In today’s episode, we’ll discuss establishing a successful routine that you can put in place to move your finances forward. I’m not talking about a painful process that involves the dreaded budget. I hate budgeting too!
- Learn a simple six step routine that will help you stay on top of your finances
- Why you need to pay yourself first and automate everything
- Cash is king, but it can mess up your routine if you don’t capture it
- Habits are part of your success and understand what you must do first to keep you going
Learn about the importance of automating your finances.
Why setting personal goals is critical to your success.
Today on Agile Finance Radio, we’ll discuss establishing a successful routine that you can put in place to move your finances forward; and no I’m not talking about a painful process that involves the dreaded budget. I hate budgets too.
But hey, before you put down that phone, do me a favor, if you haven’t already, please subscribe to my podcast and leave me a review over on iTunes. This will help me get the message out to others to help them win with money and gain at life.
So, Let’s get started! Queue the intro…
Welcome to agile finance radio. I’m your host Jason stump, and our goal is to help you win with money, gain at life, and retire with confidence.
Back in Episode #9 we talked about the importance of setting goals and how that could impact all the areas of your life like your vocation, your spiritual life, physical life and, of course, your finances. To continue on the theme of making 2020 great, we’re going to dive deep into the financial routines that can set you up for success.
Having a financial routine and building a habit out of that routine is one of the best ways that you can win with money.
Now we all have routines, whether you consciously are aware of them or not, that’s a different story. Some are helpful, like starting your day with purpose, while others could be harmful like binge watching t.v. too much.
Now if we examine the routines of professionals, say like a professional athlete. What do you think we would discover? That they certainly have an ability that you and I don’t have, that’s a given,right? They have that gift of being an athlete but in order for them to achieve the next level almost all of them incorporate a routine. Take a look at Michael Phelps. His routine sets him up for success. What time does he get up, what he eats, exactly how and when he we would practice. After he did his routine for so long, guess what, it just became automatic. He didn’t have to think about it.
This is exactly what you can do to improve the areas of your life, including your finances. Your body is made for this and guess what, it’s doing it right now. Are you telling your heart to beat or your eyes to blink? For you guys that get up at the same time everyday, you know what I mean. Your body adjusts and eventually you can wake up at that time without an alarm. An essential part of a routine is that it becomes second nature and turns into a habit.
So how do you create a winning routine for your finances?
1. Decide on the what and why
So if you want to win with money, you have to tell your money what to do. That means identifying what’s important and deciding to direct money toward those goals.
Do you want to travel, buy a second home, what about retiring early? What about just paying off your mortgage or setting up a charitable fund to give to causes that you love? You can do anything with your money, but probably not everything, because unless you’ve won the lottery or a trust fund baby you probably won’t get to do everything, so make it meaningful. So this goes back to what we talked about in Episode 9 so if you haven’t listened to that, go back and listen to Episode 9, but I challenge you to spend some time on what you want and why you want to do that. That’s your first step: decide.
3. Pay Yourself First
Now the next step is to pay yourself first, so after you decide" hey, this is what’s important to me," this is the most important step to take. As soon as you get your paycheck you have to move a portion of it to your long-term investments to secure your retirement, and some of it to your short-term goals that you are trying to accomplish for this year or next. You can’t wait until the end of the month to fund these goals that you have.
Lifestyle creep is a real issue and if you leave it in your checking account for very long you will spend that money. The best way to pay your self first is by automating everything, which is the next step in your successful routine.
2. Automate everything
With today’s technology, you can put your finances on autopilot. This is a cornerstone to your success because honestly you and I can’t be trusted with our money! Right? We will spend it. If it’s in your account, it’s going to go. So here’s what you do:
Setup your paycheck to automatically take out your money for retirement funding. Many companies have retirement plans but if you don’t, it’s not a problem. Just set up an IRA or ROTH IRA, depending on, ya know, where you’re at and if you qualify for those. Then, automatically transfer the amount to your investment account.
