I’ve heard countless stories of people going on a cleaning frenzy during the pandemic. Closets, basements and garages have never looked so good!
I don’t know what it’s like in your neck of the woods, but my city asked residents to please cut it out because they were generating too much waste!
Now that your living spaces are spic and span, how are your finances doing?
When was the last time you took a good look at your financial systems to see what needs to be cleaned, tweaked, boosted, or simply yanked out?
If it’s been a while (read: a loooooong time or never), cut yourself some slack. We’ve all had a few things on our mind these past few months.
The big difference in your bottom line
Cleaning out your house may feel good and provide immediate gratification, but cleaning out your finances will have a far greater impact on your life.
It’s akin to the difference between spending time chasing small savings through coupons and scoring big wins through negotiating your Big 3 Expenses: housing, food and transportation.
Three months into the pandemic, it’s time to take stock, tidy up and create systems to carry you through the rest of the year.
Why, you ask, when there is no shortage of items on your to-do list?
Because we’re not done with Covid-19. Or rather, the pandemic isn’t done with us.
Most of us are still dealing with the effects of the first wave – limitations on the way we work and earn money, physical distancing and dealing with kids at home 24/7. The thing is, when we get through this life-altering phase, we will be met with a second phase at some point.
Health authorities everywhere tell us the same thing: The question is not if there will be second phase of infections; it’s when. Guess what will happen to “regular life” when that happens? You’ve got it – more restrictions.
Are your finances ready for that?
The good news is that we all have time to do something about it, and spring is the perfect time to clean up your systems to help you come out on top.
Tending to your financial garden
Those of you who have a literal garden have probably already done a spring clean-up: picked up debris left over from the winter, chopped out the dead bits, de-thatched the lawn, applied (environmentally safe I hope) weed treatment, fertilized, and planted seeds and flowers for the summer season.
This month, I’m going to walk you through the steps to do the same for your finances. With some effort and a spot of luck, the results will be just as pretty!
I break down the clean up process into two main areas of focus: Mindset and Financial Systems. For the next two weeks, we’ll focus on mental “debris” – the mindset portion – then we’ll turn our attention to organizing your financial systems.
A little attention will go a long way to creating peace of mind and healthy options when things like a pandemic hit.
What is mental “debris”?
If you know me, or you’ve been a part of my community for a while, it will come as no surprise that I’m starting with mindset issues. Here’s the thing:
Mental “debris” will stop you cold.
It doesn’t matter if you have a perfect-for-you financial system. If your mindset isn’t onside, you are fighting an uphill battle. Think Sisyphus here – big rock, steep hill, one screwed guy (that is, if mythological characters can be referred to as guys).
Mental debris is any form of mindset block or belief that harms your progress. Some of the biggies are shame, low self-worth, believing that you can’t make progress because you’re not one of the lucky ones, feeling you don’t have what it takes, blaming the economy for working against you, thinking it’s impossible to make or save money – the list goes on and on.
Mindset issues show up in your life in a variety of ways:
- Discomfort when talking about money
- A flat-out unwillingness to talk about money
- A lack of progress with goals despite repeated efforts
- Harmful patterns of behaviour
- Persistent debt
The difference between mental debris and the decayed bits you find in your literal garden is that the latter won’t harm your garden’s growth. New shoots will come up through last year’s dead leaves. The plant will be every bit as vibrant whether you pick up the leaves or not, and whether you prune the branches or not. It just won’t look as pretty.
But leave that “dead” stuff lying around in your mind and the results won’t be as innocuous. Wrench, meet works.
The first clean up task
To kick off your financial spring cleaning, open up your calendar and set aside one hour within the next seven days. Actually book the time to do some thinking. If the time isn’t earmarked, the task won’t happen. It’s not you, it’s human nature. Let’s not fight it; let’s work with it to get important tasks done.
When the chosen day and time arrives, grab a notebook or your laptop and write out the answers to the following questions:
- Which parts of my finances are not working well for me?
- Which cause me stress or tension?
- What bit would cause me discomfort if it were to be shared publicly? (If this one makes you cringe, that’s a good thing!)
- Can I spot behaviours that don’t help my financial situation?
- Are there any patterns at play? (E.g. Same frustrating results over and over again.)
- Do I have any beliefs about making, saving, spending and investing money that might be limiting my progress?
- Is there something I’m avoiding doing that I know would make a positive difference?
Make a list. Include as much detail as possible for the purpose of understanding.
When negative emotions come up for you – and they will, because money is emotional – just take a deep breath and ask my favorite questions:
Isn’t that interesting? I wonder what’s going on? I wonder why I feel this way?
Sit with the feelings and the questions. Write down everything that comes up – the good, the bad and the ugly. You want to get this all down on paper, or in your electronic document, for the purpose of examining it and tracking your progress.
If you draw a blank, that’s OK. Leave it and come back to it. Set your intention to uncover any aspects of your finances that are not serving you well and keep asking the questions.
I have yet to meet someone who did not uncover insights through this process.
Do this valuable work and see what you come up with. Please share your results and/or insights in the comments below.
That’s it for step one of your financial clean up! You’re identifying which shrubs need pruning, which plants didn’t make it through the winter, and which bits need to be raked or thinned up.
Gloria’s big aha
One gal that I worked with, Gloria*, kept procrastinating over this first step (which is ironic, no?). She told me she already knew perfectly well what her challenges were. She didn’t need to create another list.
“If you know the contents of the list, it won’t take you long to write it all down then!” I said.
When she finally got to it, I received an excited email. Gloria had made a linkage she had never seen before. By writing down all the points of stress and thinking about the “why”, she came up with an aha.
“I knew that I hated opening bills and checking my bank account, and I knew very well that it’s because I feel I don’t have enough money coming in every month to pay for everything, so there was tension, embarrassment and guilt. When I wrote out my list, I realized that one of my beliefs is that making money is hard, so I keep earning less than I want to. After staring at my list, I saw that that one belief – making money is hard – is causing most of the other problem items on my list, and that if I just worked on that belief to change how much I earn, much of the stress would go away. It seemed so obvious but I had never stopped to make the connection. If I work on one area, many other parts of my life will improve.”
And that’s exactly what she did. She worked on her mindset while building a side income. One year later, she has paid off a significant amount of her debt thanks to the extra income and she is slowly putting better systems in place to remove the stress of bills.
One exercise; big results. That’s so much more satisfying than a clean closet.
Well, OK, a clean closet is awesome, but it won’t do a thing for your financial future.
In my next post, I’ll tackle step two.
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*Not her real name