On the surface it’s not a big leap to go from someone who struggles financially to someone who is in control of their finances. Sure there will be hard work involved however once you have mastered a couple of steps (including the mental aspect) there is no reason that you can’t achieve a high level of financial success, even if you are coming from a less desirable financial position.
Unfortunately most people get stuck in their current ways, they don’t have the belief in themselves and are doomed for a life of financial struggle. They are happy to blame others for their financial predicament and won’t take it upon themselves to take control of their financial destiny.
It doesn’t have to be that way. A couple of changes to your routine, your mindset and belief can turbo charge your financial situation in a short period of time. Below we go through 9 tips to turn your financial situation around.
1. Take action
A lot of people like to talk a big game, telling others about all these great ideas they have and how talented they are. However when the time comes to make the move to take action they freeze. They come up with an array or excuses about why they can’t. This could be lack of time, money issues, family issues, education issues, being too old, etc.
Every expert started as a beginner. Your favourite sportsperson started as a beginner, all successful business people started as business novices. All successful artists had never painted at one time, all famous actors and actresses had never acted at the beginning of their careers! Everyone starts as a beginner, including you! The point is these people had the courage to take action in spite of not knowing where their journey would end.
Every successful person in any field of life started as a beginner! They went through the normal trials and tribulations to get to the top of the profession or area of expertise. Sure their natural talents may have gotten them to the summit quicker however they had to put in their apprenticeship like everyone else.
So take action today! Keep failing forward, keep learning along the way taking these lessons to fuel your growth. Have patience, stay focused and committed to your goal and success is a good chance to appear in your future!
As the Chinese proverb states, “The journey of a thousand miles begins with a single step”.
2. Change your attitude and buy into the concept that you can (and deserve to) be financially successful
If you’ve ever been in serious debt, overlooked for too many promotions, been sacked, were made redundant, ripped off by a spouse or family member, this sucks and can take away a lot of your self belief. However it’s not the end of the world!
You could have the best plan in place, the best coaching, the best resources, however if you don’t have that belief that you can succeed, chances are you won’t or it won’t be at a level you truly desire. If you are still carrying negative emotions regarding your past financial situation this will severely impact your chances (at least in the short term) of turning your financial situation around.
These negative emotions also affect your levels of belief! The quicker you believe you can be financially successful (even when your current financial situation sucks) the quicker your turnaround will be!
Whatever has happened to you financially in the past, do your best to wipe away any negative emotions. Even if you were taken advantage of, were ripped off or were in a financially abusive relationship, accept this as being in the past and move on in your attitude. You may need to speak to a counselor or a specialist for anything serious however this needs to be addressed.
Burn it into your subconscious that something like that won’t happen again and that you will do everything to be financially successful. This includes improving your knowledge, doing your due diligence, becoming less trusting of people and their motives around your finances, basically doing everything in your power to improve your financial situation.
More than likely your past financial mistakes or mistreatment will likely leave you with debt however the quicker we take any negative emotions, any feelings of resentment or anger of these financial issues or a general lack of belief, the quicker your path to success will be.
You can be financially successful and you deserve to be financially successful, that should be one of your daily mantras that you repeat to yourself often!
3. Change your environment
You can have the best plan for success however if you make no changes to your life or environment you won’t get anywhere with that plan! your life and actions need to be reviewed and changes will need to be made to turn your situation around.
This includes your home environment, your work environment, the people you spend most of your time with and the activities you spend most of your time doing.
If you don’t like your job, make a change. If you can’t make a short term job change then start making plans to change jobs or careers. This could be building the necessary experience or contacts or undertaking additional education to enable a change in job or career. You may not be able to change jobs tomorrow however you can begin the process now!
Who are you spending time with? If you are in a relationship is this a loving one? Do you feel that your partner is in your corner and if you undertake these new changes in your life they would be on board and back you to the hilt? If the relationship isn’t as solid as you would like then it’s time for a long talk with your partner. If you find out that your partner isn’t as invested in your growth and happiness as you would like then it’s probably time to move on. You deserve all the support and happiness in your life and if the partner you have isn’t up for this then it’s time to move on.
The same goes with your friends and family. Do you look forward to spending time with these people or does the thought of spending time with these people cause you to recoil in fear? You should only be spending time with people you enjoy hanging out with and any friendships that don’t fit this bill should be reviewed.
If family members aren’t on board with your new changes or time spent with them leaves you angry, exhausted and in a bad mood, then time with them should be limited or eliminated where possible.
Your job/employer also needs to be reviewed under this critical lense. If you are in a dead end job that is in your comfort zone with co-workers who are working for the paycheck and are a negative influence.
You should also be reviewing your current living arrangements. Whether it’s sharing a house with people who act in direct opposition to your new way of life or living in a town or city that’s not conducive to your future plans, it might be time to review this. For example you might want to study a specific subject or topic and your local college doesn’t offer this or you might be looking to build a successful business and the current city or town you are living in doesn’t have the infrastructure or connections to help you build your business or idea.
