Three Steps to Get Your Money Headed the Right Direction

Trying to get your financial life pulled together can be overwhelming and confusing.  You may know that you need help but don’t know where to start or if it is even possible to get things turned around.

So you decide to ignore it and hope for the best.

If your doctor told you to lose weight or you would be unable to walk in a year, but you knew nothing about weight loss or if it was even possible, would you ignore your doctor and hope for the best? 

Losing Weight is more than one issue

Losing weight is many issues that show up in one outcome.  Not only is weight affected by your eating habits but also by your exercise level and type, your stress levels, the amount of sleep you get, mental blocks, health issues and many more!   To lose weight you must figure out exactly what is causing your problem, and this is typically more than one issue in play!

Money is the same.  The status of our money is affected by many things, including debt, insurance, overspending, savings, emotions and many more.  To begin to fix your money problems you first need to figure out what is causing them.

Losing Weight is easier when you get help

Trying to go it alone in a subject that you are not familiar with can be overwhelming.  If you have never lifted weights before you would have a friend show you the ropes, attend a class or hire a trainer.  After all you don’t want to hurt yourself the first day out!

Money is the same.  While money gets easier and easier to understand as you learn more, it still helps to asking a knowledgeable friend, attending a class or hiring an expert can make things faster and easier.  This reduces your times of making mistakes!

Losing Weight happens one day at a time

Most of us don’t go to bed thinking I want to lose ten pounds and wake up in the morning and it is gone.  Instead we have to adjust our lifestyle to include fewer calories, more exercise and a healthier relationship to ourselves and our bodies.

Yet again, money is no different.  You don’t go to bed thinking I am going to pay off all my loans and in the morning they are gone (unless of course you have the money and you just write the check).  Instead you have to adjust your lifestyle to increase income, decrease debt, increase savings and build a healthier relationship with money.

Getting Your Money Body Turned Around

So how do you apply the ideas we talked about above to start your money transformation?

1.  Solving your money problems is probably going to be more than one issue.  So start making a list of everything that you can think of that affects your money.  Then start reviewing those to determine if they are part of the problem.  Then start working on those that needs adjusting.
2. When you are confused and need help, do not be afraid to ask for help.  Help will you learn more and make bigger steps in the right direction.
3. Breathe each day and know that as you make positive changes they will eventually have an impact on your financial health.  It takes every day making little steps of progress but you will get there.

Just like your doctor ordered you to lose weight or you would not be able to walk, I encourage you to get your money turned around or you won’t be able to walk through your ideal life.  The confusion and what to do will slip away with the following of these three steps.  Why don’t you start today and start planning for the best.

Need more help?  Coming in January is our MoneyFit Workshop, we will create your list of money items to be worked on, how to tackle those, and answer any questions you have.  Right now for a limited time we are doing a pre-sale, get in for half price!

Limited to 30 people!

http://www.smartstepomaha.com/moneypresale

 

More reason to invest today!

 

One great reason to start investing today is that the long term impact your regular investments have can be more beneficial than which mutual fund you pick.   This article says it best!

 

http://finance.yahoo.com/focus-retirement/article/108005/bear-markets-do-wonders-for-retirement?mod=fidelity-buildingwealth

 

Then when you are ready to learn how to invest:  www.smartstepomaha.com

Afraid of the Risks of leaving your job?

Is taking the risk of leaving your job worth the chance to live your dream life?  YES, if you are prepared with a plan.  Leaving your job because you are burnt-out may solve an immediate issue of joy in your daily life, but when this is done without a detailed plan then your risk dramatically increases and your issues become greater.  When you leave with a plan you have already calculated your risks, assessed what to do to avoid them and made arrangements for what happens when they do occur. 

Risk is only relative to how much or little you planned and researched your next move.  If you jump into your own consulting business but have not done any form of business planning it makes it much harder for you to succeed.  Kind of like running around like a chicken with its head cut off!  Besides for planning your new business or career move you also need to plan your own personal finances and life situations.  Ignoring issues such as cash flow, insurance and day care makes it harder for your next step to be successful.   Why?  Because you are stressed and thus less productive.  So what do you need to do?  Make plans to prepare yourself, these include the following steps:

·         Plan and evaluate your family finances – if you can only make it two weeks without a job then that was a risky move.  Wouldn’t you rather discover that before you left your job?

·         Develop a business plan or life action plan – Even if you don’t know exactly what you are going to do if you have a plan of action to decide how you are going to decide then your days will be productive and not wasted time.

