You’ve been wondering how to manage money wisely, and you feel like it should be easier than what you have seen. What if I could show you the 10 steps I took 10 years ago to drastically change my financial situation for the better? Would you be interested? Well you’re in luck. Today I’m going to share with you the 10 steps I took to get better with my finances, and radically change my money life for the better.
If you want all the details of these steps I’m giving them away for free in a nice book for you to download and get started on your own money transformation.
Step 1 Coming Up With a Big WHY
This is the step that everyone jumps over. DO NOT SKIP THIS STEP.
I repeat: DO. NOT. SKIP. THIS. STEP.
Finding your WHY is like finding your North Star. It’s what will make you stay the course when times get tough.
It doesn’t have to be long. It doesn’t have to be cute or elegant.
It just needs to be done.
For me, getting better with my money was simple. It went something like this:
“If I don’t get better with my money, then my kids will be bad at money, and if that happens I won’t have properly prepared them for when they leave this house.
It’s my duty to get better with money because I am capable of doing it. Money is a tool, and I need to learn how to use it.”
It’s not smart, or sweet, but it’s how I felt.
Step 2 Where do you want to be in 10 years?
This is where the rubber hits the road in our Money Kickstart Challenge.
We use the 10 year plan to get clear on what we want to see happen in our lives over the next decade and figure out how money plays into it.
It’s the start of your new money foundation.
When you start down a long road, the saying “one step a time” sounds crazy.
But that’s how every journey works.
Every. Single. Time.
You see it everywhere in nature.
A giant oak tree doesn’t just pop up one day; it starts from a seed and grows over time.
Babies don’t get up and walk the day they are born.
First they roll over on their tummies (yeah I said tummies), then they crawl. Then they stand and walk awkwardly. After a lot of trial and error, they eventually run.
It’s the same for us, in anything we do.
Small steps lead to bigger things over time.
That’s the point of this program: to help you grow faster in your life. One step at a time.
It’s a fact. We tend to overestimate what we can do in one year, and underestimate what we can do in 5 or 10 years.
So let’s remove the pressure of doing everything this year and think a little longer, shall we?
Create your 10 year plan and know that we will be coming back to fill in the blanks.
Step 3 Discover Your Net Worth
If Money is a Game, This is How You Keep Score
If you have never heard of net worth before, it’s going to change your life.
Because it completely changed mine.
Your net worth is like a money picture of where you are right now.
It’s like creating a financial snapshot of your money. If being good with money is a game, then your net worth is how you keep track.
When my life was a mess (and trust me it was a doozy), figuring out my net worth was the first thing I did.
This exercise is where you see where you are at financially and start moving forward.
Fair warning, you may not be able to do this all at once depending on what you have gathered. That’s ok.
For more on figuirng out your net worth you can download the free book the Money Kickstart Challenge here.
Step 4: Start an Emergency Fund
Do you know that 39 percent of Americans have less than $1000 saved up in their bank account?
That’s not only scary, it’s downright impossible to live a happy life.
Heck, when you are living that close to the edge, you aren’t going to sleep well at night.
When that happens, everything in your life suffers. EVERYTHING!
The fact is that more money gives you more peace of mind.
When we were starting out, getting that first $1000 in our bank account was key to giving ourselves some breathing room.
Without doubt, $1000 in your bank account helps you sleep at night.
Imagine no longer worrying about being able to cover a car repair bill.
Imagine no longer worrying about your washing machine calling it quits and not having the funds to replace it.
Sounds nice, doesn’t it?
That’s because it is.
It’s an amazing feeling. That might sound far fetched, but it’s not.
Imagine living like this:
- Car breaks down. The money is there. You can cover this.
- Furnace breaks down. You can cover this.
- Water tanks goes in the night (they only go in the middle of the night). You can cover this.
That’s what we want. We want to be able to cover that unexpected expense.
We can’t remove every money concern at once, but we can take control and start to get rid of them one at a time.
That’s why today’s challenge is a doozy.
You’re going to open up a separate account.
And you are going to race to put $1000 in it so that you can sleep better at night.
Step 5: Get Your Savings Accounts Set Up
Giving your money purpose is a big part of getting better with money.
Which is why it’s way easier to not buy lunch at work when you know that your lunch money is going towards something more important than a tuna melt sandwich.
