We all know life is a journey and finances is just one piece of the overall journey which includes our faith, relationships, work, etc. It is interesting how finances plays such a large role in the roads we travel. From a faith perspective, there is giving. Relationships involve money when we talk about doing things with friends and family, or with how money can impact how we interact. Our work lives involves earning. Money is definitely interwoven into all these areas of life. In fact, it is no wonder that ‘going the wrong way' financially, or making poor financial decisions has a direct impact on us.
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How Do You Know if You’re Going the Wrong Way?
There are several symptoms of when you might be going the wrong way financially. Sometimes it's easy to ignore them because they're too painful to face. In fact, with money related issues being the leading cause of divorce and a whole lot of anxiety, many people choose to flee from these problems or bury them deep in their thoughts. Of course, there is danger in that because as mentioned above, money directly impacts important areas of life including faith (our relationship with God), relationships with family and friends and our work.
Typical symptoms of going the wrong way may include an inability to save money, increase in debt, inability to generate more income, lack of giving and overall reduction or stagnation of net worth. If you follow the Dave Ramsey Baby Steps or Crown Money Map, you can see that you're going the wrong way financially if you can't make progress to the next step. For example, perhaps your emergency savings hasn't increased for a year or more. Why is that? Is it because you've had to use it on several unplanned financial emergencies? If that's the case, you have to either increase income or reduce other expenses to get it built back up again.
Such symptoms call for immediate action. What can be dangerous for an individual or family is sleeping on these issues, or burying them to resolve later. Doing so results waking up years later with no money in the bank, moderate income and no imaginable way to be debt free or financially independent.
How to Change Directions
Changing directions financially is sometimes difficult for people. It's when you have to have self motivation and discipline to pull yourself up out of tough situations and take corrective action. By the way, everyone has to do this at one time or another. I don't think there is anyone who isn't subject to finding themselves heading in the wrong financial direction at least a few times in their lives. So, it's important to not feel sorry for yourself or feel like you're the only one with such challenges.
So how do you change? If you experience the symptoms described you'll want to explore ways to make more money, downsizing to free up more money each month and perhaps reign in spending with a monthly plan or budget. Personal money management is really simple math. You need to have more coming in than going out each month to make progress. When this situation no longer exists, you have to tweak income or expenses in some way to get moving again.
For a Christian, it can be a matter of putting your finances in God's hands. Giving often helps us realize we're not in control and that we must put faith in God to take care of us. In fact, when you're in a financial rut, look to your giving situation first. Are you trusting God first with your money, or are you trying to carry the burden of your finances. While we're called to be faithful Christian stewards or money managers, God plays a larger part in our finances. Where there is a lack of giving, financial struggle may exist.
How to Stay on the Right Path
Once you're own a solid path, net worth is increasing (debt is reduced, income increasing), you have to maintain your situation. While there will continue to be hills and valleys, actively manage your money each month is important and establishing a longer term plan is essential. That's why I think it's important to ask yourself what you plan or hope to accomplish in the next five years. Will you become debt free, save $5000 for emergencies, start investing for retirement and contribute 10% of your gross income towards this goal? What does a five year financial plan look like for you? Start with the bigger goals and then break them down across year and identify what you have to do each month to start aligning with them. There is comfort in having a plan.
Have you ever found yourself going the wrong way financially? If so, how did you change your situation?