Early on in life, we all had grand dreams of an incredibly exciting, adventurous life. At least I did. Traveling the world, starting a business or going to outer space (hey, one day….)! The world was at your fingertips. But first, you probably need to start a career. You meet the person of your dreams, and get married. The next thing you know, kids are running around. Time, is no longer what it used to be. Quite frankly, neither is money. You find yourself suddenly in a position with money problems. You might be struggling to save even a little bit. Debt has continued to climb. You’ve probably heard of a budget, but don’t have your own. Retirement? Please.
When you get into a position like this, which unfortunately is way too common, you have two choices. You can bury your head in the sand and HOPE it goes away….OR you can take it into your own hands! Guess what, it’s NOT going to work out unless you do something about it. You may have a rich uncle or win the lottery, but for the rest of you, you’re going to have to work for it!
Enter, the FINANCIAL RESET. A what? You heard me. A RESET! Starting over. Wiping it all clean and getting a fresh start. Have you have gotten to a point with a project or a paper and said, “OK, this isn’t working. I’m starting over”? That works with money too.
If you’re having money problems, don’t give up. Don’t fret.
I’m going to explain what it actually is, who needs it and how to get started.
Who Needs a Financial Reset?
I’m going to give you a few scenarios of when it might be time for your reset. Money problems is a relatively vague term, so let’s go into further detail.
- If your expenses are equal or higher than your income, it’s time. This can be for a number of reason, but I’d be willing to bet that at it’s core, you don’t know what your working for. You lack the proper motivation to get you working harder to make money or stop spending money frivolously or both.
- You’re relying on bonuses to cover your living expenses. Hey, I’ve done it. The problem is, you’re probably going into debt BEFORE you get that bonus. Is it even guaranteed money? Same goes with #1…your living expenses (all of them) are too high for your income.
- You’re saving for retirement, but barely. AND, even worse, it’s the only savings you have. Another sign that you need to RESET.
- You might be saving, but toward what? You don’t know. You have no target or end destination.
These are all common and I’ve seen them all…many at the same time. None of these really seem THAT bad. BUT, it’s wrong. You’ve been doing it wrong. That’s OK because you’re definitely not alone. You just haven’t been properly taught the basics or been properly motivated.
Now is your time.
Why You Need a Financial Reset
Just to give you some light scare tactics, I want to paint a picture or two for you. A picture of what could happen if you DON’T make a financial reset to squash your money problems.
Let’s say you’ve been saving 4% into your 401(k) so you could take advantage of your employer match. You have no other savings and can barely seem to squeeze your lifestyle within your paycheck. You are expecting (or hoping) that a promotion or some unprecedented pay bump will make it all better. It never happens. You wake up, 5 years from your ideal retirement age and you don’t have anywhere near enough saved. You also have credit card debt because life’s almost guaranteed set backs happened. Well, now you’re in trouble. Money problems.
Another scenario for you. You’ve saved and saved for a down payment on your home. Maybe it’s the “recommended” 20%, but maybe it’s only 5%…or less. As soon as you get to that number, you talk to a bank or a mortgage company. They look at your debt, income and a few of your expenses and tell you the maximum amount of home you can “afford”. You and your realtor find a DREAM home. The home you’ve been hoping for. You take the savings, and close on the home. Now, you want to furnish that home. Well, no more savings. Just put it on a credit card! You tell yourself that you’ll tighten up the budget and pay it off. Yeah right. You can barely afford the home! Oh yeah, you need to do some upgrades. Then, the AC goes bad. There’s another $5-$10K on a credit card! You’re stuck and spiraling out of control and your money problems have just begun.
Finally, you let your debts from early in life, like student loans, college credit cards, auto loans, etc. continue on. You’re paying the minimum. Then, you get married, have a wedding, buy a ring and a home. Debt debt debt debt debt. Money problems.
Are these “financial horror stories”? No, they’re really common and most likely look vaguely familiar. This isn’t a one in a million chance that this happens to you. These are decisions that people make EVERY DAY. I’ve made them to some degree myself!
How Do You Start?
Remember, at the beginning of this article I mentioned that you weren’t properly motivated? What I meant from that is you think earning money and saving is just “smart”. Or, you think money is to support your standard of living. Both of these are right, BUT you’re missing the best part.
Your money is what can help you accomplish those DREAMS you’ve been thinking about since you were small. I’m not talking about expenses like paying for repairs or college tuition. I’m not talking about goals like an annual vacation or “retirement”. I’m talking about your dream to start your own business. Living in a dream destination, completely financially independent. All of this…takes money. If you’re making it then it’s up to you to decide how you spend it.
So, your starting point is to have a “brain dump”. Write down everything that you need to pay for, want to pay for and dream to FUND (Be careful. Don’t get caught up with material possession, you won’t be happy.).
Put them in order, some expenses will be shorter term and more important to you than others.
If you’re married, or in a relationship where you’re in this together, talk. Communicate to each other what the goals are. Make sure you’re properly motivated. If you need to make a joint list, do it. If you’re not on the same page, nothing can work. If one spouse spends money too much while the other is trying to save, it WILL cause a fight and you might as well throw away that list.
Then, get your mind right. You’ll want to start thinking BIG. The goal exercise has motivated you, but now it’s time to think. Think about every expense you have that is getting between you and your dreams. Literally compare them. If that guy mowing your lawn is more important than your dream business, please, by all means. Keep him around. More realistically, it’s time to start mowing your own lawn.
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Next, download our 10 Steps to Financial Strength. This will give you every step, in order, to squash your money problems and make that FINANCIAL RESET. You don’t want to skip ahead and start funding a goal before you protect your downside. That would be like a home builder building your awesome new master bedroom before they even pour the foundation. It won’t work.
Your foundation needs to be virtually unbreakable. It will eliminate your money stress. Money problems will fade and you’ll be on your way.
To help you get started with your reset, we’re building something really cool!
Everyone’s financial situation is different. We all have our own version of money problems. Everyone will go through the 10 Steps in their own way.
If you’d like us to let you know when it’s done, click here and we’ll keep you posted.
In the meantime, your money problems are real. The clock IS ticking. You may be young and time may be on your side. That doesn’t mean procrastinate. That means you have more time to ENJOY all of your hard work and reach even more of those dreams. So get to it.
Sports Fan, Movie Buff, and Anything Outdoors sums it up. Brad loves spending time with his wife, Ashley, and their two boys. He helps empower people to take control of their money, bringing them the confidence to build the life of their dreams.
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About Matt & Brad
They are identical twins and money experts. Matt and Brad Ruttenberg have, combined, over 2 decades of experience as financial planners. They are known for simplifying money and helping others go from living paycheck to paycheck to thriving financially.
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This communication is strictly intended for individuals residing in the states of Florida, Michigan, Arizona, Nevada, New York, Ohio, and South Carolina. No offers may be made or accepted from any resident outside the specific states referenced. Registered Representative Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. The Money Twins and Ruttenberg & Company are not affiliated with Cambridge.