Before We Begin
Everyone learns best when their minds are open and ready to receive information. Which is why before you get started working through the steps of financial wholeness, Tiffany wants to talk about the importance of checking in on your mindset around money.
#1 Recognize Your Money Influences and Patterns and Identify Their Consequences
The key to breaking any patterns is to gently question your behavior. Think about your consistent financial habits and write them down. Be honest about where they come from, how they make you feel, and how they might be pulling you off course from your financial goals. This is not to make yourself feel bad about your current habits, but to celebrate the awareness. Knowing when, how, and why you do something is the first step to making lasting, positive changes, and that’s exciting!
#2 Establish Your Own Financial Voice and Use It to Take Charge
Start to envision this “you” who’s good with money. Think about what kind of behaviors she has. If it helps to work from what you know, draw this new you in your mind using characteristics of people you respect or want to emulate. Picture your friend Janet’s rocking retirement account and Sheila’s seeming ability to fund all the fun stuff she wants to do without struggling, and mix that image with Tanya’s resistance to always having to have brand-name stuff. These are the voices you want to envision and emulate, and let meld together until they emerge as your own.
#3 Find a Reason for Gratitude
Know that learning new things, navigating money differently, learning how to budget, save, and invest better…these don’t happen overnight and might feel hard at first, but the hard is preparing you for the better. You are about to level up so you should expect some growing pains. To help get your mindset right,
Find a bright spot or your hidden opportunity—your equivalent of a raggedy suitcase, or fifty email addresses—and write them down. Create a gratitude list and add to it as you can.
#4 Live for Joy
More money might make your life easier on many levels and might make you superficially more successful, but beyond a certain point it’s not actually making you happier. Even if you are in a tough spot right now, and you know there’s a lot of work to be done to get you on the path to financial wholeness, know that there’s still laughter to be had. There’s still love, there’s still hugs, there’s still sunshine.…There’s still joy.
#5 Surround Yourself with Positivity and Accountability
Think about the people in your life who influence you—these could be people you reach out to for insight when it comes to decisions, or just those who have some power over the choices you make, maybe because you admire and want to emulate them or because they overshare their opinion of how you should operate your affairs. In any case, you want to consider the type of energy coming your way from these outside forces. Are you getting enough positive, encouraging support? If not, consider replacing these influencers with people who will help lift you up toward your dreams. Be proactive when looking for the right kind of accountability partner. Don’t be afraid to connect online.
Remember the Power Within You
Ultimately, a lot of your money mindset comes from remembering how truly powerful you are. You have everything you need; you have the tools and ability and the right to pursue the abundance that was meant for you!
Remember that your current financial position and circumstance aren’t the end; they are just the beginning. Prioritize faith over fear and believe that you can get where you want to be.
10% Whole: Budget Building
Does the idea of budgeting make you a little nervous? Downright scared? Don’t let it! Yes, you have some work to do, but this work is the good work, the kind that will give so much back to you if you just roll up your sleeves and get started.
Know that by actively taking charge of your budget you are laying out the path toward your fabulous future.
Here are the eight Do’s to help you get good with budgeting:
- Make a Money-In list.
- Make a Money-Out list.
- Calculate how much each expense (Money-Out) costs monthly.
- Calculate your beginning monthly savings
- Assign control categories to your expenses.
- Reduce your expenses as needed and look for ways to increase your income. Then RECALCULATE savings!
- Separate your funds.
- Get automated.
Tiffany explains each step, in detail. I highly recommend you buy her book here.
In addition to gathering up your recent bank statements and maybe some receipts from recent expenses, you’ll need just a couple simple tools for this process. First, if you’re old school and analog, get a cute journal or notebook. This doesn’t have to be fancy, but using something bright and eye-catching, something that’s not going to just get buried on your desk or bedside, is really helpful.
20% Whole: Save Like a Squirrel
Savings is more than just an incredible fuel for your future. It’s also a cushion that can catch you if you fall on tough times, or risk protection like a seat belt that protects you in a car crash. After all, life is unpredictable—you might get laid off or face a health emergency that puts you out of work.
