by Contributor Group,
Can one single word change your financial life and perhaps completely change your life story? Sound a little too simplistic? Before you dismiss the possibility that one single word can have transformational powers, ask yourself one question: Is my financial life just a little bit too complicated? If you answered ‘yes,’ I officially declare you normal and a card-carrying member of the so-called “real world.” With so many different moving parts in our financial lives (managing cash flow, paying bills, paying down debt, and investing for future goals), it is very easy to lack clarity and vision when trying to figure out where we should focus our attention.
I started thinking about this recently when a friend reintroduced me to a book called One Word That Will Change Your Life by Jon Gordon, Dan Britton, and Jimmy Page. This book is positioned as a “guide to creating simplicity in your world and developing discipline for life.” You just choose one word to guide your actions throughout the course of the year.
It’s that simple but can also be a powerful way to focus on what matters the most to you during this season of life. If you are interested in using this process by choosing one word to guide your financial planning efforts for the remainder of the year, then you can even use their action plan without having to purchase the book itself. Here are some examples you may find helpful as you seek your word that could give you the necessary focus and discipline to knock items off your financial wellness action plan:
Simplicity – Are you doing everything possible to streamline your finances? Consolidating debt to a lower interest loan, automating savings through direct deposit or regular bank transfers, and tracking your income and expenses with online budgeting tools such as Mint are just some examples of ways to simplify your finances. Other things to consider include switching to a passive investing strategy through low-cost index funds, target date retirement funds, or robo advisor investment platforms.
Adapt – Many personal spending plans (a.k.a. the “budget”) don’t work out as originally planned because life gets in the way. Sometimes our health fails us and we get sick and it costs us money to get better. Transmissions fail. Air conditioning units fail during summer heat waves.
No matter what “life happens” moment occurs, budgeting should never fail to help you align your money with what matters. Create a spending plan that is adaptable and approaches setbacks as temporary challenges that can and will be overcome. (See YNAB’s Rule #3 – Roll with the Punches for ways to adapt your spending plan over time.)
Trust – If you are seeking guidance with important financial decisions, you want a trusted advisor by your side. Anybody can call themselves a financial planner so how do you know the person you are getting guidance and advice from is genuinely offering help from an unbiased and conflict-free perspective? Check out How to Choose a Financial Planner and When to Fire Your Financial Advisor.
Focus – Putting our goals in writing is essential but this is often overlooked. Set SMART goals that are specific, measurable, actionable, realistic, and timely. (See How to Make the Financial Planning Process Work for You.)
Believe – Research suggests that people with higher financial self-efficacy and greater financial optimism about the future are significantly less likely to report financial stress. Self-efficacy can be described as a person’s perceived ability to handle different situations and plays a major role in our perceived financial wellness. Not feeling confident in your ability to manage money? Start small and create some quick wins early on. Most importantly, believe that you are truly capable of positive behavioral change with a newly found sense of empowerment.
Communication – Talking about money isn’t something everyone is comfortable with. As a child, I was taught that money was a taboo subject. In order to improve money relationships, it is helpful to realize how the money scripts that we tend to develop early in life guide how we talk with others about money. Challenge yourself to improve how you communicate with those significant others in your life. Commit to setting regular meetings and set ground rules in advance on how to have “the talk.”
My personal word for the rest of this year is simple…Now. I’ve got big plans this year and refuse to let procrastination, fear, or hesitation get in my way of completing my personal goals. As a result, that slightly disorganized file cabinet and garage that looks like a hurricane came through it sit at the top of my “now” list. But I’m also making some much needed updates to our family’s estate planning documents and reviewing our investment policy statement and portfolio as the summer rolls on.
Do you have a word that you are using to guide your financial wellness planning decisions this year? Consider why it is important to you and write it down so you can use it to guide you going forward. Then take the next step and make sure that you have a written financial wellness plan to help prioritize your current and future money decisions.