Are your finances so deep-fried that even the topic is a source of dread?
If your answer is “Yes,” please know that you are not alone at all. Believe it or not, some of today’s big-name financial success stories start with surprisingly humble beginnings. Money trouble is a circumstance; not a physical condition.
In other words, it should never define who you are—or hinder you from pursuing a better financial destination in life.
Intelligent, capable people sometimes have things happen to them or have life events that throw them off track financially. Anything from the wrong partner to medical bills can derail a healthy financial plan, cause economic challenges, and take a chunk of time out of your life.
It happens to the best of us. The good news is you can make a full recovery.
There is a very ancient Chinese proverb from which we get the phrase, “A journey of a thousand miles begins with a single step.”
In other words, even deeply-entrenched bad money habits can be overwritten with wiser ones. So, here are six steps to getting yourself back on the path to a healthier wallet.
It’s part of human nature to avoid hard things. Nobody likes it.
However, one of the best things you can do is to take a good look—with kindness—at your income and expenses: What got you here? What are your strengths?
What can you deal with now (that maybe you could not before)? Conversely, what is beyond your control?
Cleaning up your finances, like dealing with any other kind of a mess, begins with taking an inventory of the situation. Once you’ve identified the problems you need to address, you can start considering your options for them.
If you start feeling overwhelmed, it is okay to take a breather. Sometimes simply getting up to stretch your legs for a few minutes can help.
When you feel ready to return to the notebook, your computer, or your financial advisor, look clearly at the best and the worst; warts and all.
Believe it or not, this phase of leveling with yourself is sometimes the most painful part. As fiduciary financial advisors in Kansas City, we see some clients struggle with this step even when they have significant savings, investments, and income. The upside is that even if it takes a while, the result can be a much greater understanding (and ultimately control) of your finances.
Next comes putting together a budget. This will have to be based on where you are, not where you want to be.
Cutting expenses is an instant way to increase your available income (however, step 3 may potentially make it as pain-free as possible). Maybe you can trim a little here or there, but budgets have to be realistic, or they don’t work for long.
Do not cut back on necessities. Meanwhile, spree shopping or a new boat can be put on hold. It all adds up.
If you are accustomed to managing your own finances, you may have better options that you are not aware of. An experienced financial planner can help a great deal in this regard.
ViaWealth’s advising comes with the benefit of both our experience and expertise in everything from goal setting to wealth management.
So, we can look with unflinching eyes at the numbers you dread—and possibly help you find ways to reach financial stability sooner.
We never guarantee results (especially sight-unseen), but you might even be able to keep a less expensive cable package. If you need a Kansas City financial advisor, we are here.
We listed getting financial counseling as Step 3 deliberately; because we do not want you to think that this step requires trying to hold down three jobs.
With that caveat, the more income you can generate, the faster your finances should start to improve. Similarly, your debt(s) will have to be reduced as quickly as possible.
Thankfully, the situation can often be improved. For example, you might look into starting a side business.
Creating passive income may be an option, as well. A portfolio balanced specifically for higher interest rates may actually see greater returns soon.
At the same time, now may be an excellent time to start overpaying your mortgage, seeking its completion sooner. Doing so would not just save you time—it could potentially save you tens of thousands of dollars off the total sum you pay.
This is another place where an experienced financial advisor can prove extremely helpful.
Sometimes it is easy to look around at the state of your financial life and get discouraged to the point of giving up. However, this only leads people to drift back into the same bad money habits that first dug the hole.
Instead, set financial goals, ideally as part of an advisor’s long-term financial plan, and keep accountable to someone as you progress toward them. Even slow achievement, a little at a time, can get you to a better place eventually.
People mistakenly let the stress of their finances flavor every part of life. This is another mistake that robs you of the happiness you can have right now.
Do what you can; keep working toward your goals, but then ignore what you cannot control. In this case, tunnel vision is actually a plus: focus on what is good and what is working.
Enjoy your life on the way to getting things back on track. Otherwise, you court disaster by risking depression and the loss of perspective. Consider setting shorter objectives between long-term goals as milestones you can observe, too.
Call this celebrating the small stuff or whatever you like: Keeping your eyes on your progress is generally considered an approach that works consistently. It may also be one of the surest, healthiest ways to a lasting financial recovery.
ViaWealth wants to be a part of your financial life’s change for the better. Reach out and contact us today.