Record Keeping. Successful people tend to be organized. It’s an even easier task now than it used to be, due to electronic files, online accounts and computer storage rather than the old school manilla folders. But whatever method you use to keep track of your records, just establish a system that works for you.
Attention to Details. You may have heard of a “Profit & Loss Statement” and “Balance Sheet.” What’s most important is that you know and track how much you earn (especially if your income varies) and how much your expenses are each month. During good times, we can tend to be less concerned with some frivolous spending, but it’s better to be in the habit of keeping an eye on this and minimizing those lost dollars.
It’s also important to know the details of any debt you have (such as a mortgage, car or student loan and especially credit card debt). You should know the interest rate you are paying, how much longer you have until the loan is paid off, and how much of your payment goes towards interest costs versus paying down the principal of the loan. Knowing these “boring” details puts you in better control of your debt.
Flexible Planning with Consistent Behavior. It’s important to set goals in life and to create a plan to achieve those goals. But also know that the plan WILL change, and you will need to adjust your plan and actions at some point.
I believe the most effective plans are the ones you set based upon your core values. If family or independence are your core values, for example, then you want to be sure to set your financial goals to align with those values. Make decisions that allow you to provide for your family and are not dependent upon friends or strangers for your financial well-being.
Being flexible and being consistent are not mutually exclusive. In fact, knowing your core values can help you to be both. When you know your values, they can guide you in the long term, which is consistency. This can allow you to also have more flexible thinking and make plan changes necessary in the near-term. This is how wealthy people achieve progress over time.
Know How to Ask Good Questions. The quality of your answers depends upon the quality of your questions. So it’s important to continually improve your communication skills.
After almost 30 years of marriage and raising kids, I do not believe perfect communication is definitively achievable. However, there is one action and one non-action I believe can lead to improved communication. Action: Pay attention to what the other person is saying. First, it’s polite! And it will also help you formulate questions on the details you truly need to understand.
Non-action: Don’t ask questions rashly. Good questions rarely get asked when we’re mad or frustrated. When you are emotionally ruffled, pause and mentally reset. It helps to ask for clarification (i.e., “when do you want me to take the garbage out?”). Or ask for examples, if appropriate. One of my favorite questions is “when is this not the best option”? Nothing works all the time and it’s important to know that as well.
I hope these observations help you to see the value in some “boring” habits that can actually improve your financial life. Have a wonderful spring season and contact me if you have any questions.
