One Word That Can Change Your Financial Life

February 02, 2015

Can one single word change your financial life and perhaps completely change your life story? Sound a little too simplistic? Before you dismiss the possibility that one single word can have transformational powers, ask yourself one question – Is my financial life just a little bit complicated?

If you answered ‘yes,’ I officially declare you normal and an official card-carrying member of the so-called “real world.” With so many different moving parts in our financial lives (managing cash flow, paying bills, paying down debt, and investing our savings) it is very easy to lack clarity when trying to figure out where we should focus our attention. An effective financial plan needs to possess the beauty of simplicity and also requires focus to stay on track to realize important life goals. Time is our greatest asset and that is why I am all about exploring ways to help others channel their energy in the right places and conquer those procrastination demons. So dust off those financial resolutions for change and consider using a one-word approach to follow a financial plan with a greater sense of purpose and meaning.

I started using this concept last week when a local minister reintroduced me to a simple but effective book called One Word That Will Change Your Life by Jon Gordon, Dan Britton, and Jimmy Page. This book is positioned as a “guide to creating simplicity in your world and developing discipline for life.” It is a pretty quick and easy read with a simple yet effective premise.

The One Word concept was designed to impact all dimensions of the life experience – mental, physical, emotional, relational, spiritual, and financial. Choose one word to guide your actions throughout the course of the year. It’s that simple but can also be a powerful way to focus on what matters the most to you during this season of life. If you are interested in using this process to choose one word to guide your financial planning efforts for the remainder of 2015 then you can even use their action plan without having to purchase the book itself. Here are some potential examples you may find helpful as you seek your word that could potentially give your plan the necessary focus and discipline to knock items off that financial action plan.

Simplicity – Are you doing everything possible to streamline your finances? Consolidating debt to a lower interest loan, automating savings through direct deposit or regular bank transfers, and tracking your income and expenses with online budgeting tools such as Mint are just some examples of ways to simplify your finances.

Adapt – Is your financial plan adaptable and flexible? Many personal spending plans (a.k.a. the “budget”) don’t work out as originally planned because life gets in the way. Transmissions fail. Heating units fail when its freezing outside. Sometimes our health fails us and we get sick and it costs us money to get better. No matter what life event happens, budgeting should never fail to help us align our money with what matters. Create a spending plan that is adaptable, is flexible and approaches setbacks as temporary challenges that can and will be overcome. (See YNAB’s Rule #3 – Roll with the Punches for ways to adapt your spending plan over time.)

Trust – If you are seeking guidance with important financial decisions, you want a trusted advisor by your side. But anybody can call themselves a financial planner. So how do you know the person you are getting guidance and advice from is genuinely offering help from an unbiased and conflict-free perspective? Check out How to Choose a Financial Planner and When to Fire Your Financial Advisor.

Focus – Putting our goals in writing is essential but this is often overlooked by some. Set SMART goals that are specific, measurable, actionable, realistic, and timely. (See How to Make the Financial Planning Process Work for You.)

Believe – Research suggests that people with higher financial self-efficacy and greater financial optimism about the future are significantly less likely to report financial stress. Self-efficacy can be described as a person’s perceived ability to handle different situations and plays a major role in our perceived financial wellness. Not feeling confident in your abilities to manage money? Start small and create some quick wins early on. Most importantly, believe that you are truly capable of positive behavioral change with a newly found sense of empowerment.

Communication – Talking about money isn’t something everyone is comfortable with. As a child, I was taught that money was a taboo subject. In order to improve money relationships it is helpful to realize how the money scripts that we tend to develop early in life guide how we talk with others about money. Challenge yourself to improve how you communicate with those significant others in your life. Commit to setting regular meetings and set ground rules in advance on how to have “the talk.” (See Money and Marriage: The Missing Manual)

My personal word is simple…Now. I’ve got big plans this year and refuse to let procrastination, fear, or hesitation get in my way of completing my personal financial action plan. (Slightly disorganized file cabinet…I’m looking at you so you are on my “now” list.) If you have a word that you are using to guide your financial life planning decisions this year, please feel free to share it and why you chose it.