·         Discuss what factors would make you change direction and move back to a paid job – this is for those of you planning on jumping into your own business.  Decide where your end point is, give yourself a deadline. 

Once you have made adequate plans, jump!  You only have one life to live out your dreams and passions.  Make it a good one!

Live a Life of Passion

Many of my clients choose their next step in life based on where they believe the money is which would ultimately lead them to happiness. Please don’t do this, because if you pick a passion and build it into your next step the money will flow and happiness will be built in automatically. This does not mean if you love to play piano that you can hang up a sign and people will come walking in. You still need to plan accordingly to either turn it into a viable business or find an employer that will fit with your personality and needs. What it does mean is that as those people eventually come in, they will sense your passion and love and will become customers for life.

So how do you pick out this passion and turn it into your next step in life?

First you need to pick which of your passions you really want to grow into a career or lifestyle. Not all of your interests will make for a good business so you need to evaluate what you want to spend your time on and what will work in a business. I frequently ask my clients this question “If you could talk about one thing everyday what would it be?” I love reading about health and fitness, but I think after a week of talking about it I would need a week off! On the other hand talking about creating an ideal life and achieving it I see no reason to ever stop talking about!

As you are discovering where your passions can lead you consider these tips.

• If you need to make a list of all your interest so you can go through and eliminate them one by one go for it! Also, don’t be afraid to combine two of your passions. A great book to help you with this is “What color is your Parachute”. Get all into it and do the full flower exercise, no matter how cheesy you feel! (Get the workbook it makes it easier)

• Just because you are good at it does not mean you should create a business around it. This one is hard because we gravitate to what we know – that does not make for a passion based business. I was a great bookkeeper that did not make me happy doing it! Avoid the easy road of turning your current job into a business or slightly altering your position. It is easy to say if you switch from non-profit to for-profit you will be happy, you might be but really analyze what you dislike about where you are now and how that would or would not change.

Once you have narrowed it down to one or two the next step is to build a business or find a career around the interests. This part can be time consuming and it just may take some brain storming around it. Give yourself plenty of time and space to figure out what the right move is. Ask yourself these questions:

1. What can I do to make money with this? Would I pay for this?

2. Do I need training to do this?

3. If someone else is doing it is their still room in the market or is it saturated? Can I do it for them instead of working for myself?

4. Are the start-up costs reasonable for me?

5. Can I imagine spending my time on this for many years in the future? Really take the time to envision yourself 10 years down the road doing this.

Finally, once you have selected a business it is time to start building a business plan or begin your career search and chasing your life’s passions! Your soul will thank you!

Your Financial Health and Your Start-up

Thinking of starting a business?  One of the most important things to take into consideration is how financially healthy your own finances are.  Why is this so important?  If you are in debt, not cash flowing your current monthly expenses, and don’t have an emergency fund then that impacts how you grow your business.  You have less room to take your time and do it the right way, there is no cushion to make mistakes.  So what why is that bad and how do you go about starting a business and having personal financial health?

Why is growing a business quickly under financial stress bad?  First, it is just plain stressful.  Stress is bad for your health, which ultimately affects your business.   Second, a business that is rushed due to lack of money will make poor decisions.  It becomes harder to make good decisions and not seem desperate to clients and vendors because you are worried about the house payment.  These bad decisions can range anywhere from pricing your products or services wrong, to selecting the wrong niche (or none at all), or bad financing.  What does it matter if you make a bad decision?  We will use picking the wrong niche as an example?  The wrong niche, or a more common problem no niche, makes marketing harder and more expensive.  If you are marketing to the wrong clients your growth is slowed because your customers don’t know they are your customers.  For example if you choose to market to the world instead of narrowing it down to mothers who suffer migraines your message will get lost on those who don’t have migraines while migraine sufferers who are moms may not stop to read your message.  You select no niche because you think you can get more sales faster, but it takes more money to reach your market because they are not looking at you! The brilliance of small business is that you can change quickly to fix mistakes, however too much change and too much radical change puts you back near the starting point and confuses your customers.  This costs you even more money, money that you did not have to start with.  So do yourself and your business a favor, start it when you are financially healthy.  How?

There are two ways that I recommend you start a business with financial health.  The first is to start your company on the side of your day job.  This will force you to start it slower because you have less time.  It also allows you a steady stream of income and will allow you to test the market to make sure the concept will work.  The biggest caution with this is ensuring that it does not cause trouble with your employer.  Don’t let it affect your performance at work and make sure if you are doing the same line of work that you don’t violate policies or lose your intellectual capital to your company.  The last thing you want is a legal battle or bad blood!

