Wednesday, November 4, 2015

Managing Your Money with These 5 Numbers - Part 3


Welcome to The Finance Gym Action Plan for a Better Life with Money video series. If you’re ready to not just know better but to do better with your money, you’ve come to the right place.

Today we’re going to be talking about the big picture again. In our last video we talked about the big picture but we wrote about it in sentences. Today we’re going to get those pencils out and put some numbers down. But for those of you that are number-phobic, I promise today we’re just going to do five simple numbers.

If you’re following along in the book, turn to chapter 1, page 11 and for those of you that haven’t gotten the book yet, just get a piece of paper and a pencil out and write these five rows down. You just start with “earning” and then we’re going to subtract “spending” and then the third row is going to be “difference”. The fourth row will be “debt” and the fifth row is “savings”.

What I want all of you to do is to think about your last year, either your last 12 months or the last calendar year, whichever is easiest and I want you to estimate. We’re not looking for exact here. What did you earn in the last year? That’s earning everywhere, in your businesses, in your job, in your investments.

Then I want you to write down what you spent in the last year and then of course the difference. Whatever that difference is, whether it’s positive or negative, I want you to divvy that up. Did you increase your savings with anything that was left over or if you had a negative amount, did you grow your debt? Was there some mix happening with both? So some of you, you’re like writing those numbers down right now. You guys are great. You’re all good. Some others of you are like, “How in the world would I know those numbers?”

So for some of you, you might need to pause this video and when you do that, I want you to set a timer for 15 minutes and spend no more than 15 minutes going and gathering that information to write those five numbers down.

Now again, estimate it. If 15 minutes ends and you still don’t have those numbers, then just do it to like the nearest 50,000. All of us can do it to the nearest 50,000. Well, most of us. But those people aren’t watching this video. Just do as close as you can and take a look at those numbers.

So here’s the thing. How much time did it take you to pull those four numbers and do that simple little calculation down? How much energy did it take and how comfortable are you with your final answers?

There’s a trick to this exercise. When I have an introductory meeting with potential financial coaching clients, they always want to know what information they can pull together to bring to that first meeting and I always tell them I would really rather you didn’t prepare and then I asked the questions that I just asked you and how readily someone can answer those questions tells me a lot about where they need to begin on their path to making their money life better.

So if this was a challenging exercise for you and you wanted to pull your hair out, you might not like my answer. My answer is you’re going to have to watch that next video on recordkeeping and you’re going to have to make a little bit of commitment to change your recordkeeping format.

I promise you I’m going to make it as painless and easy as you can possibly do. But you’re probably going to have to do something a little different and if you’re one of those people where those numbers just roll off of your head or they were at your fingertips, whatever recordkeeping you’re doing, even if it’s simply just recordkeeping in your head, you’re good enough. You don’t need to do anymore unless you really want to because you already know what your numbers are. You have your answers.

So thanks for walking through the first time of delving in, writing numbers down. I swear we’re not going to do this every time and as always, I don’t want you to do this alone. If you would like support, please join our community by signing up on our list at www.TheFinanceGym.com or head on over to Facebook and join our Finance Gym Action Group or head on over to Facebook and join our Finance Gym Action Group, "Team Do Better". Have a great day.

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