Personal finance is a topic that typically induces stress among people. One defense mechanism people tend to use when their finances cause them stress is to not think about their finances at all. The problem with this tactic is that when you do not think about your problems, they grow greater. Then the next time you are forced to think about your financial situation, your stress grows greater as well. One solution to eliminating financial stress is to take the opposite approach and think about your money long enough to give your money direction.
Establishing direction for your personal finances is deciding where you want your money to go both now and in the future. You can start by asking yourself, “What do I want to spend my money on and what do I need to spend my money on?” After you answer those questions, you can then give each dollar a job. This can be done in the form of a budget. The purpose of creating a budget is to know where every dollar is going and to control how much money you spend in each category of your life. Budgets can help reduce stress, because the budget allows you to hold power over your money. You can tell your money where to go instead of wondering where your money went.
The next step to creating direction for your money is establishing long term financial goals. To form long term financial goals, you can start by asking yourself, “What am I going to spend my money on in the future? Am I going to buy a car? House? Pay off debt?” After you know what you want your money to be used towards in the future, you can develop a plan to achieve your goal. You can develop a savings plan or add savings to your monthly budget. You can then feel comforted in the fact that you have planned for your future financially, and you are taking steps to achieve your future goals.
Establishing direction for your finances will hopefully increase your personal financial confidence, and the next time finances comes up in conversation, you can share your direction instead of avoiding the conversation due to stress. If you would like guidance establishing financial direction, schedule a one-on-one coaching session with me today!