The keys to personal financial success are very simple. Keep track of your money. Spend less than you earn. Have an emergency fund. Find ways to economize. Save and invest on a regular basis.
Every other life change you may want to make is also very simple. Want to lose weight? Eat fewer calories than you burn. Want to get more organized? Clean up your junk. Want to get that college degree? Go back to school. Want a deeper faith life? Pray and receive the sacraments on a regular basis.
Planning what you want to do is the simple part. Having the discipline to act on that plan is a lot harder. Just because something is simple does not mean it is easy to achieve. This could be said about losing weight, finishing college, getting organized, deepening your faith life or getting your finances in order.
So how exactly do you make a change in your life that seems really simple but is genuinely hard to accomplish?
The best way to start is to do one thing each day that moves you one step closer to your goal. If you are trying to get control of your finances, start tracking every penny you spend each day so you have an understanding of exactly where your money goes and what needs to change. If you don’t have any idea of where your money is going, how can you hope to define any changes you need to make?
It’s fun to dream about being debt free, but that won’t happen for a long time. It’s also fun to dream about a time when you will have your retirement funded. It won’t happen this week or this month or this year. But if you don’t start with a small step today it won’t happen at all. Success is the sum of small efforts repeated day in and day out, month after month and year after year.
The only way you’re going to make any long term progress is to begin by making short term progress. What can you do today to move in a positive financial direction? If you succeed today you have taken one small step in the right direction. If you add today to all the todays that follow, one small step at a time, you will get to your destination.
Track your spending for 60 days and put it into categories. How much did you spend today on giving, housing, food, transportation, clothes, entertainment, etc.? Review it weekly, and monthly.
Once you have tracked your spending for 2 months, step back and look at the total of 60 days’ worth of spending. The 60 days of spending provides you with a baseline start for a monthly budget. (Or you can call it a spending plan since nobody likes the word budget.)
Reviewing your budget on a monthly basis allows you to see how much progress you are making on controlling and allocating your money to the most important things. Is it more important to save for the kid’s college education or to buy a fancy coffee on the way to work every day? Success begets success and controlling the monthly income and outgo helps you focus on more strategic money goals.
Review your spending on a monthly basis and analyze your progress. Is your debt lower this month than last month? Do you have more money in your emergency fund this month than last month? Is your giving more generous this month than last month? Have you over spent in any categories? What can you do to be more successful in the next month?
Once you get your day-to-day spending under control every month, you can tackle bigger picture items like paying off all your consumer debt, paying off the mortgage, and saving for college and retirement.
One things that helps when you are trying to get your finances in order is to hang out with people who have the same goals you do. If you are trying to cut your spending, hang out with your friends who are naturally frugal and not the people who spend money like it’s water trickling through their fingers.
Surrounding yourself with people who want to achieve or who have achieved the same goals you have means you have a natural support system. Their actions will help bolster your actions. Over time, their spending and saving habits will seem more and more natural to you.
It is also important to celebrate your success. You can download a free eBook copy of Your Money Counts, and when you read it you’ll see that we are big believers in celebrating success. In a small way. When you pay off that first credit card, celebrate. For your very next dinner do something special—like lighting candles on your dinner table and thinking about how much money you are saving by eating at home!
When you accomplish your next financial goal—like paying off that 2nd credit card— celebrate again. Maybe you can have a sundae at the ice cream store. Once you get all of your credit cards paid off then you can go out to eat at any nice restaurant where you can each order a meal for less than $20!
Celebrating your short term successes and achievement of milestones is a fantastic way to feel great about how things are going, but that celebration should not undo the progress you’ve made. If you’re trying to improve your financial status, don’t celebrate your success by overspending.
Simple doesn’t mean easy. Creating a plan to fix your finances is simple. However, executing the plan is hard. The choices you have to make are hard and they go against the influence of our materialistic society.
Of course, the easy road is usually the one that puts you in a place where you don’t want to be. Perhaps it’s time to try the harder road … the road that Jesus outlined over 2000 years ago … you may just find that the harder road isn’t quite as hard as you thought.
1 John 2:17 we read, “Yet the world and its enticement are passing away. But whoever does the will of God remains forever.” Don’t fall victim to the enticements of this world.
Listen to the Compass Catholic podcast for more about how to stop dreaming and start doing.