Introduction
Most people wouldn’t compare a budget to a nutrition label, but they have more in common than you might think. The same habits that help us improve our health – awareness, consistency and a clear plan – are often the same habits that are going to help us improve our finances and relationship with money.
As someone who has gone on their own fitness/lifestyle journey (and still continues to do so), I realized that taking care of my body was not that far off from how I started taking care of my finances. Sure, the context might be different, but underneath it all, the core principles which lead to successful results are more or less the same. The purpose of today’s blog post is to help provide a framework for how to start.
Building Awareness
One of my core principles for someone starting their personal finance journey is that we need to build awareness. Just the act of peeking behind the curtain can help open your eyes. We tend to turn away from this because we’re scared of what we are going to find, and that’s a completely normal feeling to have. What I find is that most people have a moment of clarity whenever they finally do the daunting task.
I remember when I started my fitness journey, I didn’t realize just how many calories I was consuming until I really took a look at the numbers. It shocked me to see just how much those small snacks and fast food meals were being a detriment to me reaching my goals.
Our budgets are very similar. For example, we may know that we are paying for a handful of subscriptions, but when we finally take a look at it, we realize that what we thought may have equated to $200/mo is really looking like $500/mo. This whole time, you’ve been in the dark, and now that we have some light, we have given ourselves the ability to be in control. This is the biggest reason I start with awareness, because it can be empowering for a lot of people.
While you can certainly begin this process on your own, many people find it helpful to work with a CFP® professional who can provide structure, accountability, and an objective perspective. As a fiduciary, my role is to help clients make informed financial decisions that align with their goals and best interests.
If you don’t know where to start and want to speak with us, use this link to schedule a free introductory meeting!
Creating a Plan
Now that we know where our money is going, we can start to build a plan.
In the same way we can’t lose a bunch of weight or put on muscle overnight, we can’t change our financial situation either. Unless you are one of the few people who gets lucky and win the lottery (0.000000342% chance btw) this doesn’t apply to you, but for the remaining 99.999% of us, we have to create systems that allow us to build a better relationship with our finances.
It’s normal to want to make a bunch of changes all at once, but if we cause too much shock to our already existing system, we might find ourselves struggling to implement anything. This can lead to getting discouraged and resorting back to our previous way of doing things.
This is why those strict diets don’t work in the long run. They require someone to restrict themselves from enjoying the foods they love for a specific period of time. The diet may work in the short term, but there are countless cases of people relapsing and gaining all the weight back, sometimes even going past where they started.
Plans should start off simple, and easily doable. For example, if there are 3 spending habits you realized you want to change, it will be easier to focus on one at a time instead of trying to do everything at once. We’re creatures of habit, and if we try to make too sharp of a turn from what our body and mind is used to, it can derail the plan before it’s even gotten started.
ACTION ITEM: Write down one habit you want to start implementing for your finances. Keep it simple and specific
Some people like to use apps to track their progress, other people like to write in a journal. Find what works for you and will keep you accountable, and stick to it.
These are processes that require taking small steps, one day at a time, and changing our habits altogether. These small steps compound, and before you know it, you will look back at where you were a year ago and be proud of all the progress you’ve made.
Consistency
One of my favorite analogies I’ve heard in regards to my fitness journey was this: “If you accidentally ran a red light, would you think to yourself its ok to run future red lights because you messed up once?”
As someone who loves food, I would have instances where I let myself go and binged on a bunch of food and snacks. Because I was disappointed in myself, I unconsciously let myself go for the next few meals after that.
The right approach in those situations is to acknowledge we made a decision that went against the plan we had built, and instead of beating ourselves up for it, we should chalk it up as an outlier, then go back to the plan moving forward.
It’s the same way with our finances. Sure you might go out and spend more than you wanted to on a meal or a piece of clothing, but not letting it get to you and steering yourself back on course is what is most important here.
The goal isn’t to be perfect, the goal is to build habits that are sustainable over the long term.
Closing Thoughts
Being on top of our finances and our diets are things most of us aspire to have control over. While we won’t see the fruits of our labor in the short term, the small changes to our habits we make can be the difference in where we end up in the long term.
Building awareness, creating a plan, and staying consistent are easier said than done, but those three habits can have a meaningful impact over time. Small changes, repeated consistently, often lead to the biggest results.
If you’re ready to start mending your relationship with your money, use this link to schedule a free introductory meeting to discuss your goals!
Disclosure
This content is provided for informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. No advisory relationship is created by reading this article. Investment advisory & financial planning services are offered only pursuant to a written agreement through Noor Financial Services, a Registered Investment Adviser. Please consult with a qualified professional regarding your specific financial situation.
