If you’re struggling with your finances and would like to start down a different path, here are 5 steps to get you going in the right direction. We’ll call them first steps, because I firmly believe that these actions make up the foundation of a sound financial strategy.
Your First Steps to Financial Freedom
1. Determine your motivation.
Too fluffy for you? You want rock solid financial advice instead? This is.
Your motivation is important to your financial goals because motivation is important to ANY type of goal. In order to achieve a goal, we must be properly motivated. Elite athletes and corporate CEOs don’t get where they are without something to motivate them – something that drives them during the difficult times.
“I want money” is probably a bit too vague. There are probably more than a few people out there who believe that cash is the ultimate goal, but for most of us there is an underlying reason that we’d like to fix our finances.
I’ll share a couple of mine to get you started.
One of my motivations is travel. I love to visit places I’ve never been, meet the people, see the sights, and taste the food.
Another is the chance to give more generously. I am well aware that you don’t have to have much money to give it away, and my wife and I try to emulate that fact as often as we can, but while we are able to help a handful of families or charities now, we long for more.
And, of course, I live a frugal life because I want to provide security for my family. God gave them to me and expects me to take care of them. I plan on doing so with His help. My views on money were on their way to changing before I met Trisha, but they became what they are when I knew that I would have a family to support. That’ll change you.
2. Let’s break it down a little further: What’s your Big Picture Goal?
Take your motivation and make it more tangible. What are your goals? These would be considered more long-term goals – not to save $100 this month on your groceries. If your motivation included the security of your family, maybe your goal would be a certain dollar amount in your savings account. If your motivation was to retire early, maybe you have a figure in mind or an income stream that you need to obtain. If you simply are looking to travel, are there certain places that you most want to see? Make a list.
3. One more time, we need to go deeper: How are you going to achieve your Big Picture Goal?
It’s time to get down to the nitty-gritty. This is where saving $100 per month on your groceries comes into play. You need to make a plan. You need to devise very specific, quantifiable goals. You need goals that you can achieve within the next week, month, or year. For most people, a goal without celebrations along the way is an unsuccessful goal, which is why smaller goals that lead up to the larger one are so important. We tend to lose our steam if we can’t stop and celebrate a couple little victories every once-and-a-while.
So, what do you need to do? Come up with a specific goal or two and write them down. Take a gander at them occasionally as a reminder to keep you on track. If you’re not quite sure what the right goals would be for your situation, maybe you need to first take an honest look at your situation. If that’s the case, see step 4.
4. Find out where you are right now (financially).
- Create an accurate budget and begin to track your expenses
- Check your credit report
- Determine your net worth
These are the most basic steps to truly understanding your finances. And you MUST understand your finances before you can move on. Yes, occasionally ignorance brings forth success (Christopher Columbus comes to mind), but it’s much less common than good ol’ planning and know-how.
5. Put your goals into action
That’s where Simple Family Finance can help. Take a hard look at where you’re at and find ways that you can get to where you’d like to be. I’ll help as much as I can. Subscribe to the automatic email updates, take whatever advice and tips resonate with you and skip the rest.
Congratulations…you’re now on your way.