For many of us, our relationship with money is a complicated one. Having financial issues can cause sleepless nights and unnecessary stress. We all go through financial struggles at some point in our life. Whether you avoid money or worship it, it’s helpful to know if you have a distorted belief about money that’s holding you back.
When you’re trying to find the best way to solve your financial problems it helps to first clearly identify your problem.
Step 1: Identify your problem with money
Most people would say they have some type of problem with money. Financial problems can range from something minor to a financial crisis. Some people don’t make enough money others don’t understand how to budget and feel like they never have enough. Overspending, budgeting, unexpected expenses and debt can all be on the list of common problems people face with money.
But if you look a little deeper you’ll usually find habits and/or choices causing the real issue with money. Here are three steps to help you identify your problem.
- Make a list of the issues you feel you have with money and define why each one is a problem. Write it down!
- Spend some time brainstorming. Evaluate the problem and possible solutions.
- Focus on your behavior toward money rather than the actual problem. For example instead of saying the problem is “I’m bad with money” say “I’m not confident with money because I haven’t learned how to manage my finances.”
Identifying and writing out your money problems will take them from an abstract powerful thought to something concrete you can actually change.
Step 2: Define your money goals
Once you’ve clearly identified your problems and possible solutions you’ll want to set a goal. Be specific when defining your goal. Create an achievable action you can take for every goal. Instead of writing “learn how to manage my finances” elaborate on how you’re going to accomplish the goal. “Learn how to manage my finances by tracking my expenses in an excel spreadsheet and/or take an online course to learn how to budget.”
It’s important to get in touch with and truly listen to yourself throughout this process. Here is a more in-depth example;
Problem: I self-sabotage by overspending and creating debt. The debt justifies my choice to stay in a job I don’t enjoy because I have to.
Solutions: I can create a budget, budget for fun money so I won’t feel like I’m going without, stop using credit cards, pay off debt.
Goals: Update my budget spreadsheet at the end of every day. Pay off $2,100 in credit card debt in the next 6 months by paying $350/mo. Figure out what would be fun and rewarding to do with the next 6 months of my life and start taking baby steps to make that happen.
Step 3: Evaluate your progress
You need to be accountable for every goal you set. Your goals should be 1. clearly defined (specific) 2. measurable and executed within a specific timeframe and 3. achievable. It’s helpful to make a checklist of the items that need to be accomplished to achieve your goal.
Throughout the process look at how far you’ve come from your starting point and how far you need to go to accomplish your goal. By evaluating your goals you’ll also have an opportunity to see whether these actions have had a positive or negative effect on you and your finances.
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