Why do you want to understand your money?
Not everyone’s answer is the same.
In fact, I don’t assume everyone wants to understand their money. It’s a choice you make — to switch gears, learn new things, assess yourself and make changes.
And the fact that you’re here, reading this, means you’re considering making a change for Future You. (I’m proud of you!)
Ultimately, understanding your relationship with money will provide clarity and purposeful direction moving forward.
Take a look at your motives, the positive change you’re hoping for and any hangups getting in the way. Then, keep going.
Download the Understanding Me + Money worksheet (get it below) and write out your own thoughts — because personal finance is personal, ya know?
What’s motivating you to understand your money?
The mental and emotional burden.
When you don’t know where your money is going (or needs to go) and bills are piling up, the unknown about money is a heavy, heavy weight.
When our bank account always has less than we “thought,” it can be stressful. Perhaps it’s...a credit card bill you can’t pay in full, another overdraft fee, calls from a collector or “cutting it too close” to paying your bills.
You’ve had enough of it.
You want to know (once and for all), “Where is my money even going?” What would it feel like to get out from under of the burden of money and live with more freedom?
Haunt me no more, money.
The expectation to grow up.
Me: “Adulting! I should learn to adult!”
Others: “Adulting! You should learn to adult now.”
Perhaps it’s an internal feeling of independence and striking out on your own that gets your butt in gear about your money. Or maybe it’s the fact that banks or student loan servicers are taking money out of your account every month.
At some point, it’s a reality (and responsibility) to take care of our own financial matters. We take out car loans, banks let us buy houses and we get pinged with late fees that we can’t cry to get out of.
We’re hanging with “the real adults” now.
You’re sick of debt. You’d rather save on interest and pay down your loans sooner than expected — and with that, saving yourself years and years of debt payments.
Personally, I hate owing people money. Whether banks or individuals, I don’t like that responsibility hanging over me. The sooner I could get my money under control, the sooner I could make a game plan to knock out my debt.
The big picture.
If you’re right out of college, now’s a good time to be proactive about your money. Or if you’ve had enough WTF money moments, you’re looking for a change. One that’ll stick.
When you understand your money, you’ll start to make better spending choices for the future. And when you make better choices, you’re setting yourself up for long-term success.
What change do you want to see the most?
Think of what understanding your money will do for you. What do you hope will change?
By understanding your money, you’ll get a handle on “the unknown” and be able to pinpoint where your money is going, create a gameplan for where you want it to go, then you’ll have the gusto to do it.
That’s when you’ll see results. The kind of results you want to see.
Start by tracking your expenses. Then create a budget that makes sense for you. Budget for the “responsible” things you have to pay for, create margin for the things you want and build a safety net in case of emergencies.
The big secret is to plan for the unexpected. Once that’s covered, you can live with peace of mind and go/buy/do/see the things you want to. That’s the beauty of a budget. It’s meant to give freedom, not hinder you, so you can live your best life.
What’s holding you back from understanding your money?
But let’s be honest, we all have roadblocks. Sometimes it’s yourself, sometimes it’s other people.
All-out ignoring money.
I have some sweet friends. And bless them, they’ve admitted to me they just roll about their days swiping their credit card, only checking their account balances on an as-needed basis. (Don’t mind me, just “eek!”)
Assuming your money is just doing it’s thang is a passive approach to managing your money. And your money? It needs managed — actively. Your money is like a toy car — it has the ability to roll, but it won’t know what direction until you tell it where to go.
Fear of what you’ll find.
If you’re afraid of what you’ll find when you start looking at your bank accounts, it’s time to show your cards. Be vulnerable for your own sake. There’s no shame here.
If fear is keeping you from understanding your relationship with money, tell fear to shove it. You’ve got too many important things to achieve in life to let fear hold you back.
You’ll be using money your whole life. Now’s the time to buckle down and admit that you’ve got things to learn — about money and about yourself.
Someone else does it for you.
Sometimes we don’t understand our money because we don’t have to. Perhaps what’s keeping us back is outside of ourselves — it’s someone else. Our parents, our spouse. If we’ve never had to understand our finances, why worry about it now, right?
Mmm, I vote no.
It’s your finances. Yours.
Even if you’re sharing your finances with someone else, take some initiative to understand it too. Make it a team effort, so you’re on the same page. You might have an opinion about ways your money is being spent; graciously, let those thoughts be known.
The learning curve of understanding your money is full of unexpected bumps (and humility about what you don’t know yet), but I bet you’ll be a more confident person by going through it yourself.
Download the Understanding Me + Money workbook and answer the questions honestly. (You don’t have to share your answers with the class, I promise!)
It’s for Future You, remember.
Then, come back and keep reading. I’ve got the next step for ya.
By tracking your spending, you’ll gain clarity about your overall spending habits. Once you understand what’s what and where’s where, you can budget for those things you want the most.