Finally, your new life changes will likely need/lead to an overhaul of your routine. If you were continually wasting your spare time on mind numbing television shows or internet searches then this needs to change. Your new (productive) routine would involve time for improving your education, time for earning more income or building a business/investment as prioritizing spending time with the special people in your life.
4. Find out where you are financially and track everything
There might be many reasons as to why you are in a financial pickle or have an abnormal amount of debt. You might have had a health emergency and are unable to work, you might be trying to keep up with the jones’ and living above your means or you may be undertaking emotional overspending to mask an issue or issues in your life.
Unfortunately many people like to keep their head in the sand when bills and debts pile up and won’t address these financial issues head on. Taking this approach tends to make the problem much worse and reduces some of the options you have to get out of your financial situation.
Review Your Assets and Liabilities
To change your financial circumstances you need to do a full audit of your financial situation, leaving no stone unturned and getting everything out in the open. Rip off the band-aid and find out exactly where you sit financially. Find out exactly how much money you owe, to who you owe money to, what the repayments are, the interest rate, basically everything about all the debts you owe. Also get a copy of your credit score.
What assets do you own? Do they secure any of your debts (such as property or shares) or is your debt unsecured (ie personal loans or credit card debt)? What about cars, jewelry/watches, clothing, handbags, high end sporting equipment
Review your Income and Expenses
Now take a look at your spending habits. Where does/did your money go? If possible take a forensic style analysis of your last 12 months spending, are then patterns or bad habits reflected in your spending over the last year?
Finally what is your income and do you earn any income from investments? Do you receive any government assistance?
Find out exactly how much money you earn (both before and after tax) and how much gets deposited into your bank account.
This exercise will more than likely be quite painful (particularly if your finances are in really bad shape). Once you have the full picture then we can look at putting a plan together.
5. Set goals and develop a plan
Now you’ve got a detailed understanding of what your current financial situation is, what is your end goal for your finances? Do you want to be debt free as soon as possible? Do you want to push towards debt repayment and financial independence or are you looking to boost your investment portfolio?
Setting financial goals
Take some time to think about what you want to achieve long term and don’t let your current financial situation affect your long term goal setting. Just because your short term financial situation may not be great doesn’t mean this will stay like this for the long term. Set your goals with an abundant future mindset.
After you’ve set your bigger long term goals, break these down into smaller short term goals. These shorter goals could have a monthly, 3 monthly or yearly time frame. For example you might have a long term financial goal to pay down your personal debts of $100,000. Breaking this goal down into a smaller one, you might have a yearly goal to repay at least $10,000 of this debt.
Setting a budget
Go back to your analysis of your previous spending habits, what can you cut out to put together a lean budget to help you get back on track quickly? The worse your situation, the leaner your budget should be. If you are looking to save a deposit for a house or save for a rental property bond, get hungry for this goal. This could be walking or taking public transport rather than an Uber or taxi, this could be cutting out your daily coffee, cutting out your cable or subscription services.
Other exercises you should be looking at to save money include reviewing your current living and transport situation, reviewing your mortgages, car loans, credit card and other debts to see if there are cheaper alternatives out there. You should also look to review any insurance policies, any cable or phone subscriptions, any gym or other subscriptions, basically any recurring payment. ask yourself do you need this product or service and if yes are there cheaper alternatives available?
Don’t forget when putting together a budget to budget for future expenses (replacing appliances, furniture, etc.) as well as for longer term financial goals such as a holiday or children’s education expenses.
The more you want something the more sacrifices you will make.
Whilst setting and sticking to a short term lean budget should be a priority, in the long term working towards boosting your income should be your focus. Not only will the increase in income help fix your financial issues quicker, living long term on an ultra lean budget living an abundant life. Yes we recommend you always maintain a budget however as you get out of your financial issues and move towards a more prosperous situation you can adjust your household budget accordingly (providing you are still on track with your long term financial goals).
6. Develop a routine and automate everything
Developing a routine is a great way to add structure around your desire to achieve a goal or to complete a task. Too much time is wasted by people aimlessly going through their day rather than sitting down and creating a time saving efficient routine. If you constantly have to think about every single thing that you need to do each day, nothing serious would be achieved, something we want to avoid. Plus with a routine you are regularly checking in with the goal or task you want to complete.
This also goes for your new financial plans, your financial improvement will in part depend on how entrenched this gets into your daily, weekly or monthly routine.
The deeper in debt you are, the more focus in the short term you should have on your spending and budget. This could be a simple end of day calculation of everything you spent for the day in readiness for an end of week check in. Then on a weekly basis you could tally up all expenses, check this against your proposed weekly budget (bearing in mind some weeks will have more expenses than others).
On a monthly basis your routine should include a full income and expenditure review and how this tracks to your previously prepared budget. Ideally these check ins should occur at a similar time, ie a weekly Sunday evening check in or a last day of the month evening review where you add all income and expenditure to your tracking app or spreadsheet
These new changes might take a bit of time to get used to in the short term however as your routine becomes more efficient this will eventually become second nature.