Second, you can take a couple years to focus on getting yourself on solid financial ground before starting your business.  Scale back on living expenses, pay down debt, and save up emergency funds and start up money.  Then when you are set, make the jump to owning a business.  This does not mean you don’t have to set the business off to the side.  While getting your finances together you can still write your business and marketing plan, start designing a website, or get some marketing materials ready you just won’t launch until the money is right.   

By being financially sound on the personal side you empower yourself with the time to build your business with thought, time and care.  Making it that much more rewarding and enjoyable.

Liquidity is King

Over the years my financial focus has shifted as I have continued my money education.  I grab on to a phase and make that the it thing for the time.  Everything from real estate is king, to invest early and often to debt free living is the way to go!  Usually when I depart a phase that information does not go away, it just gets incorporated into what I know and my emphasis moves on!  The older I become and the more I learn about personal finance the more I realize that no matter what financial approach you are going to take the number one most important principal is liquidity.

What is liquidity?  Liquidity is how quickly you can get your hands on your money for immediate needs.  Checking accounts are highly liquid; the value of your business is not liquid.    I also add the requirement that the liquidity is present without a penalty being imposed for liquidating.  This would be the case with retirement accounts, CD’s and some other investments.  You may have a million in a money market account, but if it is under the umbrella of an IRA and will cost you a penalty to the IRS to get at it, then I do not consider that liquid.  Debt is also not liquidity, because ultimately debt will decrease your future liquidity by creating payments and extra expenses in the form of interest.  We are talking about cold hearted cash that you can get your hands on is liquidity. 

Why do you want to be liquid?  Liquidity gives you flexibility which allows you to create independence and freedom.  How?  Imagine all the times that having money available would have allowed you the ability to move on an opportunity that has been presented.  For example during a recession your competitor is about to go under and you can step in and buy them or their equipment.  You start a new business and because you have cash you can take longer to build your base and find the right customers versus operating in panic mode and going back to make adjustments latter.  You at the last minute are offered a vacation spot with your friends because of a cancellation and you have the cash to do it and enjoy it! 

Outside of winning the lottery and sticking all that money in savings how do you create liquidity?  There are three basics to follow: live on less than you make, diversify your types of assets and learn to say no to good opportunities.

The first step is to live on less than you make.  This is one of those things that you hear over and over but rarely actually listen to the advice and take steps to follow through.  Please take the time to stop right now and process this statement in your head.  It will help you with more than just financial liquidity.  It reduces stress, creates money for investing and allows you to take full control of your financial destiny.  Sit down and do a budget and start focusing on eliminating expenses or creating income until you are spending less than you bring in.  Then begin to put that extra money into liquid accounts for you to access when needed.  This concept should apply to you and your business.  If you don’t do this on the business side you are not making a profit, and at that point you might as go work for someone else!

The second step is to diversify your assets.  What I mean by this is don’t put all your money in retirement accounts, or real estate or even just a savings account.  Your money needs to be divided among different assets with varying degrees of liquidity.  This is beneficial because it not only creates a place for liquid savings, but encourages you to put away in non-liquid investments such as retirement thus creating more permanent long term wealth at the same time you create liquidity.  If the perfect real estate deal comes along you don’t want to have all your money in retirement.  If your goal is to save 15% of your income, break that 15% down to 10% retirement accounts, and 5% non retirement investments.

The third thing to do is learn to say no!  Just because you come across a fantastic deal does not mean it is a fantastic deal for you as your situation stands today.  This is a really hard one to put into practice because we all tend to want to get a great deal and then brag about it!   However if that great real estate deal that you get to brag about is going to jeopardize your liquidity and wealth then it is not worth doing.  Why, because life is unpredictable.   You may believe you can make the extra payments for a year and then you will get a raise, land a new client or sell your old place and then all will be back to the right balance. What if that is not true?  You cannot guarantee that a future event will happen today.  Basing current decisions on what might happen tomorrow is not a good way to make good financial moves.  Only seize opportunities if it is completely right for you today, based on today’s situation.  Say no with the confidence that it will put you further ahead and when YOUR right deal comes along it will be even better and easier to enjoy.

Freedom comes from having choices, allowing yourself liquidity creates choices.  Don’t box yourself in a corner, give yourself freedom.  It is easy by living on less than you make, allocating your assets across many areas, and learning when to say no!  You can do this and reap the rewards of good financial choices!

