Getting Back to the Joy in Your Finances

Marie Kondo has been a trending topic for a minute. Folks are taking their whole lives, throwing them into piles in the middle of the room, and throwing them out with the trash in order to better align their living spaces with their joy, find calm and pursue peace. But as you go through the massive clean-up of your living space, emptying out your closets, don’t forget to do the same with your dollars.

Fully Assess Your Situation

Before you can do anything to clean up your financial act, you have to pull all of the pieces out so that you can see them. Start by getting a credit report so that you can take stock of all of your debts. Pull out copies of all of your bills and payments, and take a look at all of your spending over the last few months. Once you have your statements, you can compose a list of all of your spending.

Think about your choices. What have you gained from each categorical expense– did your education benefit you? Do you realize huge gains in your relationships from your restaurant expenses?

Start with your goals. What is it that you’d like to accomplish? In what timeframe and what does success look like for you? Are there major milestones you can put down under each goal that will help you in your journey?

Take stock of your income. Identify all of your sources of income– how much you’re making and how frequently. How much can you expect to make each month? Take a moment to compare your actual income to your value; are you being paid what you’re worth? There are go-to websites that can help you with this assessment: places like Payscale or Glassdoor.  If you want something different, did you ask for it? Remember that you can’t receive what you haven’t requested, and the worst reaction to your request will be a denial. And, at the end of the day, are you settling for less? What might that state of settling say to employers about how you feel about your value? Do you want to earn more through a side hustle, and if so, what kind of side hustle speaks to you?

Assess Your Spending

Okay, you have all of your statements on the table– your bills, your bank statements, your receipts. Take a moment to evaluate all of your expenses, regular and irregular.

List out what you owe. Write your debts down in order of size, smallest to largest with your minimum monthly payment on the far side of the page.  With this list, you’ll be able to review your priorities for paying the debts back. Don’t forget to double-check your list against your credit report!

Break down your spending. On another page, identify everything you spend– every penny– in a regular month. Take a categorical approach to this step, including everything from restaurants and entertainment to rent and groceries. Where are you losing the most money? Does the value assigned with each category align with your goals?

Size up your stash. Add in a full assessment of your emergency fund and mattress money. How much do you have, and how do those balances compare to your goals for those accounts?  

Take a look at your worth. Have you calculated your net worth (what you own less what you owe)? This is a great sky-level view of how you’re doing financially. 

Think About What’s Working Well

What is it that you enjoy doing? Do you have an idea of what you’d prefer not to change?

Develop a monthly budget and set targets. Write out a budget of what you’re actually spending on each category, and beside that column (in the next column), create targets for each category.

Prioritize self-care. As you create your categories, don’t forget to include self-care into your investment: remember, your investment into self-care should mirror the efforts of your mss.

Make space for happiness. Finally, be sure to leave a space for what makes your heart soar (for me, as an example, that activity is travel)!

Consider Your Habits

And as you evaluate each of these things, consider which behaviors you’d like to change.

Plan to pay your debts. What debt can you pay off and remove from your monthly budget?

Adjust your bad habits. Can you adjust some of your extraneous expenditures– maybe eating out less, reconsidering how often you actually need that $5 cup of coffee or taking fewer trips to the mall?

Make it automatic. Finally, can you automate your savings to make stashing cash a bit less of an emotional struggle?

Need resources on the contents of a budget? Check out You Need A Budget, or consider the Dave Ramsey app as a solution. Want to figure out how to track your spending automatically? There are tools that can help you, like Personal Capital.

If you’re a regular at the budgeting process, how do you regularly approach your finances?

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