The number of bankruptcies has skyrocketed in recent years. Foreclosures are rampant and credit card debt is reaching an all time high. If you’re in a bad financial situation, or if you just want to improve your personal financial health, this tutorial is for you. Over the next thirty days, you will learn a lesson each day to improve your finances. This tutorial is a little different than most personal finance books or articles, instead of trying to force a new system onto you, we focus on helping you see what’s important in life and then show you how to reorganize your finances to help you succeed at your goals and obtain your desires.
What follows is a preview of the entire month’s activities, with links to each individual day. If you’re at all concerned about your personal finances or find yourself often feeling strangely guilty about the money you spend, you’ll find some value in the activities of the month.
Let’s get started.
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Part 1: Figuring Out Your Goals And Values
Most people have a skewed view of money – believing it is an enemy, is evil, or is simply too difficult to control. They see it as a distinctly different thing outside of their life and outside of their control.
Money is amoral – it isn’t evil, it isn’t bad, it doesn’t have feelings, it is simply a tool you can use in life. Money is like a hammer – you could use it to hit someone or you could use it to nail in some drywall in a home or a hospital. The hammer doesn’t care what you do with it, it’s just a hammer. When you start out and don’t understand what to do with the hammer, it could seem like the hammer is bad. It’s heavy, has a sharp side and could be used to hurt someone. Once you understand how to use the hammer and build the frame of a house with it, you understand the hammer is just a tool to get something larger accomplished.
The first step for learning how to integrate money into your life and use it successfully as a tool is to figure out what exactly you wish to build with that tool. Without underlying values, goals, and plans, money is no different than swinging a hammer around without building something. Thus, this first stage is crucial: what exactly is most important to you, and what will it take to adequately support those values?
Part 2: Evaluate Your Situation
Once you’ve figured out what is central in your life, it’s time to take a serious look at what you have to work with. How much do you make, and how much time do you spend making it? This seems like an easy question, but it’s not. How much of your income do you spend maintaining your job, via transportation, career development, lunch, clothing, and so forth? And how much time do you spend doing things devoted to your job, such as going to work, coming home from work, attending work-related functions, and so on?
When you calculate these new numbers, you might be shocked both at how much time you actually spend working in an average week, as well as how little you actually earn. You can drive this point home very clearly by calculating a number that we’ll use throughout the month, your true hourly wage. How much do you really make for each hour that you spend devoted to your job? It’s not nearly what you might think, and that alone might shock you into considering doing something different with your time.
Part 3: Building Your Own Life Budget, Not Following Someone Else’s Prescription
Day 7: Work For Your Dreams, Not Your Money
Day 8: Breaking Down Your Expenses
Day 9: Cleaning Up Your Expenses
Day 10: Fitting Your Expenses Into The Bigger Picture
Day 11: Dividing Up The Rest and Finishing Our Time Budget
Day 12: A Flexible “Budget” That Reflects Your Reality
Once you’ve taken a hard look at what you actually earn, you can begin to set up the basic framework of how to spend that money that is in line with your personal goals. This isn’t about printing out worksheets and trying to jam your life into the pigeonholes that someone else has created for you; instead, this is about defining how you spend money and working from there.
Have you ever started a diet you didn’t finish? Was the diet around a certain fad – such as no carbs, only vegetables, or based on bland, expensive food? Why didn’t you succeed with the diet? Most likely, you were trying to fit your eating habits into someone else’s plan – into something based on someone else’s values. When you try to change all of your habits to fit something dreamt up elsewhere, it often leads to failure. In this tutorial, we teach you how to build your financial life around your values, goals, and dreams.
It’s almost unfair to refer to this as “budgeting,” because budgeting carries with it some very bad connotations, much like putting on an uncomfortable suit. This process is much more like going to a tailor, who uses you as the basis to construct a custom suit that fits you. This process will create a custom budget that fits your life with your values and goals as a basis. We’re not talking about restricting you to spending $20 a month on “dining expenses,” but instead creating a structure where you can decide what’s appropriate because you can see how it relates directly to your dreams.
Part 4: Looking At Your Life, Piece By Piece
Day 13: Pay For Your Dreams First
Day 14: Get Rid Of Debts (Slowly But Surely)
Day 15: Coming In Under Budget and An Emergency Fund
Day 16: Evaluating Your Expenses – Home and Auto Insurance
Day 17: Evaluating Your Expenses – Life Insurance
Day 18: Evaluating Your Expenses – Energy
Day 19: Evaluating Your Expenses – Automobiles
Day 20: Evaluating Your Expenses – Food
Day 21: Evaluating Your Expenses – Housing
Day 22: Evaluating Your Expenses – Monthly Services
Day 23: Evaluating Your Expenses – Bank Fees
Day 24: Evaluating Your Expenses – Entertainment and Hobbies
Day 25: Evaluating Your Expenses – Credit Cards
Once you’ve got a basic budget in place, it’s well worth spending some time carefully evaluating those numbers that represent you and see if there are any places where there is excess fat – and simply trimming it away. Is your electricity bill pretty high? Maybe there are a few simple ways to reduce it. Tired of paying for cable TV? Maybe you don’t need it at all – or can utilize something less expensive. Getting hit over and over again with bank charges? Look at what they’re charging and do something about it. Credit card finance charges eating you alive? There are some easy ways to reduce them.
We’re looking for ways to trim away fat (things that make you uncomfortable when you look at them) so that the meat (your goals, dreams, and values) have room to thrive. You don’t have to eliminate that daily latte if it brings you joy – just look for the many things you can do without or that you can reduce without significant pain and you’ll have the money to chase your dreams.
Part 5: Creating Habits For Lifelong Success
Now that the complete package is coming together, there are some basic methods for keeping the momentum going. What do you do with the fat you’ve trimmed away? How do you keep track of all of your financial information so that it’s not chaotic and incomprehensible? How do you ensure that you’re not ensnared in loan debt over and over again? How do you keep this good thing going?
If you follow this plan and keep these principles in mind, you can easily live your dream. It’s all up to you, and it takes just an hour a day for a month to get things going.
Let’s Get Started!