Stages of the Financial Journey
Starting Your Financial Journey
Gaining control of your financial life is not easy. But we believe that no matter where you are in your financial journey, you deserve to live a life of stability, peace, and financial independence.
When someone begins a journey, they must know where they are starting, and where they’d like to end up. The path to the destination may vary, but if they don’t know their origin they will wander aimlessly. Your financial journey is no different. Many individuals can’t see a path towards financial independence because they aren’t sure where they’re starting. To help with that, we’ve identified three different starting points, or stages, that we see many people experience financially:
Stage 1 of the Financial Journey: CHAOS
At this point in your financial journey, everything is a mess. You might know how much your family makes, but you certainly don’t know how much is going out. Every unplanned expense is a huge “Gotcha!” and you may even be making difficult decisions about which necessity to cover this month.
You may often ask questions like, “You spend HOW much on that!?” and “How are we going to cover childcare this month?” Likely your stress levels are near a maximum. Most likely you are living outside of your means because you have no real way of knowing what they are. You use a credit card for everything, and because you have spent more than you have made, your total balance increases along with your minimum payments. You most likely feel helpless and trapped.
Stage 2 of the Financial Journey: CONSCIOUSNESS
In this stage, you are aware of the need to make better financial decisions. You might start limiting your expenses (e.g. not eating out, shopping at discount retailers, etc.), but you still are mostly guessing at your budget. You might live within your means more often, or possibly every month, but you have no guiding principles or goals for how your money is to be spent. You are probably paying for most of your unexpected expenses out of your monthly budget. However, you are adding bigger “Gotchas” to your credit card in hopes to pay it off with the next bonus, tax return, etc. In this stage, you may even get to a point where you are “managing” your money well. You may even have some savings for the unexpected. The missing piece in this stage: money isn’t handled proactively and with purpose.
Stage 3 of the Financial Journey: CONTROL
This stage is not about how much money you make, how much wealth you have accumulated, or how few financial emergencies you have. This stage is about freedom and peace. In this stage, you have a mindset and set of disciplines that, over time, will cause you to be financially independent. You know your numbers: income, expenses, net worth, etc. You make financial decisions based on your values and your goals (and you can communicate what those are).
You use a system to keep track of your spending and you have the discipline to avoid unnecessary debt. You plan for purchases and value finding a great deal more than immediate gratification. You plan for expenditures. You set money aside for tires monthly, knowing that you will need them next year. You put money back monthly for gifts because Christmas happens every year and you value generosity.
You may still have some financial surprises, but you aren’t ruined when you have a doctor’s bill and a flat tire in the same month. Knowing you would have to spend the money at some point, you saved a little money monthly to cover these expenses. Your stress is reduced and you’re consistently living out your values while pursuing your financial goals. You are proud to be taking care of your household and you are on your way to financial independence.
Begin Your Financial Journey
It’s time to begin your journey. This will not be easy, but you deserve to live a life of stability, peace, and financial independence. It will require sacrifice. It will require a budget. It will require discipline. But it will also create more opportunities for you and your family than you could have ever imagined.