By Amanda Ainsworth If you couldn’t make it to our most recent event, Money Matters, I hate to tell you but you truly missed out! An evening with Tracy Theemes was all I needed to get my money-saving, ladder-climbing butt in gear!
For me, the most valuable takeaways came in two parts: Tracy’s methodical approach to identifying your goals and achieving financial freedom and her behavioural tips to help every women work their way to the top of their careers.
Below you’ll find Part I: Tracy’s 5-Question Technique for Financial Decision Making. I hope you find these as valuable as I did; stay tuned for Part II: Tracy’s Behavioural Tips next week!
Tracy’s 5-Question Technique for Financial Decision Making
Q1. Where am I now?
How do you know what financial position you’re in once all the smoke and dust clears? Here are two things to calculate and track:
- Net Worth— Calculate it every six months: Net worth = your Assets – your Liabilities
- Cash Flow — Track your spending pattern over a 90-day or six month period. Use your online debit and credit statements or the plethora of online apps/websites (such as Mint.com) that will do it all for you.
Q2. Do I have reserve?
Reserve is simply a liquid “backup”, preferably kept in a high rate savings account, meaning you can take it out as cash in under 24 hours. Keep cash (or cash equivalents) in your reserve.
The amount of reserve money you should have will depend on things like occupation, for example someone in the film industry might need more than someone with a predictable and dependable income, and your other spending patterns.
When should you start building this reserve? Umm, right now! A good base is to calculate how much money you need to cover your costs of living for three months.
Being your own bank is not only cheaper, it creates financial freedom, confidence and happiness.
Q3. Where am I headed/What do I want?
Pick the 2-3 most important things to you right now (hint: one of these should be your reserve from Q2, if you haven’t already reached your margin)
Then ask yourself, how much does it cost?
And, when do you want it by?
Q4. How am I going to get there?
These are the years to learn (and practice) positive new behaviours. So skip that latte, pick up an extra job if you need to and attend one of Tracy’s investment classes – they’re free! Contact us if you want to hear about upcoming sessions.
Q5. How am I going to monitor my progress?
Fluent with Excel? Even if you aren’t, it’s a great tool for tracking your budget and financial goals, Use it!
Define what would be “success” for your financial goals and remember to track your progress!
So, what are you saving for? Share with us in the comments below and stay tuned for Part II next week!