Yeah, yeah, yeah. There are keys to financial success. You’ve heard it before and read it before. But you may not have read about these keys to financial success.
You see, these keys to financial success were born out of a lifetime of financial failure.
All my life I wanted to be good with money. And up until a few years ago, I sucked at it. Well, it wasn’t that I sucked at money management. It was that I wasn’t aware of the money crushers that were destroying any chance I had of financial freedom.
Once I learned what those money crushing roadblocks were–and blew them out of the water–things started to change for the better.
I knocked out over $35,000 in consumer debt. I started having money to put in savings–and kept it there. And I started earning enough cash to save for my family’s dream house.
Are you sick and tired of chasing your money from paycheck-to-paycheck? Then you need to know the keys to financial success I learned–and master them for yourself.
Table of Contents
The Right Keys to Financial Success Start in Your Head
Dave Ramsey says that winning with money is 80% behavior and 20% head knowledge. I love Dave Ramsey and use a lot of his tips regularly. I think he’s one of the top personal finance influencers in the world.
But I’ve found his stats a bit off. I think “head knowledge” has a lot more to do with it than most people think.
Here’s why.
In order to do well with money, you need to know what you want from your money. And you need to know why you want it. And….you need to know how you got to where you are in the first place.
This is where key number one comes in.
1. Get Deep With Yourself About Your Financial Habits and Why They’re There
When I realized after several years of living on a budget that I was getting nowhere financially, I got really frustrated. It just seemed like no matter what I did, no matter how hard I tried, I was always broke!
I worked hard. I budgeted. Paid all my bills on time and followed all the rest of the typical money management advice. But my finances still sucked.
Until I sat down and had a heart-to-heart talk with myself.
I got real deep with myself about what I wanted and what I needed from my money. (Know that BOTH are equally important).
Here’s what I learned:
- I really wanted financial security more than anything
- Building our dream home (in a financially responsible way) was really important to my kids and I
- I spent money when I shouldn’t have out of a fear of rejection
- Some of the things I was spending a lot of money on really didn’t matter to me at all
WOW. Talk about eye opening!
So, my question for you is: If you sit down and face ALL of your fears and pains, from past present and future, how would you find that your spending is affected by them? And what would you find you REALLY wanted from your money?
What are Your Financial Fears and How do They Affect Your Spending?
In my case, I grew up really poor. My fear of being poor and not having what I needed tricked my mind into thinking that if I could buy whatever I wanted, I was doing well financially.
Struggling for money scared me, so if I didn’t worry about money then I wasn’t struggling. Right?
Wrong.
The way to not struggle for money is to plan, save and invest properly.
And once I learned that what I wanted most out of my money was to not struggle, my perception that being able to spend would quell my fears was broken. Destroyed.
Another fear I had was that I didn’t deserve good things in life. Some childhood incidents I experienced and being in an abusive relationship for 20+ years convinced me of that.
Once I realized that I was worth something (we all are: God says so), I learned that more than anything, I deserved financial security from my money.
Because somehow along the way I’d gotten the idea that I deserved to be broke. Or that I was destined to be broke.
But that’s just not true.
You, me and the rest of the world, we have a choice about how we earn and how we manage our money.
And it’s up to us to love ourselves enough to do better with our money. And to abandon spending habits that secretly destroy our finances. (I’m talking to you, coffee stops and drive-thru runs that will give me a short-term “feel good” high).
Once I got deep with myself and got to the bottom of some of the reasons my money wasn’t working, I got angry.
And I decided I wasn’t going to let short-term joys (like drive-thru runs) steal my long-term happiness ever again.
That’s when I sat down and determined what I REALLY wanted from my money.
2. Figure Out What You REALLY Want From Your Money
I knew that the one thing I wanted most from my money–on a super deep level–was financial security.
I wanted to be in a place where I never again stayed up at night worrying about how I was going to pay the bills.
Or whether or not I was going to make it to the next payday.
