Google “personal finance” or anything similar and you’ll get an endless list of advice from experts. On the one hand, it’s great that so much information is readily available. On the other hand, it’s extremely frustrating when all of those experts have different things to say.
Trying to apply all the advice is impossible when every expert has something different to say. Even if you just pick one personal finance method to follow, it might not be the right path for you and your family. And if you end up not being able to follow a certain financial guru’s plan, it feels like you’ve failed.
The thing about personal finance is that it should be personal. Here at Everyday Money, we understand how frustrating it is to see money management advice that’s provided without any context or nuance. We want to help you wade through the sea of financial solutions to find the one that fits you best. Before you revamp your personal finance system based on advice from the next trending expert, ask yourself these questions:
Am I the target audience?
It’s frustrating when advice from popular financial experts is provided without any context. For example, Dave Ramsey talks a lot about being debt-free, and Ramit Sethi’s message is all about financial freedom through entrepreneurship. These strategies can work very well for some people. But they aren’t right for every person, which is something that’s seldom discussed in the personal finance sphere.
The problem with one-size-fits-all financial advice is that it just doesn’t work for everyone. Not everyone is wired to be an entrepreneur. Being debt-free isn’t a goal that everyone aspires to. Not everyone wants to work 80-hour weeks to build wealth and retire early. And that’s OK. You shouldn’t try to change who you are to make a certain personal finance method work for you. Instead, you should choose the method that fits your life and goals best.
So the next time you see an expert talking about how to get rich through entrepreneurship or recover from debt or save enough to retire early, stop for a minute and think about whether you’re the right audience for the message. If not, just realize that others may benefit from that strategy, and work to find one that is more relevant to you.
Does this method encourage me?
Unfortunately, if you choose a money management strategy that isn’t compatible with your money personality or goals, you’ll probably end up “failing,” which leads to feelings of guilt and shame. But you aren’t the problem. The problem is that the advice you tried to follow wasn’t the right advice for you and your lifestyle.
It’s important to take some time for personal reflection to understand how you think and feel about money. Maybe you struggle with money shame, which is really common. Maybe you’re the type of person who thrives on detailed plans and needs a really granular budget. Or maybe you’re the opposite and you need to take a big-picture view of your finances.
Understanding your personality and your feelings about money can help you decide which advice to follow and which personal finance method to use. When you find and follow a path that aligns with who you are, you’ll feel more confident and capable with your money.
What are my goals?
Think about your goals as you determine which personal finance expert’s advice to follow. It’s essential to choose a path that matches your goals. Talk with your partner to figure out what’s most important. What is your financial dream? Do you want to retire early, pay for your children’s college, or start your own business? Identify your financial values.
Some money management and budgeting methods work better for certain types of financial goals. For example, if being debt-free is your goal, you probably need a strict, comprehensive budget. If your dream is to start a successful business, however, the right move might be to take out a small business loan. Knowing your goals makes it easier to recognize which method will help you reach them.
Start by figuring out where you are
The first step to getting control of your finances is awareness. You can’t determine which personal finance method or plan is best for you if you don’t really know what your goals are or where you’re starting from. Start by having some deep conversations about finances with yourself or your partner to identify your goals, values, and feelings about money.
Once you know your goals, you can make a plan to reach them. The key is to understand where you’re starting from. When you know exactly where you are, you can see exactly what you need to do to make progress toward your financial goals. Our BudgetingBlocks™ system is the perfect tool to figure out your current financial situation and make a plan to move forward.