What Is and How do you Find Financial Balance
From our title you may be wondering, “What is financial balance?” We have often heard from pundits who say, “Pay off your credit cards first” or, “Pay off your student loans first.” Likewise, we often hear advice such as “Don’t rent – buy!” or “Save your money – don’t spend.” As you can see, handling money is not an all or nothing event.
While the pundits’ advice may not be wrong, they assume we are living our lives in an ‘absolute’ mode, which is approximately never the case. So, we should not approach our financial planning this way. You may accomplish micro goals easier, but you do not live in a small bubble; isolation for the sake of saving some cash is not a lifestyle towards balance. The world is lived in the macro and not micro. Your life is not impermeable to the world, there is a flow between your micro and everything else.
What effect does this thinking have on your finances? For starters, make sure you have proper reserves and protection for those “What if?” moments that can blindside us into seeing just how extreme the macro can affect our bubble. Learn to make debt work for you and don’t become a slave to debt payments. Have a strategy that takes care of your short and long-term goals at the same time. Financial balance begins with you and the goals you are trying to reach.
For this we have mapped out some basic steps:
1. Take stock of your habits
How do you spend your money? Create a list of categories, necessities, and expenses used to enjoy your life.
Are you mindful when spending? Do you find yourself surprised by your monthly expenses? If you have an allocation strategy, how often do you follow it?
How do you optimize your payments?
Do you have a spending strategy? If not, reach out to us and we can get you set up with a spending strategy and mind map.
2. Ask yourself the hard questions
What brings you happiness when it comes to money? What activities would, if removed, be detrimental to your emotional or physical wellbeing?
What is the value of money to you?
3. Identify which goals are the most important in your life.
Be sure to look at goals at a macro level first and then narrow down. Here are some areas you may want to consider building goals around:
4. Evaluate these goals each period and modify your behavior to stay on course.
Be gentle with yourself. Every day will not feel like a superhero day and sometimes we slip up. But as long as we stay focused on what we have strategized, planned, and promised to accomplish, adjust accordingly, and keep moving, we reach a balance of keeping the important expenses while keeping an eye on our long-term wellness.
The key to getting started is having a plan and making sure to implement clearly defined goals. Success is a series of small wins. Make daily adjustments and continue on your path towards a balanced relationship with your wealth.