Automating everything will also help you with your new routine. For example if you set up an automated personal finance system (which we recommend you do) where all regular bills/debits are set up to be completed automatically this will save you plenty of time compared to having to make these regular payments manually. We go into more detail here regarding setting up your personal automated financial hub.
You can also manually track your income and expenditure and eventually your savings then investments or you can use an app (depending on your location) like Mint, YNAB (You Need A Budget), Pocketguard or a product provided by your personal bank or financial services provider. Once you build up your savings and investments you can also include an app (ie Stash and Digit) or manually tracking your investments.
We also recommend that you use automation in regards to planning your day. You can go old school with this and physically print out a calendar and write in all your planned tasks and activities or you can download an app such as Google Calendar and add all tasks and activities to this. For those with a family you can even sync this together so everyone in the family knows your schedule and can plan around this.
Setting up an automated calendar can also help you set aside time to build a side hustle/online business or your investments. This can also allow you to focus on being present, spending important time with family and friends.
It’s easier to stay on top of everything if you have it automated and the sooner you set up a routine and automate as much of this as you can the quicker you will reach your financial (and life) goals.
7. Take an active approach to your financial education
For some people part of the reason for their financial issues is due in some part to their lack of financial education or at least their lack of basic financial understanding. How many people were taught to prepare a budget or the basics of money management when they were at school?
A lot of people who have credit card debt couldn’t even tell you the current interest rate on this card! If this is you it’s time to fix this and start your own Personal Finance and Investing 101 education course! If you have children they should also be part of this new education.
It’s time to learn everything you can about finance, investing and making money. Find out how much more you will save by paying more than the minimum repayment on any credit cards, personal loans or mortgages. Know your credit score and learn about what the effect of missed payments or overdue bills does to your credit score.
What about better options for current financial products you have, such as is there a better mortgage option on the market (such as an offset account) that would be suitable for you? Also when was the last time you reviewed your loans or credit cards to see if there are better options available? What about reviewing your communications, utilities or insurance providers?
Set up an automated financial system and build your emergency fund if you haven’t already yet.
In regards to investing, how many people have an understanding of the potential tax effectiveness to borrow to invest in something like property or a business?
Learn about the basic concepts of compound interest, about tax effective investment strategies, learn about investment risk profiles and how to build an investment portfolio around these profiles and your investment time frames.
Read up on successful people who have come from a similar background to you to become financially successful. Look at people who have made money in fields that interest you.
Reach out to people who have been successful. This doesn’t mean following the latest fad internet success story who only looks successful by hiring fancy cars and houses to promote “their success” Social media has the ability to alter reality and it can be hard to sort the “wheat from the chaff” however success rarely occurs overnight and hard work (with proper knowledge) needs to be put in to achieve this success.
8. Regularly check in and assess your goals
We discussed this point in a previous article however to make sure you are on track you want to check in regularly (or at least monthly) with your goals to make sure you are on track.
You also want to make sure that the goals you set aren’t too hard (or too easy). This could be checking in with your planned savings goal or your planned investment goal regularly. If it turns out that you have set your goals too high or too low, make the necessary adjustments and go hard at these new goals.
Once you achieve your goals regularly this will hopefully become a habit and allow you to achieve things financially you once could only dream about.
To help keep you on track you might also look to finding an accountability partner or someone to check in with once in a while. You could have a friend or family member in a similar situation financially or like you who wants to improve their finances and you can work together to hit your goals.
9. Build your income and assets and make sure these are protected
As touched on in a previous point, the quicker you increase your income the quicker you can improve your financial situation. We go through some suggestions in more detail here, however simple steps to boost the household income could include asking for a pay rise or applying for a higher paying job. Can you take up a second job or start a side hustle?
Look to build your investment portfolio as soon as possible. Divert income from these investments towards paying down any personal debt or look to reinvest this into more investments. The quicker you start building your investment portfolio (ideally with focus on passive income) the closer you will be to reaching your financial goals and to hitting financial independence.
If you don’t have the money to invest, work on building up your savings or start creating your own investments such as building a bricks and mortar business or creating one online. With all investments look to have a well diversified portfolio, one that isn’t dependent on one investment sector or investment type, the more passive the better and never invest money you can’t afford to lose!
Protect your hard earned assets through insurances (this includes your personal income) and through proper and thorough legal advice. This also includes your estate planning.
Investing is the best way for wealth creation and achieving financial independence. Use your new found investment knowledge to take a leap!
Having financial or debt issues isn’t the end of the world, nor should it be swept under the carpet. If there is an issue, address this, make plans to fix this and take action. Follow the above steps and your financial 2nd act will blow your past financial issues out of the water!
Don’t continually beat yourself up over any past mistakes that have been made or if you were taken advantage of or ripped off. This goes to one side, make that commitment to yourself that you won’t let this happen or let people take advantage of you again and put your head down and commit.
Remember, hard work will be needed (the worse your situation the more work you’ll likely have to put in) however the quicker you address your financial issues the quicker you can be back on track to hitting your financial goals and taking control of your financial destiny.