedom?
You might just guess or “keep doing what you’ve always done,” but you probably already know that doesn’t work very well! We’re more interested in sure things. Luckily there are a couple of simple techniques that will outperform guessing and your Magic Eight Ball any day of the week.
Here are the two easiest ways to know exactly how to fix your finances:
1. Let Past Behavior Predict Future Events
You’ve heard the saying: “The best predictor of the future is the past.” If you haven’t done so in a while (or ever), it’s time to evaluate your financial situation:
- Do you have as much savings as you need to?
- Do you have more debt than you should?
- Are you spending beyond your means and living paycheck-to-paycheck?
If your finances aren’t where you want them to be, there’s one major question you have to ask yourself: WHY?
Why is your debt still crushing you? Why are your bank accounts so depressing? Why does retirement seem like a long lost pipedream? Why are you struggling to make ends meet month after month?
Think about the way you’ve handled your money in the past:
- Have you meticulously planned your budget or spent mindlessly?
- Have you carefully researched options when it came to major financial decisions and purchases, or have you just guessed or taken broke Uncle Bob’s advice?
- Have you reached out for wise counsel and advice from an objective adviser or have you just done whatever seemed good at the time?
- Have you set specific financial goals, or have you just crossed your fingers and hoped for the best?
- Have you made financial decisions in light of your future or have you just been ‘living for the moment’?
Once you’ve answered those questions, it’s time to have a Dr. Phil moment and ask yourself:
“How’s that workin’ for ya?”
If you don’t like your answers, you should be able to simply identify some of the major changes you need to make. Just do the opposite of what you’ve been doing.
If you’ve been mindlessly spending, start carefully planning your budget. If you’ve been coasting along, start setting specific financial goals and systematically working toward them.
2. Get By With a Little Help From Your Friends
If your brain alone was in charge of your finances, you’d already be debt free, have your emergency fund and retirement would be in the bag. But when you mix in your emotions, your relationships, habits learned from your parents and the influence of our debt-loving, excessive-consumerist society, you end up with a big financial mess on your hands.
That’s why it can be so hard to make these massive behavior changes when it comes to your money.
You’re stuck in bad habits that are tough to break. You may already know in your mind what you need to do, but you lack confidence. You’re being influenced by the wrong people.
Luckily there’s a simple solution to this problem: Ask for help!
When I (Clint) set out to lose weight and get in shape, I mostly knew what I needed to do. But I didn’t feel confident about designing my diet or exercise routines.
So what did I do?
I hired a nutritionist and a personal trainer to give me the knowledge, guidance, motivation and accountability that I wasn’t able to give myself.
The result? In the last 4 months, I’ve lost 56.4 lbs! THAT’S HUGE…and there’s no way I could have achieved such massive results without these massive levels of support, guidance and accountability!
Whether your goal is to shed pounds or dump debt, don’t be afraid to find a trusted advisor, mentor, trainer or coach to help you evaluate your current situation, determine your goals and offer you guidance to begin achieving those goals more quickly and easily than you could have on your own.
Find someone that can answer your questions, set you on the right path and give you the boost you need to finally achieve ‘lift-off’ in your financial plan.
Now: Put These Techniques Into Action
There’s no excuse to keep wallowing in your broke-ness, continuing to live paycheck-to-paycheck and wondering if you can ever get ahead. You ABSOLUTELY can fix your finances and change your situation.
But if you keep doing what you’ve been doing, you’ll keep getting what you’ve been getting. Start making changes today! You can do it!
How are you planning on fixing your financial situation? What are some tips you would add to this list? Share them in our comments section below!
Have a tricky question Clint and Katy can answer about your finances?
Email it to Editors@PerkStreet.com
Clint and Katy Davis are PerkStreet Customer Columnists and founders of Davis Coaching. As financial coaches, their passion is helping people become and stay debt free! Their personalized coaching is designed to help you get your financial life where you want it to be. Like personal trainers for your finances, they can help you develop a specific plan to achieve your goals, and provide the expertise and accountability to get you there. If you’re ready to take control of your financial life, visit Davis Coaching online, check out the Davis Coaching blog, and connect with Clint and Katy on Twitter and Facebook.