Money Frustration

Yesterday while working on narrowing down my list of mutual funds for my invest 25 project I became a bit agitated toward the end of the process.  Why?  I kept running into road blocks on selecting the right fund to invest in. When I thought I had the perfect fund, I would get to the last step and one thing would throw it off.  Then it dawned on me.  If I spent as much time as I did on the research for this (at least 8 hours), and knew what I was looking for and understood the terminology and it still managed to frustrate me I could not even begin to imagine the frustration new investors feel.  Which confirmed for me even more how much help we need in the area of money education for our society? 

So what does this mean for you?  I want you to know that I understand your frustration; it’s like learning a new language late in life or worse yet me trying to learn physics!  I am here for you when you need guidance, just drop me a line.  I encourage you to commit to learning more over time.  Ultimately know that by taking small step to learning over time you will get to a place where you are comfortable with money.  Please don’t give up.  Only you can manage your money with the passion and heart that is your own.  So take the time and learn and eventually the frustration will go away, and be reassured to know that even those of us who are knowledgeable are sometimes frustrated also.

Learn something new

Our world is in turmoil.  The news may even leave you to believe the sky is falling.  Is your job at risk?  Realized that you have been spending too much money?  Not sure what to do next?  I have on piece of advice for you. 

Go learn something new.  Use this as a time to grow.  Does it really matter what you learn?  No!  Just get out there are learn something new.  This is truly the only way to grow and thrive,  be continually learning.  Do you want to be in the same place in ten years are that you are today?  No – go learn something!  Your future self thanks you.

Fitness and Money

Most of my clients come to me for assistance in learning about money and making progress with their investments.  However, we usually end up working on many issues that indirectly influence our money.  These cover everything from job and or business growth, family and life balance to health and fitness issues.  Each of these areas has a direct impact on our money and how well we manage it.  With this being the 3^rd week of the New Year and some of our resolutions starting to waver I wanted to focus on the one that most of my clients have in common – health and fitness.

How does fitness affect your finances?  The obvious one is that the healthier you are the lower your health care costs are, but it actually impacts us in other ways that are harder to monetize.  To me the biggest of these is that exercise and a healthy lifestyle decrease stress levels.  I know for myself that without exercise my stress goes up which creates a downward cycle.  I am less productive, my creativity comes to a halt and my patience is gone.    This impacts money because I don’t get as much business done, my writing is harder to accomplish (I get many of my ideas on cardio equipment) and my overall patience with myself is gone so I am more demanding – which creates more stress!  It ends up being a vicious cycle that impacts me and my money. 

Unfortunately in our hectic world the challenge becomes when do I work out?  Most of us are overbooked and quickly put fitness on the back burner because it is not screaming at us.  Yet it is one of the most important things to do, so how do we make it a priority?  I use three areas to get it to the top of my list:  Variety, commitment and make it easy!

1.    Variety – I keep it exciting and rarely do the same thing more than once in a week.  I spice up the cardio and alternate my weights program.  This way it is never boring and dreadful.

2.    Commitment – I make a commitment to myself and family that I will be the best me.  I know that this requires me to workout.  So it is on my calendar in ink and cannot change!

3.    Easy – I make sure that I am able to workout whenever I want.  Not only do I belong to a gym, but at home I have cardio equipment and some weight items.  This means I never have an excuse beyond I did not make it a priority.  I even have one of the best inventions ever for weight training that make it quick and easy to accomplish (FitDeck) so I really have no excuses.

So are you going to make fitness a priority so the rest of your life can thrive?  Your bank account and business with thank you for it!

 

 

 

Books that Change lives

I am always amazed when I read a book how I am radically changed by it.  Over the past two weeks I have flown through two books that have had a huge influence on me.  They are The Secrets of Six Figure Women and Overcoming Underearning by Barbara Stanny.  I have been searching for a book that I liked on dealing with the emotional issues with money and was never satisfied with any of the books.  These two books have changed that forever. 

Money is deeply tied to our emotional past and present.  You may think that sounds a little new age, but the fact it they way you were taught about money and the way you have dealt with money as an adult does have an effect on what you do today to not only make money but to save money also.  In order to reach your true potential with money and life you need to discover what your deepest core beliefs are, determine if they are right for you today and if not change them.   These two books are great for helping you with that.   Get these books today and start a journey to a healthier money relationship.  Your bank account will thank you.

For information on these and other books I recommend check out my book list:

http://www.smartstepomaha.com/books