And I’m guessing you want the same thing.
Now, financial security doesn’t have to be your ONLY want. But it should be near or at the top of your priority list.
Why?
Because your level of financial security affects every single other area of your life.
- It affects where, when and how much you have to work
- It affects your relationships
- Your level of financial security determines when–and where–you can retire
- It hugely affects your stress level, and thus your physical and mental health
- It affects what you can–and CAN’T–do on a daily basis
If you can make financial security your top priority as it pertains to how you manage your money, everything else in life will become easier.
And getting financially secure is as easy as three simple, little steps.
3. Make THESE Three Steps Your Top Money Steps
I’m sure the idea of getting and staying financially secure sounds pretty unachievable when you’re struggling to make ends meet. And I know how you feel.
But stay with me here.
Because the steps you need to take to get financially secure are really pretty easy.
The reason people fail at them is because they either don’t know what they are, or they don’t want them bad enough.
Yes, you’ve got to WANT financial security before you can achieve it.
Once you’re sure you are sick and tired of racing after every paycheck, do these three things.
- Make a budget that works for you–and stick to it.
- Commit to NOT spending your extra money on useless stuff (i.e. stuff that doesn’t REALLY matter to you).
- Use your extra money to do two things: pay off debt and build up your savings account.
I know these simple tips were probably a letdown. You might have been hoping for some awesome, mind-boggling revelation here.
But the truth is that this is how I KNOW you can get your financial crap together: Because it really is THAT easy–once you really understand how badly you want and need financial security.
That’s the key, my friend. You need to know how bad you want it, and you need to comprehend that you deserve it.
If you don’t understand those two things you will continue to blow your money on stupid stuff.
Value Based Spending
Value Based Spending is simply about taking a good, hard look at every purchase you make–before you make it.
As you’re deciding, ask yourself questions like:
- Do I want take-out pizza more than I want financial security?
- Do I want this new sweater/iPhone/restaurant meal more than I want to be free from debt?
- Is this purchase worth me having to work an extra two (or four or TEN) hours to pay for it?
If the answer to your questions about the purchase is “no”, forego the purchase in favor of making an extra debt payment or extra deposit to your savings account.
And use the value based spending challenge every time you want to buy something you don’t truly need to buy.
Doing so will help ensure you’re managing your money in a way that truly brings joy and value to your life.
4. Remove Toxicity From Your Life
Removing toxicity from your life is another necessity if you want to change your financial picture. That means removing toxic habits AND taking steps to manage toxic relationships.
If you overindulge in alcohol, gambling, smoking, overeating or other toxic habits, get help. Start eating healthier. Start exercising. You don’t need to become the next Gunnar Peterson or Massy Arias.
But you can start going for walks or stretching each day. Work every day to improve your mental and physical health.
Work to destroy destructive habits and actions, and trade them in for healthier habits and actions.
And as you feel better, you’ll be more encouraged to do better with your money.
Why?
Because toxic habits and toxic relationships breed destructive actions.
Work to Set Boundaries Around Toxic Relationships
If you’re in a toxic relationship, whether you’re the toxic one or the recipient of the toxic behavior, things need to change.
Get counseling. Encourage your partner to get counseling. If he or she won’t, you may need to consider leaving the relationship if it’s a safety issue.
Now, I’m not suggesting you leave a relationship because your money sucks.
And I’m certainly not suggesting you leave your relationship without some serious forethought and without trying to work it out first.
Many, many couples DO repair their relationships, financially and otherwise, and go on to GREAT things.
But if your significant other is unwilling to stop abusive or dangerously toxic behavior, you might need to consider other options. Just please, get the advice of a professional first.
The more you can do in terms of abandoning toxic habits and setting healthy boundaries around toxic relationships, the better you’ll be at managing your money well.
5. Know That You CAN Do More and Achieve More
Courage is being scared to death but saddling up anyway.” -John Wayne
This is pretty much the driving quote of my life. It was devastating and terrifying for me to leave my spouse after 21+ years of marriage.