To get good at saving, you’ve got to move from the habit of saving to spend money to saving to make money. Being a good saver means you don’t spend all that you save unless it’s an emergency and you put the savings somewhere intentionally
Here are five Do’s to get good with savings:
- Be like the squirrel. Work hard and save big during plentiful times.
- Identify and calculate your savings goals.
- Drop down and get your noodle on. Calculate your baseline needs by asking yourself, “What’s the least amount of money I can survive on monthly?” aka “If I had to eat ramen noodles…?” Use your Noodle Budget to help you find the savings you need to fuel your savings goals and use it in case of an actual emergency to help you keep your head above water.
- Practice mindful spending.
- Set up and automate.
30% Whole: Dig Out of Debt
Being debt-free should be a goal, but not the goal. The main purpose of reducing your debt is so you have excess money to go toward growing wealth, which should be the ultimate goal.
Focusing exclusively on your debt is like giving all your attention to filling a hole in the ground. Focusing on wealth is the equivalent of growing a tree in that hole.
The bottom line is that paying off debt is part of achieving financial wholeness, but it is indeed just one part of a whole. If you put all your energy into paying off your debts, you could miss out on investing in your retirement and your long-term wealth.
Here are the four Do’s you’ll need to dig out of debt:
- Identify your debt.
- Restructure your debt.
- Choose a paydown plan.
- Automate the paydown plan.
40% Whole: Score High (Credit)
Even if it’s just a number, it’s an important one! It can open doors of opportunities like a job, homeownership, renting an apartment, borrowing money, owning a car, and more. It can give you access to better interest rates, more negotiating power, and greater ability to shop around for the best deals. Good credit can also help you avoid having to put down a big security deposit on an item like a cell phone or being charged higher rates on things like insurance. You want good credit.
Think of your credit report as a kind of money transcript, similar to your high school transcript that shows what classes you took and the grades you got. Your credit report is a detailed record of your financial history and public records; your credit report will reveal any credit-related event connected to your name and your Social Security number. This includes credit cards, mortgages, payment history, bankruptcies, liens, collections, and more.
- Check payment history (35% of your score).
- Reduce your amounts owed and improve credit utilization (30% of your score).
- Protect your credit inquiries (10% of your score).
- Build the length of your credit history/hack your age (15% of your score).
- Manage your credit mix (10% of your score).
Tiffany explains each step, in detail. I highly recommend you buy her book here.
50% Whole: Learn to Earn (Increase Your Income)
The key to bringing in more income is not to grind yourself into the ground to make it happen; what good is more money if you’re too tired to enjoy it?
You want to get good with money but of course, you also want to live a good life. You don’t want to create higher hurdles to get to the richer life you want to be living. Stop leaping, start earning more intentionally. This means looking at the most obvious places first for ways to increase income, and then spanning out from there.
No matter how you look at it or what your starting point is, you can make more money if you do some up-front work to find the right path to hustle down. Your path will be based on your current job, your current and maybe unknown-to-you skills, and where your greatest income growth potential lies.
There are just four Do’s to increase additional income in your life:
- Maximize your earning potential at work.
- Assess your skills.
- Decide which of these skills you can monetize.
- Put a number on it: What’s the income potential?
60% Whole: Invest Like an Insider (Retirement and Wealth)
Everyone wants in on investing as a concept, not everyone wants to really get into it in the way that’s necessary to get something out of it. As in, they talk a big game about wanting to invest because it seems like such a glamorous topic, but when push comes to shove, they walk away from the kinda nerdy financial advisor who might be droning on about risk and strategy at the cocktail party. Champagne and caviar, yes. Details and data, no thanks!
But you’re different. You’re going to make sure you really understand the terms and your options and the necessary steps to invest to meet your goals.
Retirement: The goal for this type of investing is for you to save and grow your money to an amount that will allow you to maintain your current lifestyle even after you stop working. You do this because you want to live comfortably without worrying that you have to work forever.
- Determine how much you need to save for retirement.
