A step-by-step guide to financially adulting in eight weeks
You've heard of Couch to 5k in eight weeks. Well how about getting fit financially in eight weeks?
If you're tired of being financially stressed, financially fatigued or wishing you had a road map to help you plan how to sort yourself out, I've pulled eight weeks of tips from within my eight week Financial Adulting Plan Online Course to help you on your way.
Week One and Two: Financial Awareness
In Week One I want you to start with a 30-day financial detox. This means eliminating any discretionary spending for 30 days (and no, shoes are not essential spending). The detox helps you detect unconscious money patterns and helps to turn you back into a conscious consumer.
Week Two is all about discovering who you are (financially at least.) That's because too often when it comes to money, food, fitness, relationships or anything where emotion is involved, we dive straight into fixing and ignore why we're behaving that way in the first place.
How we stop the sabotage cycle is by doing the financial detox and some financial awareness exercises. For example, we might identify our money story. The money story we grew up with might be serving us or sabotaging us without us realising it and identifying that will help us either amplify or minimise its effects. Another exercise might be dividing up a page into three sections with good, bad and OK on them and write for each when you think money is good, bad or ok.
Week Three and Four: Where are you now and where do you want to be?
Too many people ask what percentage of their income they should be saving but that's the wrong question. Instead, you should take this week to answer the question: what sort of life do I want to design? What do I want my life to look like in five years, three years and 12 months' time - and yes, you need to include your finances as part of that exercise.
Once you've taken the time to complete your goals exercise, the next step involves figuring out how far away you are from where you want to be. To do that, you need to work out how much money you have coming in now, how much is going out and what the difference is. You also need to work out how much you owe and how much you own. The gap is the difference between where you are now and where you want to be financially in 12 months' time.
Week Five and Six: Closing the gap
Once you've figured out the gap, it's working out how to close the gap.
For example, do you need to cut up and pay off your $5000 credit card bill within 12 months? Do you need to save $10,000? Do you need to find an extra $100 per week? Each answer will be unique to you. If you don't have enough left over each week to meet that gap then it's about swapping, pausing and cancelling expenses, finding more income or re-evaluating your goals.
Week Seven and Eight: Sorting out and setting up great habits
The final two weeks are all about setting up great financial habits so the changes you want to make will see you through for the long term. At a minimum, the financial habits should include setting up multiple bank accounts (at minimum a bills account, savings account and everyday account) and automating any of regular monies to the goals you outlined in weeks three to six. Or you might want to adopt financial habits that are unique to you, in which case, I have a whole chapter on Habits in my book, Budgets Don't Work (But this Does).
Finally, it's about financially cleaning up. If you have credit cards that aren't paid off every month then cut them up and stop using credit. If you have three superannuation accounts, choose the best and consider rolling over the rest to it. If you haven't checked the interest rate on your mortgage, contact your bank and make sure there is a two in front of it. And so on.
But don't just think 'that's it' at the end of the eight weeks. Set yourself a regular challenge of every month of looking at another facet of your finances. Maybe it's investing in shares, understanding how to run a side hustle, comparing your health insurance and more. By setting a regular, monthly finance appointment with yourself you'll continue to build financial momentum and reach financial adulthood in no time.