How To Take Control of Your Finances in 2022
Over 50% of US citizens live paycheck to paycheck.
Unfortunately that leads to a lot of professionals feeling shame or overwhelm when it comes to money. If that's you or if you are just ready to feel more in control of your finances this year, know that just by viewing this article you have taken a powerful step to changing your financial future.
Personalized solutions can be determined to solve your personal financial pain-points. ⠀⠀⠀⠀⠀⠀⠀⠀⠀
I’m on a mission to provide education and encouragement for any professional or entrepreneur who wants to take control of their finances and learn how to manage their money with complete confidence.
Your history with money (aka Your Money Story) since childhood impacts how you think feel and manage your money today. Through a combination of money mindset exercises and semi-automated financial systems, you can transform your confidence with money management in as little as 3 months. ⠀⠀⠀⠀⠀⠀⠀⠀⠀
The first step towards money management confidence is building (or re-building) a strong financial foundation.
Here are 5 steps you take for control over your finances:
Step 1: Do a Money Mindset Exercise
There are many money mindset exercises that you can do to help you change the way you think and feel about money. The first one I suggest you do is writing two lists about past financial experiences. One list should include every negative money experience you can recall. The other list should include ever positive money experience you can recall.
Common Negative Experiences Include: Missed bill payments, high interest on loans, unexpected medical bills.
Common Positive Experiences Include: Receiving your first paycheck, birthday money, raise in salary.
Step 2: Download (and use) a Budgeting App
“Budgeting” can feel intimidating and depending on how budgets have worked for you in the past, you may be tempted to skip over this step. So instead let's say that budgeting equals understanding your income vs. expenses + spending habits. You don’t need to follow a strict budget. However, free apps such as Mint.com or Truebill are great tools to use to help give you weekly summaries of your income, expenses and spending habits. When you understand how you’re using your money, you can begin to use your money as a tool.
Step 3: Check-in On Your Credit Score
Do you check your credit report 2-3 times a year? If not, that’s ok. While it’s a good habit to have, it isn’t a task that needs done regularly. However, knowing your estimated credit score each month will allow you to make informed financial decisions when necessary. If you use a credit card that offers a free monthly FICO score, use that service. If you don’t, check out a trusted credit score service, such as creditkarma.com.
Step 4: Create 1, 3 and 5 Year Savings Goals
This step can be a little time consuming and maybe even feel overwhelming. But, when you determine financial goals you want to achieve over the next 5 year period, you’re giving your money a job and setting yourself up for success, since you never have to guess where your extra income should be allocated.
I have a free worksheet for this exercise that includes sample examples and step-by-step instructions. Get your free copy here. ⠀
Step 5: Automate Your Retirement Investment Plan
By taking care of your future financial health, you’re also allowing yourself to manage your money wisely in the present, which will help you feel confident about your monthly money management. You may want to keep things simple if your employer offers a 401(k) match program or 403(b) program. If you’re self-employed, there are options available to you, as well! Make a plan and set up monthly automatic payments into the account(s). ⠀⠀⠀⠀
Self-Employed in the U.S. - A Roth IRA or IRA may be a great place to get started.
Self-Employed in the Canada or the U.K. - There are multiple pension plans you can look into that are available to you as a business owner. ⠀⠀⠀⠀⠀