Are you uncomfortable with financial topics?
There, I said it – many people are uncomfortable with financial topics. Whether it is balancing your checkbook, committing to a night out to celebrate a friend’s birthday, knowing how much is too much to spend on renting your first apartment – and the list goes on. And you are not alone with the discomfort - as noted in a June 2021 poll conducted by Insider - approximately 2,000 respondents reported they're more likely to talk about politics and relationships with their friends than money.
My clients hire me as a financial coach because they are uncomfortable with financial topics, and they want to change this.
One such client is in a secure job, making a good salary and from the outside, she appeared to be doing great. Yet, she told me she often felt uncomfortable when friends shared informal advice on saving, investing, or any financial topic. She felt unable to join in the discussion because she didn’t understand some of the terms being discussed and wasn’t comfortable making financial decisions for herself. She didn’t know how to engage in the discussions and didn’t want to look stupid.
She needed a safe place to learn more about financial topics and to discuss goals. She wanted to feel more confident with her decisions and could build a financial plan she could stick with. We ran into each other - I told her about my business and she decided to give me a try. After only a few months of working together – she is now the person who initiates those financial discussions with friends and shares the tips she’s learned!
So - what is the best way to become more comfortable with your finances and financial topics? I recommend spending time on the basics and building from there. What do I consider a “basic” – first it is to complete a Spending Review. A Spending Review includes looking at all the ways you make money and how all that money is spent (or saved). Expenses can be categorized into 3 main classifications:
Essential – The things you need to live – housing; food; utilities; transportation; savings; debt payments; and similar items.
Non-Essential – The things you could do without and might be considered optional like Cable TV, Gym Memberships, coffee out every day on the way to work.
Luxury – The items that if we can afford them make life more enjoyable – like hiring a house cleaner, lawn services, salon/spa treatments – you get it.
How would you get started on a Spending Review? You can start by using paper and pen or select the button below to download my simple excel spreadsheet. If you are making your own document, list the categories above and itemize how you spent every dollar of your money in the last month. Look at your credit card statement (if you look online most of the transactions will be categorized for you), review your debit card transactions, PayPayl/Venmo, Apple Pay. If you withdraw a lot of cash, try to recall what you used it for and write it down.
What you may notice as you work through this exercise – is you are spending money that may not be necessary or in alignment with goals you may have. For example, you may find you have some subscriptions on your credit card that recur every month that you are not using. There may be a lot of money spent on picking up breakfast on the way into the office that you could cut down by eating at home a few days a week, and so on. Itemizing and reviewing our spending habits is a great way to start to determine if what we are spending money on is our highest priorities.
That is a really good starting point to understand before moving forward with other topics. If you need help, feel free to schedule a no cost Clarity Call with Evolution Financial Coaching – you will find the link below - and we can help you get started evolving your relationship with your finances.