Roadmap to Financial Success

Happy 2025! This is the first blog of the year, and I want to start with some financial guidance. Each year, I hope for your financial prosperity, but hoping alone isn't sufficient. I also aim to equip you with the tools to achieve financial success. Here's how we will optimize our finances in 2025.

Step 1: Look at Your Finances

To understand your destination, you must first know your current location. We're no longer passive passengers in our financial journey, drifting wherever it leads. Instead, we're taking control and steering our course. Dedicate a month to tracking your expenses—no more, no less. While we're generally aware of our monthly bills, do we truly know how much we spend on groceries, entertainment, personal care, savings, and more? All of this matters. Use the old fashioned pen and paper approach, a spreadsheet, or a budgeting app. You can also flip through your bank statements from the last 3 months and sum up every transaction to get an idea. Whichever approach best suits you. Gain an accurate view of your financial situation.

Step 2: Find the Hiccups

After reviewing your finances, what areas could use improvement? Did you observe that you spend approximately $600 on dining out and fast food? Did you realize your weekly nail appointments cost more than expected? Did you notice that you haven't allocated anything for savings? What did you observe? Find your hiccups.

Acceptance is the first step in the right direction.

Step 3: Implement One Small Change

We are habitual beings, and altering everything simultaneously can be challenging. Therefore, choose one thing to change. Could we stop going out for lunch with coworkers every day and bring lunch from home instead? The money saved from this can be added to a savings account. This small adjustment addresses two issues: spending less on dining out and increasing our savings. Which hiccup did you find the most concerning? Select that one and make the change.

Step 4: Say Goodbye to Debt

As the saying goes: Don't beat a dead horse. You already understand that debt is something to eliminate. Once your basic needs are met, everything else is additional. Accumulating debt to cover basic necessities is certainly an issue, but that's a discussion for another time. However, if you're going into debt for wants and impulse purchases, this is a habit we can definitely change. You deserve all the good things life offers, but sinking into consumer debt isn't the way to rebel against the system. You're only harming yourself. Create a debt pay off plan and stick to it. Yes, this may mean you will be living frugally for a few months or maybe a year, but it will be rewarding in the long run.

Step 5: Increase Your Income

This necessitates preparation. Rather than impulsively asking your boss for a raise or choosing a random side hustle, start planning for these now. Begin exploring potential side hustles you might be interested in and narrow it down to one that you'd realistically enjoy. Start taking initiative at work now and document your achievements. If you closed two significant deals, record that. If you implemented a change that positively affected the organization, note that down. This way, in 4-6 months when you meet with your manager, you can showcase these accomplishments and request appropriate compensation for them. Certainly, "no" is always a possible response, but many of us don't take the time to ask. If you make a strong case, hearing "no" will be much less likely. So ask!

Step 6: Keep Expenses Low

When you receive a raise or establish a steady side hustle income, it's tempting to consider getting a new car, upgrading to a nicer apartment, or buying a house. But let's not do that. Instead, maintain your current expenses so you can allocate all that extra money towards savings. "Affluent" individuals are often among the most "frugal" people around. They don't see the necessity of driving luxurious cars to display their wealth. Opting for a T-shirt, a pair of jeans, the same New Balance shoes, and a trusty Toyota helps them retain more money.

Let's play a game. The next time you are out on the town, see if you can guess who is wealthy and who is not. You'd be surprised.

Step 7: Separate and Automate Your Savings

Long term, short term, near future. A vacation to Italy is long term, while a weekend trip with friends is short term. An oil change in 3 months? That's near future. Although an oil change isn't a monthly expense, it's a recurring one. If you spend $160 annually on oil changes, divide that by 12 months and start saving a little each month, incorporating it into your budget. The same goes for hair appointments, nails, new tires, date nights, etc. For any foreseeable expenses, we should be saving for them monthly. It's better to make small monthly payments consistently than large ones occasionally.

Step 8: Check In

Develop the routine of reviewing your status weekly or monthly. The times of being unaware of our finances or expenditures are behind us. Setting the goals is the first step, but checking in on them is an important step. A failure to do this can result in remaining in the same financial crisis the year ended in. Let's choose to be different.

Sending you all the financial success this year!