“If you want to live a happy life, tie it to a goal, not to people or things.”
― Albert Einstein
If your personal finances are keeping you awake at night, you are not alone. The biggest cause of insomnia for many has been their stress and anxiety around their personal finances. In fact more than 60% of Canadians cite personal finances as their number one stress. Surveys and studies since 1985 have found that the two greatest stresses in people’s lives are work and personal finances.
For the last 14 years I have been working with people to help them sleep better at night. When I help them get their basic finances in order, from managing debt, to organizing cash flow, to protecting their family and planning their retirement, the same result comes from it - Relief.
What has been the biggest change? Are they wealthier? No. Are they poorer? No. Do they have more debt? No. Do they have better investments? No. Are they making more money? No. So what changed that provided the relief?... Understanding. They have a clear understanding of their financial situation and what they need to do to be financially successful.
The majority of people I work with and many of those I encounter share the same common trait when it comes to their finances – they don’t have their basic financial affairs in order and don’t know where to start.
This isn’t surprising to me as we are bombarded with many confusing messages from the media, the financial services industry, the Bank of Canada, and even our parents, uncle or best friend. Who can you trust? And the bigger question… where do you START?
Over the years, I developed a process to help people achieve the understanding necessary about their finances and the priorities for their life. It is important to understand that this process only works if you truly are ready to deal with your finances.
The critical first step, that is often overlooked, is to set clear realistic goals. Many struggle to define what they truly want to achieve and spend much of their life going day-to-day in hopes that one day it will all work out. This step is so critical to your success because you need to change your focus to what is really important to you. Keeping those things that are most important to you top-of-mind is instrumental in achieving real financial success.
One Frank Thought – To help you be successful with your goals, share them with many people. They may be able to help you achieve them and they can help hold you accountable to them.
Another critical component is to be able to differentiate between wants and needs. Take a good look at everything around you and be honest with yourself – Are these things around you wants or needs? To truly help you do this, ask yourself this – Do I want this more than I want that trip to Hawaii? Or whatever your goals are.
This was a big thing for my wife and I when we first got together. We would be out at a store and she would come across a nice blouse or pair of shoes and I would ask her. “Is that a want or a need?” I got some very interesting looks. Eventually she started catching on and found some clever ways to explain why it was a need.
Many people ask me, “If you gave just one piece of financial advice, what would it be?” I tell them the secret to understanding your finances and being able to achieve financial success comes down to just one thing. All other financial areas and issue stem from this one thing. It is the tipping point of financial understanding and the linchpin to financial success. It is what separates those that can save and those that can’t. Those who can manage their debts and those who drown in debt. If you want to start sleeping better at night do this: Know exactly how much money you spend and what you spend it on each month!
Once you have this understanding, you will be empowered to make better decisions with your money. Remember, money is finite; if you spend it over here, you don’t have it to spend over there.
By combining your knowledge of your goals with refocused prioritization of wants and needs and an understanding of how much money you spend and where you spend it – you will be well on your way to financial success and a better quality of life!
To help you START on this journey to financial understanding, I have written a book called How to Eat an Elephant: Achieving Financial Success One Bite at a Time. The book takes you by the hand and leads you step-by-step through the process of getting your financial affairs in order. It includes simple, almost fill-in-the-blank online tools to help you set your goals, figure out where you spend all your money and so much more. Available at all Chapters Indigo stores and online at amazon.ca.