A GPS has to know two things: where you are and where you are going. I'm learning that my financial life is one giant roadmap. In order to reduce the number of times we hear "recalculating route," it's imperative we get clear about where we stand today and where we want to be in the future.
Wells Fargo released a new survey about Millennials and money. The results are clear that our generation is confident we're going to be financially secure, but do we really know where our money stands right now? I would argue that a majority of us are terrified to face the music of low bank accounts, mounting credit card debt and no-end-in-sight student loans.
I know that after I graduated college I found myself saying--I am smarter than this, I should know the basics of understanding my cash flow! Instead of staying in the comfy, but paralyzing, unknown I decided to stop running from my financial uncertainty, put on my glasses and find my cash clarity.
Not being clear about your money is like being stuck in traffic, inevitably delaying you from where you want to go. Of course clearing up the congestion can be intimidating, but if you take the time now (before its gets messier) you will soon be cruising in the financial fast lane.
Here are 3 steps to take today to change your tomorrow:
- Add up your assets. Add up the current amount in your financial accounts (checking, savings, investment, retirement, etc.). I suggest talking to your parents to ask about accounts you may have that you're not aware of. Now before you move forward, take a moment to be really proud of the number you see. You worked hard for it and it deserves recognition!
- Know who you owe and thank them for supporting you. If you're in debt (credit card, student-loan or you owe parents or friends), write down all the money you owe. Then silently or verbally tell them thanks. Why? We're quick to forget that there was someone (or institution) that financially supported our dreams to go to school, buy a car or move out of our parents house when we weren't able to. Now is the time to make a plan for how and when you will pay the favor back.
- Calculate your cash cushion. To enjoy fun events with friends, products you love and lattes you can't seem to give up, you need to know what your monthly cash cushion is. First, tally up your monthly fixed expenses (think rent, cable, car payments, 401k contribution) and estimate your fluid expenses (groceries, transportation, personal care, etc.). When you subtract your monthly expenses from your monthly income, you can then choose how to spend (or save!) your cash cushion.
If you hit a detour or dead-end, don't be ashamed to pull over and ask for help. Honesty and vulnerability are the catalysts for positive growth. So, be brave, your money is worth it! And I'm here to help guide you on your way.