Do the same thing for your other savings needs like a car, a wedding, a vacation, making sure you have a "life happens" fund because things break down. Right, you know that they’re going to, so put some money aside for that. You can set up separate accounts at your bank to isolate those amounts so that you won’t go on a spending spree and if your bank doesn’t offer that, switch banks. This is for your convenience, not theirs.
After your savings and investments are taken care of, automate your bills. If you are good with a credit card, pay everything with it or set up payments in your bank bill system. That’s another feature that your bank should provide, the ability for you to pay online.
For me details on automating your finances, go back and listen to Episode #6 where I unpack my system for doing this very thing.
4. Capture your cash
I try to use cash as little as possible. It’s easy to forget where you spent the money. Before you know it, you are wondering, ”Hey, where did that $500 go?”
I typically don’t get anything for using cash. Sometimes I can negotiate a discount, you’ll find that once in a while, but not always. And also, I like to maximize my reward credit cards. I find more value in free travel, and it automatically records the expenses electronically.
The easiest thing to do is capture the expense as soon as it happens. Using an expense app or a spreadsheet app or even the notes app on your phone and it doesn’t matter which one, just get one that will work for and that you’re actually going to use. Now, you can old school this as well, just carry around a pen and paper,or a small tablet, whatever works for you so that you can capture cash whenever you use cash.
5. Do a monthly review
It’s easy to overlook expenses, especially when you have plenty of cash flow. Ya know that’s one of the negatives of, ya know, having high income, high cash flow, is you sometimes get a little lazy with your cash. That’s why I recommend you do a monthly review of your expenses. This should be really simple and it shouldn’t take long for you to do this.
So the best thing to do is to aggregate everything in a finance app or something like Mint or personal capital might work. I use a spreadsheet, but whatever works for you. Just about every bank and credit card will allow you to download your data.
If you’ve automated everything, then your essential things are being funded, and all you should need to monitor are those discretionary items that you have a tendency to overspend in. Maybe it’s entertainment, maybe it’s eating out, or maybe it’s your impulsive Amazon shopping. I don’t know, there is usually something that typically you’ll spend more money on. Just find those areas that are a struggle for you so that you can monitor those.
6. Evaluate if it’s important
Now, the last thing is to evaluate where you’re spending you’re money. So that’s the benefit of doing a monthly review, or at least a quarterly review. It gives you an awareness of your money and where it’s going. How many times have you signed up for a subscription and completely forgot you had it, but you kept on paying the monthly or annual fee because you had no idea?
When you do the review, you get to evaluate if that purchase still fits into your goals of spending money on purpose, right, so (back to step 1). We want to know where our money is going and that it’s purposely fulfilling our goals. And If it doesn’t, then cancel it or stop buying the thing that adds no value to your life.
Ya know sometimes routines can be hard to start and honestly to keep going but don’t give up! The latest research shows it can take anywhere from twenty to over sixty days to establish solid habits. There is no magical number there, right it’s not twenty-one days to the, ya know, budget of your dreams. That is just not real because everyone’s different we all have different ways of how our bodies interpret things and how things become important to us. So it may take you twenty days, it may take you sixty days, who cares, right? Just give yourself a break and stay at it. You’ll feel more confident that you’re staying on top of your money, rather than not having a clue where your money is going. Well there you have it, a successful financial routine for success.
- Decide what you want
- Pay yourself first
- Automate everything
- Capture your cash
- And do a monthly financial review
- And then evaluate if where you’re spending is still important to you
So if you’re not sure how to take your routine to the next level, Schedule a call with me and we can discuss your current situation. I offer a free consultation that we can, ya know talk about what’s most important in your mind right now when it comes to your finances. So just head on over to agilefinanceradio.com and select the contact button.
That wraps up this episode of Agile Finance Radio
Tune in next time as we discover more ways to help you win with money, gain at life, and ultimately retire with confidence!