Get Into Your Money Groove


Get Into Your Money Groove 07 21 2015We each have something that is uniquely our thing. It might be hitting a golf ball, working in a laboratory, counseling people, building furniture or flower arranging. You know it’s your sweet spot when it feels easy and you feel at your best—nothing else matters while you are in your zone. Remember the last time you experienced this? You were the master of your universe and it felt pretty damned amazing—right?

Yet somehow, when it comes to tending to your financial life, you may feel quite the opposite of mastery. You may well have limited knowledge—and if you’re like lots of people, you either avoid the situation to the greatest degree possible OR find someone you trust and hope for the best. Neither scenario is truly comforting. And deep down, you admit to yourself that other than paying bills, setting up your 401(k) plan and gathering tax information for your annual misery session, you really have very little comfort in this area. 

Your financial life becomes the opposite of being in your groove. But considering the confusion, complexity and corruption in the financial industry—why should you feel comfortable?

Take Sean. He’s a single 36 year old who earns a pretty decent living, but is far from set. Sitting in the middle of his cash flow statement was a significant outflow in the insurance category. When asked, he said that he was advised to buy a whole life insurance policy that would grow to a large amount in the future. Probing further, I discovered that Sean had no disability insurance, a tiny emergency fund and while he said he wanted to buy a condo in the next few years, had put very little toward that goal.

Sean—not knowing even what to ask—was “featured and benefitted” into buying an expensive policy even though he had absolutely no need for that coverage. He was told that the policy would accrue tax deferred and he could get the money any time. And of course the illustration he was shown displayed spectacular results. Meanwhile, he was paying out thousands of dollars for something he didn’t need.

Sean trusted the agent and frankly was too intimidated to probe too deeply. His lack of knowledge led him to bad decisions and even farther away from getting his money to work best for him.

To get into your financial groove, pick one area where you have concerns and make a simple plan. The key? Start small and start strong.

Let’s say you want to build up your savings. How can you start small and strong?

  1. Examine your monthly expenses.
  2. Pick out ONE or TWO areas where you have some control (also known as discretionary expenses—things like eating out or the cable bill).
  3. Decide what you are going to cut out or cut back and quantify what that means in a dollar amount. For example, if you decide that you can do without the $5 coffee three times a day and opt instead to make coffee at home, you can save $15 per day.
  4. At the end of each day, transfer $15 from your checking account to your savings or money market (or if you’re still writing checks, write the check). At the end of the workweek, you should have a $75 increase in your savings and $300 at the end of the month.
  5. Follow your progress each week and each month. After two months, you should have this habit down pat.
  6. Now, look for other opportunities that can push your savings to an even greater level.
  7. Make sure you are engaging in both sides of the transactions: not spending and actively

Nothing breeds success like success. Pretty soon, making sound financial decisions becomes easier because you started small and then expanded your capabilities. No world-class marathoner began running 26 miles at a lightning pace.

Getting into your money groove follows the same idea. One step at a time, you’re always expanding your comfort zone with experience and understanding. All you need is the willingness to take the first step.