Originally Published by PowHERHouse Magazine

Spring, with all its “new” and “fresh”, brings with it an expectation that this year – this year! – we’re all going to get our finances in order.  The constant barrage of commercials and conversations around RRSP deadlines, tax filings, etc., spur us to either finally get that financial plan thing sorted … or maybe just hide our heads in the sand.

I hear from a lot of people thanks to this barrage, and if it makes you feel any better, everyone’s confused.  How much do I contribute to my RRSP?  Should I contribute to my RRSP?  What about TFSAs?  What about my mortgage?

As one client said to me, “I feel like I’ve been throwing money at the wall and just hoping it sticks.”

It’s now time to start running your money, instead of running behind it, trying to catch up.  But wait… how?

Surprise!  I have some answers.  (I know you’re not surprised.)  There are 4 major steps that matter in financial planning, and you may be astonished to find that not one of them contains financial acronyms or lingo.  It’s true.  Here there are:

Get Goal Setting

Financial goals are not separate from life goals – in fact, “financial goals” aren’t really a thing (shocking!).  Life goals are a thing.  We use finances to achieve them.

Financial planning is not about choosing your investments, despite what the industry says.  It’s not about being a “good girl” (or boy, or woman, or person, or cat, or whatever).  Financial fitness is not morality.  Money is a tool.  We use it to get what we want.

Julia presenting at PowHERTalks Sechelt November 2015 Julia presenting at PowHERTalks Sechelt November 2015

So what do you want?

You may want to buy a new car.

You may want to pay off some debt.

You may want to take a month to travel.

You may want to start a business, build a house, or have a baby.

You may want to become financially self-sufficient by POINT X – what we used to call “retirement,” but since no one ever seems to admit their willingness to retire anymore, let’s not use that word.

Let’s use “financial freedom.”   There’s a point in the future when you want to be able to choose to work.  When you don’t have to work.

Now that’s a goal.

All of these goals – and any others you have up your sleeve – are possible.  They’re what matter.

Not what other people think you should have “by now.”  Not what other people look like they have that you don’t.  Not the things your parents or society or your grocery cashier think you should have or do.

Your life.  Your goals.  Let’s make them a reality.

Get Specific

If you want to buy a new car, you may decide that you want to buy a $45,000 vehicle by the end of the year.  You may have $20,000.  You, therefore, have about 8 months to come up with $25,000, or to finance it.  That’s specific.

If you want financial freedom, then you need to dig a little deeper.  How much money do you need to support your lifestyle?  What’s your POINT X?

Write ‘em down.  Some come with obvious strategies that you can complete yourself.  Some, you’ll need help with – but knowing your goal and getting specific about it will move you and your helper onto the strategy piece.

Get Tracking

“But I hate spreadsheets!!!” you may exclaim.  Yeah, me too.  No, I’m kidding. Spreadsheets are magic. But just because I like them doesn’t mean you have to.

What you do have to do is find a way to understand where your money is coming from and where it is going.

Perfectionists love Quicken, a bookkeeping program where you enter in all the data, and it provides some really thorough reports.  They’re fantastic if you’re into that kind of thing.  If you’re not, then please do not use this program.  It will only anger you.

Spreadsheet enthusiasts do a great job of tracking in monthly spreadsheets.  Money in, money out.  If that’s you, and you haven’t made one, ask me for a ready-made tracking sheet.

Everyone else can make great use out of on-line tracking programs like www.mint.com (which is free).  If you use online banking – please use online banking – then this is the way to go.  You do have to spend a little bit of time initially, teaching it which categories your various expenses go into, but once you’ve done that, it will start to click along.

Why are you tracking?  The results of this tracking tell you what resources you have in place to help you achieve your goals.

If you’ve determined that you are going to save $25,000 over the next 8 months, then you need to find $3,125 every month that you can set aside.  (Don’t run away: these are example numbers!) Without analyzing your income and out-go … er, expenses… then you’ll just have no idea if the money is there.

Get tracking, so that you can analyze.  Or so that someone can analyze for you.  Either way, recognize that you do need to do upfront work here to get to the point where a strategy can be built, and this is a key piece.

Get Measuring

Most people who get as far as tracking stop there.  And then they stop altogether.  Why?  Because tracking isn’t a goal.  Tracking is information-gathering.  The goal is a completely different beast.

The way you track and what you track will depend on your goal.

If you’re tracking a future expense, like a car, a house, a business, then what you’re tracking is the pot of money you’re growing towards achieving that goal.

If you’re tracking a financial freedom point, you’ve hopefully worked with a professional to create the strategy that will put you on the right path.  Now you need to track that strategy to make sure all the action you’re taking is putting you where you want to be.

That Sounds So Boring (you may say)

Yeah, measuring and tracking can be pretty boring.  If that’s the case for you, that’s more than okay.  Most of us weren’t taught strategy, let alone financial strategy in school.  I have a job because most people aren’t strong here.  It’s more than okay if your strengths lie elsewhere.

Do the bits that no one else can do for you:  Get Goal Setting, and Get Specific.

Then Get Help.

Julia Chung, CFP, CLU, FEA wants to live in a world where everyone makes music, gourmet seafood, and rational decisions.  She creates businesses like Spring Financial Planning and Admin Slayer, and helps others build their own futures.  Outside of work, you can find her solo-parenting, writing, fiddling with guitars, seeking refuge on the Sunshine Coast, and occasionally attending punk shows with a mohawked yeti.

Click here for Julia’s FREE Women & Money e-book.

Click here for Julia’s PowHERtalk, Startups:  4 Things To Get Over.

Julia Chung

Julia Chung

Co-Founder, Sr. Financial Planner at Spring Financial Planning
With twenty years' experience in the financial services industry, education in both personal and corporate finance, business and family law, cross border planning, family dynamics, insurance, risk management, operations management, and strategy, Julia is a powerhouse financial planner and the co-founder of Spring Financial Planning.
Julia Chung

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