- Decide where to put your money.
- Choose your investment mix/asset allocation.
- Set up automation and limit your withdrawals and loans as much as humanly possible.
Wealth Building: On the other hand, this type of investing is so you can upgrade your life now (and in the future) and also leave a legacy.
- Meet the baseline requirements before you start investing.
- Set investing goals.
- Determine what type of investor you are: active, passive, or in-between.
- Figure out the best management type for you.
- Identify the best investment vehicle for you.
- Start investing.
- Automate and ignore.
70% Whole: Get Good with Insurance
Insurance is a tricky topic because if you don’t have it when you need it, you can get yourself into some big trouble, but until you need it, it can feel like a waste of money since you’re paying for a benefit you aren’t using. Indeed, many people forgo insurance in its many forms because they think it’s a rip-off.
For the most part it is absolutely not a rip-off, and in most cases, you absolutely do want to have it in place. The key is to shift from thinking of insurance as something you can deal with later to thinking of it as something to put in place to protect yourself and your loves ones against future crises.
Life is unpredictable and you never know when you’re going to get in an accident, have a serious illness, or experience damage to your life or property through any number of threats that we don’t like to talk about until it’s all we can talk about.
Ultimately, insurance is a risk management tool. The reason you get insurance is to protect you in case something happens. And it’s a small price to pay for big peace of mind.
- Get health insurance.
- Explore life insurance.
- Explore disability insurance.
- Get property and casualty insurance
80% Whole: Grow Richish (Increase Your Net Worth)
The term net worth has a nice, rich-person ring to it, doesn’t it? But you’re wrong if you think it’s only for the megarich; everyone has net worth.
Assets (what you own) – liabilities (what you owe) = Net Worth
Checking your net worth is like using a thermometer to check your temperature (your financial temperature). If your temperature spikes up, you’d likely go to a doctor for testing. The same goes for your financial/net worth temp, except that a high number isn’t a concern. It’s a low number (especially a negative one!) that requires us to dig deeper to access and diagnose the cause of the problem. It could be a lack of savings or a high student loan debt balance that’s creating a negative net worth. The lower your net worth, the further you are from financial health and wholeness.
If your net worth is superhigh…well, then you’re either Beyoncé or you’re doing something exceptionally right. For the rest of us, the goal is to get up to a positive net worth, even if it’s just positive by $100, $200, or $1,000.
- Get to know net worth—and calculate your own!
- Accept your net worth (for now).
- Establish your net worth goal and identify the steps you can take to meet it.
- Make future financial decisions with your net worth in mind.
Tiffany explains each step, in detail. I highly recommend you buy her book here.
90% Whole: Pick Your Money Team (Financial Professionals)
You need a team. A Money Team, to be exact. A Money Team is the support system that helps guide and influence your financial choices.
The players on your team will be different depending on the complexity of your finances. If your financial situation isn’t all that complicated—say, you have a job and you’ve set up a 401(k) with your employer, you rent your apartment, and you have a little bit of savings—your Money Team might simply be made up of your partner, peer group, and a financial educator.
If your finances are more complicated—say, you own a company and employ others, you own property, and you have a home equity loan—then you might want a few more players on your team: an accountant, an attorney, a certified financial planner, and a bookkeeper. These financial professionals provide personalized guidance based on the finer details of your situation.
Because of their individualized focus, they come at a higher cost, a cost that is more than worth it if you find someone you trust who knows all the things in an area where you know none of the things.
The key to putting the right money team in place is to write down your financial goals, then identify the help you’ll need to achieve them. Then, of course, you’ll need to figure out who provides that kind of help.
- Accountability partner. Everyone needs an accountability partner! This is a person who is going to help keep you on track with your goals, and who you, in turn, will help, too.
- Certified financial planner (CFP)/financial advisor. Someone who can help you with just about everything related to financial wholeness.
- Certified public accountant (CPA). Someone who will help you with tax planning and identifying how you can potentially minimize your tax burden.
- Estate planning attorney. Someone to help you with essential, legal documents like your will, healthcare directives, power of attorney, trust, and so on.