Next, we dive into what’s more important for you.
Giving your money purpose is what makes saving easier.
Just like you know you are saving an emergency fund for “in case something unexpected happens”, money with purpose gives you a strong why when it comes to saying “no” to buying certain things.
Since your emergency fund account is set up and running towards $1000, it’s time to get a few more accounts set up.
One of the best kept secrets about getting good with money is giving yourself more time.
Think about it like this: every year the same costs come up. Christmas, birthdays, property taxes. None of these should surprise us, yet they always seem to catch us off guard.
You want to make sure you start putting money away now so that you have it ready for when it happens. No one likes to scramble at the last minute.
You know that there is going to be another Christmas this year, so start putting money aside for it now.
Use the Money Kickstart Challenge along with your 10 year plan to create separate savings accounts for each goal.
Step 6: Create Your Budget
Stay with me on this because what we do in today’s challenge will be a game changer!
It’s time for us to start a budget. If you have never done this in the past, it’s going to be life changing.
First, get your head around budgeting.
When it comes to budgeting, you need to get your head in the right place.
First, of all let’s forgive all the past financial blunders that have happened. We all have them. It’s how we learn. Move on.
Second, start to see budgeting as a path to freedom.
So many people hold off on budgeting because they think it restrains them.
The opposite is true.
Budgeting equals freedom.
You can check out our post on how to create a budget here, or you can get the Money Kickstart Challenge and have all of these items for FREE so you can start building an amazing life.
Step 7: Get Set Up To Win the Money Game
We have built the start of our budget.
But how do we win the money game?
Back in Step 1, you wrote out how you would know whether or not you were successful with money.
And that’s great.
But how do you know when you have won the money game?
Nobody comes to your door and says, “Congrats! You passed Go. Here’s $200.”
It’s a little—ok, a lot—less obvious than that.
For us, we need to define winning the money game.
Here is the formula:
Annual Passive Income > Annual Spending
We go into passive income in the Money Kickstart Challenge it’s important that you understand this concept because it will change the way you look at both the ways you earn money and help you understand why you need to keep an eye on your spending.
Step 8: Start Tracking Your Spending
Knowing where your money goes is a big part of getting better financially.
Today, you have a new best friend. It’s a spending tracker.
Every time you buy something, you add it up and write it down on the spending tracker. You also are going to tie it to a category.
At the end of every week (or month if you prefer), you will total up these amounts and write down how much you spent.
Over the coming months, doing this will help you figure out your budget.
But there is an added bonus.
Doing this will show you where your money is going. Most of us have no clue where we spend our money. We just think that it magically goes away.
Now you will know.
And by knowing where your money is going, you can look for ways to save money.
You can stop the leaks and fix your money bucket.
Don’t be surprised if this radically changes the way you spend. Most people don’t like to write down everything, so to get around this they stop buying things right away. I’m all for that if it helps you get better with your money long term.
Step 9: Get your Life Organized and Planned Out in 3 Easy Steps
It’s time you started to think ahead.
Most of us never get ahead in life because we are too busy thinking about today and right now. We’re so busy putting out the brush fires that we never have time to find out who’s starting them. (News flash, it’s your lack of planning that’s lighting these fires).
You will never be able to get anywhere without thinking things through.
Society has definitely gone the way of instant everything. While that’s great in many ways, it’s not always the best for your mindset or your future.
Today, we are going to block out an hour (yes, an hour!) and we are going to think forward to the next week.
Step 1: Fill Out Your Week-at-a-Glance Sheet
Step 2: Get Friendly With a Using a Meal Planner
Step 3: Start Using a Shopping List to Shop
Step 10 and Beyond: Playing the Money Game Going Forward
Track your net worth the first of each month.
We covered this in Day 3. Fill out your net worth once a month. To keep it consistent, make sure you do it on the first of the month.
The reason is to keep things consistent. The more you go through things, the more you will start to see patterns arising.
Complete your 10 Year Plan
Keep growing your emergency fund and savings account
Continue to tweak your budget.
Go over your spending and decide what can wait.
If you are ready to make a transformation in your life and your money then the Money Kickstart Challenge is the best way to do this. Simply enter in your email below and we will send you this guide absolutely free. You will get hte steps that have worked for us over the past 10 years and continue to work for us today.