Broke Ass Financial Coaching: Your Financial Priorities

While being young, broke and beautiful is all well and good, some people’s finances are more jacked than others.  That’s why we’ve invited Betsy Crouch (aka Coach $izzle) to come onboard and dole out some much needed advice.  She is a professional financial coach after all.  If you’ve got a question you’d like answered please email her atcoachsizzle@brokeassstuart.com.  Maybe your question will be the next one answered.

I grew up in Michigan and I loved snowflakes.  No two are the same.  Cheese!  Seriously, no one has the same financial priorities that you do, you are totally unique.

Many people are asking me questions these days about how to create a spending plan, otherwise known as a budget.  I don’t use the term budget because people get really upset about that.  You may not want a budget but a spending plan sounds awesome.  Great.  Remember, once you know where your money is currently going, then this is the next step.

So I hear questions like this:

“How much should I spend on rent?”

“Where should I shop/spend my money?”

“How much should I give to charity?”

I can’t answer these questions for you.

What do you value?  What are your priorities?  It is impossible to look at spending and savings to see if it is aligned with your priorities if you don’t know what your priorities are.  In addition, if I told you how to spend and save your money based on my priorities or Joe Bob’s, then you may do it for a short time but in the long run it isn’t sustainable.  You create sustainability when you identify your priorities and align your spending and savings with those priorities.

I have spent over $10,000 on travel primarily for service, family, and learning trips, in the last two years and less than $500 on clothing.  To some of you that sounds great, to others it sounds awful.

When you know your priorities it is easier to make financial decisions.

When I am in a store looking at a sweater I like I remind myself I would rather take a trip to Kauai.

First of all, I avoid stores, and television so that I don’t have a desire for things I know I don’t really need.  If you do go in and see a sweater you like and decide not to get it, instead of leaving with a feeling of depriving yourself you can remind yourself that you choose to put the money towards something that is a higher priority.  Does it mean that you can’t have the sweater and go to Kauai? No.  What it means is that you can start to become aware of the categories that are a low priority for you, and to decrease your spending in those areas and put more of those funds towards things you are passionate about.

When you align your spending, saving and giving with your priorities and values you show your money deep respect, versus “burning it,” or “throwing it away,” on things that do not matter to you.

I adapted the prioritization exercise from What Color is your Parachute?, to help my clients gain clarity about their financial priorities.

1. Make a list of everything you spend money on and save money for that is not a bare necessity.  Do not include in the list:  rent, groceries, health care needs, etc.  Include in the list “retirement” or “save for later,” to see where those things fall on your list of priorities.  Also, include anything that you would like to spend money on, give away, or save money for that you are not currently putting energy towards.

2. Start at the top of the list and compare the first item to the second item, and ask yourself this critical question, “If I could only experience 1 or 2 which would I choose?”  If you need to visualize a long time frame such as a year.  If I could only go to the movies or dine out which would I do?  Put a hash mark next to the item 1 or 2 that “won.”

3. Then repeat with 1 versus 3, 1 versus 4 all the way down the list.  Then the first item has competed against everything.  Go on to number 2.  2 versus 3, 2 versus 4, 2 versus 5, so on and so forth.  Then when you get down to the second to last versus the last, put the hash mark next to the one that “wins,” and total all the hash marks for each number.

4. Rewrite out the list in order from the category with the highest number of hash marks to the lowest number of hash marks and these are your priorities.

Every client I have ever coached has found that something about their spending and savings does not match up with their priorities.

Email me or comment about what surprised you about this exercise. Are you spending a lot in a category of expenses that is a low priority?  Is there something you value greatly that you aren’t putting any energy towards?

Questions? Coachsizzle@brokeassstuart.com