Let’s get started!
We spend a lot of time making plans for other aspects of our lives: careers, marriages, kids, brunches. But many of us fail to build an achievable plan for our finances.
Let’s make 2016 your year to get money fit and make building your financial plan your top resolution of the new year. In fact, let’s do it together. Start by thinking about what money goals you want to set this year—whether you’re saving for retirement, a new home or just looking for help getting your financial act together—and stick much too quickly. Small steps lead to great things. Here’s your first challenge: This weekend, take an hour to think about what money goals are top of mind for you right now. Write them down on a slip of paper and stick it to your fridge. We’ll come back to them at various points throughout the year.×
Download your MoneySense worksheets
Fact: What gets monitored gets improved. That’s why we’ve put together 10 downloadable worksheets you can put into your own #MoneyFit2016 folder. Keep them handy and read through them quickly to understand where we’re headed. By the end of the year, you’re going to know at a glance all of the key numbers of your life. Simply click here to download the templates.×
Use the Priority Pyramid
Whether you’re just starting to get a handle on your personal finances or an old pro looking for an easy check-up, the Priority Pyramid is the perfect place to start. MoneySense contributing editor Bruce Sellery created this riff on Maslow’s Hierarchy of Needs to help separate our most fundamental financial needs from the rest. And let’s be honest, even the savviest among us must admit some bad habits creep back in from time to time. To help you determine where you should focus your energy, start at the bottom and move your way up as you check off each financial milestone. “Because it’s inaccurate to simply get a handle on your money,” says Sellery. “You need to keep a handle on your money.”
See how the Priority Pyramid works.×
Determine your net worth
This is an important figure to know. Print out the Gather Your Documents checklist to help you pull together what you’ll need before you start, including bank statements, credit card statements, and life insurance policies. (Make sure to download the right worksheets and documents if you haven’t already.) Once you have all your documents in front of you, you’re ready to fill out the “Your Net Worth” worksheet from your #MoneyFit financial plan kit.
First list the values of all of your assets, inlcuding your home, your cars, your cash and investments. Then list your liabilities, including credit card debts, your mortgage and other oustanding loans. Tally both your assets and your liabilities and transfer those amounts to the following section, your simplified net worth statement. Finally, subtract your liabilities from your assets to discover your true net worth. This shorter net worth statements gives a clear snapshot of exactly where you stand today.×
Set a money date
It’s perfectly normal for couples to disagree—on living room decor, sports allegiances, Downton Abbey—but there’s one topic where discussions get downright toxic: money. One study from Utah State University suggests that partners who fight about money at least once per week are 30% more likely to divorce. Which is why every couple should go on a money date. Partners should set aside time to discuss their finances and goals in a setting where they each feel comfortable, says Karen Collacutt, a Money Coach based in Barrie, Ont. “As a society we’re in an ignore-and-panic cycle around money,” she says. “We often only deal with money when it feels like a problem, but money itself is neutral.” Here’s how to put the romance back in your relationship with some honest financial communication.
1. Turn off the TV
The worst thing you can do is talk about money while distracted, says Collacutt. So, pencil in a few hours away from other distractions—that includes the kids and the TV. If necessary, hire a babysitter and leave the house. Head for neutral territory—a favourite café or restaurant might work—anywhere the pair of you can free to express your concerns, wants and needs.
2. Set an agenda
To give your money date focus, each person should come prepared with a list of topic to discuss. Not sure where to start? Ask yourself what money situation concerns you most. This will usually prompt a longer list of discussion topics. Chances are you won’t get to everything, but the list will help you prioritize subjects that need the most attention.
3. More honey, less vinegar
At some point you’ll need to review your spending. This often turns into a blame game. “We layer all our junk on top of money—blame, shame, anger and frustration,” says Collacutt, “yet, our behaviour won’t change until we shift our mindset and that starts with examining what we spend our money on and why.” By keeping your focus on your own mistakes—instead of your partner’s—and on mutually agreed upon goals, you have a better chance of developing a team attitude when it comes to family finances.
OK. So the first date wasn’t so bad. You got through the tough budget stuff, set some goals and identified where you can change your own behaviour to help meet them. You’ve both agreed on a plan of action. Don’t stop there. If you make the money date a habit, says Collacutt, you establish a common language and knowledge that will help you and your family through the tougher money situations that can arise.
See MoneySense’s Guide to Love and Money to learn more.×