A financial cleanse for the 2021 hangover

I just started a juice cleanse today. It’s only three days, so I’m pretty sure my family and I will make it out alive. I decided to do the cleanse because I felt like I lost sight of basic discipline and self-control when it came to eating and drinking over the holidays.

 

Many of you probably feel the same; fortunately, there are a plethora of amazing trainers and resources to help guide people toward a healthy 2022. My favorite is Daniel Island’s own JD fitness. What I realized is that many people also have what I refer to as a “spending hangover;” however, there just aren’t as many resources to help refocus and realign our spending habits in a healthy way.  

 

Of course, there is always Siri or Google. My research shows that more people will Google “get out of debt” the first week of the year than any other week in the year. I am here to help you refocus your financial health in order to align your financial spending, saving and investing with your goals. Just like a physical cleanse, a financial cleanse helps to reset and break habits and get out of debt! The following five steps can help you stop “living rich but feeling broke” and instead provide clarity and insights into your spending and savings patterns and put you back in control of your future.

 

• First, and in my opinion, most important, you must change your mindset. You are no longer a consumer, you are a producer. Repeat that again, let it sink in. You are a saver, not a spender — a wealth generator. What is your “why?” Why do you want financial security?

Freedom, peace of mind, generational wealth, early retirement. 

 

When you shift your mindset about your place in the consumer chain, you begin to measure everything against your value system, your “why.” Flip from “get money, spend money” to “get money, save money, investment money.”  

 

• Second, treat your household like a business. Many of you reading this article are either owners or previously owned a business or have worked in an environment where you were responsible for managing to a bottom line. Treat your household spending as the business of You, Inc. We create a Personal Balance Sheet for every client we work with; it is intended to be comparable to a business income statement. A tool to track progress and manage a budget. Start by creating a spending budget for your household.

 

• Four numbers you should know: monthly income, monthly expenses, how much you can save each month while paying down debt without incurring additional debt, and your personal net worth. This is your starting point. With these numbers you can manage your monthly cash flow and begin to save more. Start by tracking your monthly cash flow, this will provide clarity around your spending habits and patterns. This is similar to a food log — the more mindful we are about what we put in our body and how we spend our money,

the easier it is to evaluate and course correct.

 

• Track your progress: the greatest motivator is seeing progress. Plug in your numbers and understand where your dollars are going and what is left to save. Become accountable for your spending habits. Start by using free online software to track your progress, Mint.com is a good one.

 

• Make your spending count: At this point you have determined your “why,” incorporated your household, understand your spending habits and are ready to make a change. So when you spend, make it count! Before you buy, ask yourself: What is my long-term gain from this? What is my Return On Investment? If, by putting it on a credit card, am I stealing from the future to pay for the past? You can and should indulge here and there, but it should be done within a plan and for the right reasons.

 

Spend your time and energy on things that really matter to you. Keeping up with the Joneses is superficial — and honestly, the Joneses may be living paycheck to paycheck. They may be portraying an image they can’t afford. Be true to who you are and what inspires you. And here’s to a prosperous, healthy and fulfilling 2022!