- Insurance broker. Someone to vet your options and help you purchase the insurance policies that make the most sense for you.
100% Whole: Leave a Legacy (Estate Planning)
An estate plan is indeed a plan for what happens to you, your property, your dependents, and your assets when you pass away or become incapacitated. Be prepared for it so you can prevent piling loss on top of loss for your loved ones.
Creating an estate plan can feel like a really big task, like too big to even know where to get started. One way to step into the space is to think of it more as a five-year life plan. Why five years? Because you don’t know what life will be like in twenty or thirty years, but five years from now is possible to picture and therefore possible to protect.
Don’t worry you plan on being here for longer than five years. Your estate plan should be revisited and updated every five years or so to reflect your new life and the next upcoming few years.
- Fill out or check those beneficiary forms.
- Think about guardianship for minor children and/or a special needs family member.
- Write a will.
- Deal with your advance directives: a living will and durable power of attorney.
- Think about and document your long-term care plan.
- Set up a (living) trust.
- Execute and fund these plans!
You’re now 100% financially whole, at least on paper. Real-life financial wholeness is when all the aspects of your financial life are working together for your greatest good, your biggest benefit, and your richest life.
If you haven’t taken your time and worked through the ten steps of financial wholeness, now is the time to do so:
- Budget Building: You have a written, and at least partially automated (i.e., transfers, savings, bill pay, etc.), personal budget. And have the necessary checking and savings accounts to support your budget.
- Save Like a Squirrel: You have accumulated at least three months of necessary, bare-bones expenses (Noodle Budget) for emergencies saved in an online-only savings account.
- Dig Out of Debt: You are either debt-free or have a clear picture of who and what you owe and have written down the components of each debt (amount owed, interest rates, due date, etc.). You’ve also identified and use a debt paydown plan (e.g., Snowball Method), and use your bank’s online bill pay tool to (at least partially) automate payments.
- Score High (Credit): You have requested and received a copy of your free FICO credit report and score within the last twelve months. You have a 740 FICO credit score or higher, or you’ve identified the factors that are impacting your score and have come up with a game plan to increase it to 740+.
- Learn to Earn (Increase Income): You’ve identified ways you contribute value to your job and feel confident you can leverage them to ask for a raise or promotion. Or, you already have multiple streams of income and/or know how to increase your income by monetizing your existing skill set and education. You also have a plan of action if you desire to make more money.
- Invest Like an Insider (Retirement and Wealth): You have identified your retirement and wealth goals. You’ve created and implemented your investment plans with the help of your Human Resources representative, a certified financial planner, online tools, or by yourself. You’re committed to consistent contributions toward investing. You’ve learned to largely leave your investments alone and give them the opportunity to grow. You put in place a clear investment plan for both retirement and wealth building.
- Get Good with Insurance: You know that you have adequate insurance coverage because you understand and have calculated your needs around health, life, disability, and property and casualty (e.g., home and auto) insurance.
- Grow Richish (Increase Your Net Worth): You know how to calculate your net worth (what you own minus what you owe). You have a positive net worth and/or you know how to achieve, increase, and maintain a positive net worth. You have a net worth goal and have defined the specific actions you’re going to take each month to achieve your goal.
- Pick Your Money Team (Financial Professionals): You found, vetted, and assembled a money team of financial professionals and accountability partners that will help you reach your financial goals (i.e., certified financial planner, insurance broker, estate planning attorney, or certified public accountant, etc.).
- Leave a Legacy (Estate Planning): You have identified and completed the applicable components of your estate plan (e.g., a will, trust, beneficiaries on accounts, etc.) and have executed (signed) and funded it. This means you have a plan for what will happen to your estate (cash, real estate, jewelry, and other assets) after you pass no matter the size of your bank account and portfolio (i.e., investments, home, stocks, bonds, etc.).
So what’s next?
Keep going! Your finance and life goals will evolve as you do. Buy this book and use it as a reference to help you restructure what financial wholeness looks like as you navigate the different stages of your life.