How to Get Your Finances Under Control

How to Get Your Finances Under Control

While glancing through a fitness book (Fit and Well: Core Concepts and Labs in Physical Fitness and Wellness) I noticed a subtitle — Reaching Wellness Through Lifestyle Management.  The section “introduces the general process of behavior change and highlights the decisions and challenges you’ll face at each stage.” In my aha moment, I realized that there are so many parallels between getting in shape and getting your finances in order.

The left column is what the book suggests for getting serious about your health.  The right is the parallel behavior for getting serious about your finances.

Fit and Well Financial Health
Examine your current health habits Examine your current spending habits
Choose a target behavior Know and establish goals
Obtaining info about target behavior Obtain the necessary financial knowledge
Finding outside help Seek professional advice

Examine your current spending habits

How to Get Your Finances Under Control 1
Photo by sashaW via Flickr.

The first step to getting out of debt that I suggest is to track everything you spend for a month (using a budget).  With exercise, you cannot get into shape until you first know what you are eating and your current exercise level.  In a similar way, until you know what you’re spending, it will be nearly impossible to develop a game plan for getting your finances in order.

Know and establish your goals

Once you know where you are, you need to decide both where you want to go (your goals) and how you intend to get there (smaller stepping stone goals).

While some think goal setting is a burden or a difficult process, goal setting is actually just a form of dreaming.  Do you want to be free from debt bondage?  Do you want to retire early?  Do you want to save a million dollars?

Granted, once you have established your dream goals, you need to go back and test them to be sure they are realistic.  But, dream first and then plant your feet on solid ground by deciding how you will achieve those goals.

Obtain the necessary financial knowledge

At this point you know where you are.  You know where you want to go.  Now you must answer the question — how?

As with any financial decision, there will be varying opinions.

Assume, for example, you want to be debt free. Dave Ramsey will advise you to use the debt snowball.  Critics will say that the debt snowball doesn’t make mathematical sense. So what do you do with all that information? Become a student.

Ask: What is this person suggesting?  Why is he or she suggesting it?  Does it make sense to me?  Does it fit within my goals?

From there, you will want to put that option alongside a contradictory opinion.  Look and see — when compared, which alternative makes the most sense?

One of the best ways to get financial knowledge is through books.  Start with one of the 88 best personal finances books.

This approach will require that you read new material and that you learn new concepts.  However, once you have decided on the best approach, you now have the ‘vehicle’ necessary to get you to your destination.

Seek out professional advice

Some might disagree that this should be your last stage.  I think it is imperative that you do your homework before meeting with a financial professional.  Unfortunately, some financial advisors are more like salespeople than financial assistants.  If they try to sell you something, you might want to fire your financial advisor.  If you do not determine your personal preferences and goals before seeing a professional then you will probably just buy into a sales pitch.  Instead, if they give you new information that seems convincing, tell them you’ll learn about it and go back to the “obtain the necessary financial knowledge” stage.  In the end you might wonder if you can be your own financial advisor.  But, the feedback from a profession is helpful.

So it seems as though these four stages would be helpful regardless if you are talking about getting in either physical or financial shape.

What have you found most helpful for getting in shape or taking control of your finances?

5 thoughts on “How to Get Your Finances Under Control”

  1. I think it’s important to find your ‘why.’ You need to really want it. If it’s losing 10 pounds or knocking out 5k in debt you need to determine if it is really IMPORTANT TO YOU. If it’s not, then you’re wasting time.

  2. This is an excellent post, Craig – financial fitness and physical fitness share many of the same pitfalls and possibilities. The drive to “get in shape” has to come from within you. If you’re trying to lose weight (or lose debt), everyday temptations can tip the scales in the wrong direction. That’s why it’s so important to have a fitness plan that you truly believe in. And as part of the process, I agree that working with an expert can be a wise decision. Many of the physically and financially fit people I know partner with a “trainer” to develop a workout plan that is customized to help them achieve their goals within their ideal timeframe. Good luck to everyone looking to get “fit” this year!

  3. Wow. Great points you made. How similar it is when comparing money to health. You really need to be diligent about spending money. It really takes a lot of focus and energy to stay on top of all your spending. This is why it is important to be ultimate smart spender especially when dealing with money.

  4. I think one of the most important things is self control right now. We live in a different world than in past years and sometimes the lifestyle needs to slow down.

  5. Great comparison Craig; physical wellness and fiscal wellness have many similarities. Both require discipline and planning. Both are best attained when goals are set, so we can gauge what we need to do to achieve them. Yet, when we reach our goals, we can reset them and work for a new level. Yet, if we carelessly neglect our goals, we can slide backwards, and lose what we have worked for. That is a fantastic analogy.

    Neglecting physical or fiscal wellness has serious consequences. Sadly, that is what many of us do.

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