And I’ve done a lot more scary things since I left my abusive relationship. I got my real estate license and went to work for a popular real estate company.
I started three side hustle businesses. My kids and I designed and are saving to build our dream house. We’ve already paid cash for the lot the house will sit on.
All of these things were very scary to do. They’re STILL scary to do. Every day.
It took a lot of research, a lot of education and the willingness to step out and confront my fears and move forward in spite of them. But I drive myself to keep going because I can’t justify living a life cowering in fear.
I want joy, happiness and the ability to help others–financially and otherwise. So I press on.
Even when I’m scared. Which is a LOT of the time.
What do you need to do to achieve more? Many people remain broke because they are convinced they can’t work. Or that they can’t work at anything but a minimum wage job.
My friend, you are SMART. You’re reading this article, aren’t you? That very step proves to me that you have the guts to want and to achieve more in life–even if it takes work.
You CAN learn new skills. You CAN find a work from home job that you can do sitting in your recliner. And you can ask your boss for a raise or learn new skills to get that promotion you deserve.
Yes, it will take effort to learn how to make more money and do new things. But you can do it. I know you can.
6. Set Concrete Numbers and Goals
You know what you want. And you have a pretty good idea of how to get it. But you’re going to need some concrete numbers if you want to stay on course.
Write down some target numbers for financial goals you want to achieve. Writing your goals down is one of the biggest steps you can take toward meeting those goals.
Here are some ideas for numbers you’ll want to determine and to write down.
Figure Out What You Need in Savings
Your savings goals should, at the very least, include an emergency savings account. This account should have three to six months’ worth of expenses in it.
And you need to commit that you won’t touch it unless you are facing an absolute emergency.
What is an emergency? And what is NOT an emergency? Here are some examples.
- An emergency is NOT a house or car repair–you should work to have separate savings accounts for that stuff because we all know house and car repairs happen
- An emergency is NOT a spur-of-the-moment getaway or a new TV you found on “super sale”
- A real emergency IS an unexpected job layoff
- A real emergency IS a child or pet emergency
Now, I know that when you first start building up your emergency fund, you might need to use it on other stuff. But only do that when it’s a NEED, and until you’ve built up money in car repair and house repair funds too.
Just put a little bit of cash each week in your car repair fund, your house repair fund, and put more in your emergency fund. The funds will grow faster than you realize.
Figure Out Your Debt Numbers and Make a Plan to Eliminate Them
When it comes to debt, make a chart listing all debts from smallest to largest. Start with the smallest credit card or other bill (not including monthly regular bills like utilities), and list all debt.
Then take the extra money in your budget and use it to knock those debts out from smallest to largest. Work to earn more income if that’s what you need to do to reach your goal.
Get a second job. Sell some stuff you don’t need. If you’re budgeting smart and not wasting money, you’ll be debt free before you know it.
Learn About Investing and Set Some Long-Term Savings and Investing Goals
Now it’s time to work on long-term financial numbers. Start learning about investing, or find a trustworthy investment rep.
Make some five, ten and 20 year financial goals and make a plan to reach them. Get the help you need to do this. Find a mentor or start reading a good financial independence blog.
Bonus tip: Surrounding yourself with people who have similar financial goals will motivate and encourage you.
7. Stay on Course–Even When It’s Difficult
Just so you know, this step isn’t going to be any easier than the other six steps. But it’s imperative that you follow it.
Something happens when you start getting your financial crap together. You develop a peace and a confidence that you didn’t have before.
When that happens, it’s easy to lull yourself, subconsciously, into thinking “it’s all good” financially.
But let me tell you: Until you’ve finished your course objectives, financial disaster is just one step away.
So don’t be lulled into a false sense of financial security. Keep paying down that debt. Keep putting money into savings.
Continue managing your money like you’re in a desperate place until you’ve got a rock solid financial foundation under you.
Then you can relax.