In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness --one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, professional trainer and counselor Karen McCall is discussing the importance of clearing the mental clutter.
Twenty five years ago, my financial life was a disaster. My bills went into a big, dark, deep bowl on top of my refrigerator. I thought that as long as they were “out of sight,” they were “out of mind,” but it wasn’t true. I suffered tremendously from my secret.
Even though I was not consciously aware of it, my financial mess was always on my mind. I would run numbers in my head regularly. Once, I was so spaced out by trying to juggle my bills in my mind that I walked in front of a bus and barely avoided being hit!
As the financial clutter grew, my life and options became smaller and smaller. I have since developed a description of this process called the Money Life Drain. Picture an upside triangle with financial burdens, debt, and out-of-control expenses on the top. As you move down the triangle, you and your relationships become more and more stressed, your health and well-being is compromised, and you end at the bottom with Financial, Emotional, and Spiritual Depletion.
Over time I was able to reverse the Money/Life Drain and in the process created the Financial Recovery Institute to help others do the same. For nearly two decades I worked one-on-one with clients to help them bring clarity to their financial lives.
Many of my clients were overwhelmed with financial clutter. Their bills would be scattered around the house: some would be in a kitchen drawer, others might be piled on a table, while still more were in the car or a handbag.
Their method of bill-paying was to wait until their utilities were turned off. Then they would frantically find the quickest way to pay so they could get their telephone or utilities turned back on. Other bills would be ignored until the telephone calls from creditors started. Many of my clients admitted they live among constant clutter, with financial clutter just a part of it.
There is a way to turn financial clutter into clarity, and I’d like to share it with you. Here are the steps:
1. Track all your money. This will get you conscious and connected to your spending and earning behaviors. Use a checkbook register for keeping track of all spending that flows through your bank account, use another one for tracking cash, and keep a third one for any credit card purchases. I can’t tell you how powerful this is.
You have heard many times that you should write your spending down for a week or thirty days. But my experience is that most people who have money problems need to do this for a much longer time.
I have been writing down every penny I spend for the past twenty-five years! It has become a habit just like flossing my teeth. I love the way it keeps me grounded in my money behaviors.
2. Plan, plan, plan. I like using the term “spending plan,” rather than “budget.” Planning my spending and earning has changed my life forever. I strongly suggest you do a plan every month because each month is different.
Then, as you plan monthly you’ll have the data you need to create an annual spending plan, so you can see the big picture. If you plan at the beginning of each month, you will know if your plan will work. If, after adding expenses and subtracting expenses from your income, you see it will not work, you’ll need to make adjustments.
Tip: Always be mindful of your needs before your wants. We can never get enough of what we don’t need. Neglecting needs or “making do without” will lead to deprivation - which is the opposite of fulfillment.
3. Stay connected to your plan. If you deviate from your plan, it is usually for one of three reasons: you didn’t plan enough, something came up you couldn’t have planned for, or you bought something impulsively. When this happens you will need to continue adjusting your plan throughout the month.
Get help! Whether these steps sound too simple or too overwhelming, don’t be afraid to reach out to a professional counselor who can hold your hand through the process. If you could do it on your own, you would not be where you are.
Starting the process of Tracking and Planning is the beginning of coming out of the clutter and financial fog. You deserve to have a life of clarity, which will lead to a balanced, meaningful life of joy and fulfillment.
Karen McCall is retired from counseling and now focuses on training Financial Recovery Counselors internationally. To find more about finding a counselor, or her MoneyMinder Products, please visit Financialrecovery.com