Your 4 Week Financial Check-Up Challenge: Week 1

Live – Plan – Thrive!!! That is the simple and straightforward mantra that I use to explain the financial life planning process. When it comes to getting and keeping others engaged in the financial planning process, the biggest challenge isn’t usually related to financial knowledge. It’s a general lack of planning. As the old saying goes “people don’t plan to fail, they fail to plan.”

A solid plan is needed to spark meaningful behavioral change when our personal finances are concerned. That’s why I would like to spend some time over the next four weeks getting back to the basics of creating and following a financial life plan that focuses on balancing living in the moment while also planning for the future. Contrary to popular belief, you can do both and here’s a little secret – you don’t have to be perfect in managing your money. You just need to consistently make more smart decisions than bone-headed ones.

The 4 Week Financial Check-Up Challenge

The purpose of a financial check-up is to see where you stand (financially speaking) this very moment and to encourage smart decision-making. A well-designed financial review should also give you a keen sense of direction as to where you are headed in your financial life and a basic road map for how to get there. I will be sharing some basic tips and strategies over the next few weeks and encouraging comments from you savvy planners while offering hopeful words of encouragement for those out there just getting the wake-up call to start managing money matters a little differently.

The “challenge” is quite simple. Just follow these steps (or create your own add-ons) and like us on Facebook or Twitter. Tell us what is working for you, what is not working, or what you plan to do next.

Don’t know what to say or still feel like sharing your financial life story on social media is just plain weird or talking about money in general is taboo??? That’s okay too because I’m a big fan of the “fake it ‘til you make it” concept. A simple “like” or comment on this blog will do and it will enter you into a drawing for a one-hour financial coaching session with yours truly that is solution-focused and 100% confidential.

Week 1: Establish a written financial life game plan.

Step #1: Develop your goals (and put them in writing). When it comes to our financial lives, most of us have good intentions with our money but not everyone has well-defined goals. Take some time to visualize your financial life goals.

What do you want to accomplish in the next 3 days, 3 months or 3 years? Be Specific. Make sure they are Measureable, Attainable, Realistic, and Timely. This is why we call them SMART Goals and it’s not rocket science but it works.

Not sure where to start? Check out Make My Plan from AICPA. For additional goal setting guidance, check out Chapter 1 of Save Wisely, Spend Wisely (special thanks to AICPA) or use this Smart Goals worksheet.

Step 2: Focus your efforts on the “Top 3” goals. Big changes begin with just a few small steps. Don’t overwhelm yourself with too many financial goals. Try to divvy up your top goals by their anticipated time horizon. Breaking things into categories such as follows:

  • Short-term (less than 5 years) – saving $2,000, building an emergency fund (3-6 months living expenses), buying a car, or taking a vacation
  • Intermediate (5-10 years) – setting aside funds for a home down payment, paying off student loans, or saving for a replacement vehicle
  • Long-term (10 years or more) – retirement, paying off a mortgage, or college funding

Step 3: Prioritize your goals. Having trouble prioritizing? Check out these three questions to help you focus your financial plans on what matters most to you. Remember, it’s not a plan unless you put it in writing and commit to turning goals into an action plan. This Saving for Goals calculator will allow you put your most important goals in writing and you can save the information to track your progress.

Step 4: Assess your current financial situation. Whether you are trying to take control of your financial life or just trying to accomplish goals faster, you need to know where you currently stand. Start by assessing your net worth situation and then complete a simple expense tracker to monitor your income and expenses. The main idea is to know where your money is currently going (e.g., complete an Expense Tracker) so you can eventually start telling it where you want it to go before the month begins (note: we will focus on that next week).

Feeling a bit overwhelmed? Not everyone enjoys dusting off bank statements and balancing checkbooks. If you use online banking you can try account aggregation sites such as Mint or Personal Capital to automate the tracking process.

The bottom line: go beyond setting and prioritizing goals this week and take time to look at your financial snapshot (a.k.a. your net worth and cash flow situation). Next time, we will take a deeper look at where your money is going and discuss why that occasionally annoying “B” word should be replaced with a “Personal Spending Plan.” Don’t forget to share your thoughts and comments about getting the financial planning process going.

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