The familiar adage, “You have to know where you’ve been to know where you’re going” is true, especially when it comes to finances. Unfortunately, few people know how sturdy their financial foundation is and can only hope it’s strong enough to withstand their dreams. In too many instances, it’s a wobbly stack of cards, ready to topple at the first big gust of wind. In my first post, I shared with you Why You Shouldn’t Put Off Your Finances.



Over the next few weeks, we will take a deeper look at the steps you can take to address the five mistakes that delay can cause.

But before we can move forward, we need to establish a firm financial foundation that provides you with a strong platform to build upon first.

Understand Your Current Reality

This is the step that scares most people and some try to avoid doing this at all costs.

They will argue they don’t have the time and throw out some ballpark numbers. I understand—you’re afraid. You may not want to admit it, but deep down you’re terrified at what you might discover.

Don’t let fear rule you. I don’t know what you will find out, but I do know that you can’t fix anything without knowing the problem either.


It’s important to review the inflow and outflow of money to see how you’re using your money and to determine whether you live within your means. You can use a budget worksheet to help you figure this out.

There are also a variety of online tools that can help you do this too.

Find one that fits your needs and still provides a good accounting of how you’re using your money.

What Are Your Opportunities?

Now that you’ve completed your budget, you can see how solid your foundation is and can look for opportunities to mine.

If your inflow is higher than your outflow, then congratulations—it appears you’re living within your means.

Now take a closer look at where you’re spending your money. Are you comfortable with those amounts?

Or were you surprised to see how much money you spent dining out or on a gym membership that you never use?

When my clients take a closer look at where they are spending their money, there are always a few surprises. Many happily redirect money towards something that means more to them and allows them to achieve their goals faster.


Living Beyond Your Means

Some of you will realize your greatest fear when you find out you are living beyond your means.

You have excess consumer debt beyond mortgage and/or a car loan that you can’t readily afford on your salary. Don’t panic. Take a deep breath and let’s figure it out.

Credit cards have made it very easy to live beyond your means and create substantial debt while still giving you a false sense of security since you are paying your bills.

Many people fall into this trap, but now you have an opportunity to break free of debt, so take advantage of it.

  1. Put an immediate moratorium on discretionary spending. Pay bills and buy groceries, but no dining out, no shopping, etc. while you figure out where your money is going and put together a plan to eliminate your debt.
  2. We don’t like feeling deprived and changing your spending habits will bring up those feelings. Start by eliminating the least painful things first, then continue trimming until you have removed all excess outflows. The newly freed up money needs to go towards debt repayment.
  3. Set goals. Money needs a purpose and the best way to avoid overspending is to know what you’re working towards. I’ll dive deeper into this on my next post.
  4. Money is emotional. The root cause of many impulse purchases are your emotions. What triggers you to spend? Anger, frustration, boredom or sadness? Find your triggers so you can become an emotionally competent spender.
  5. You may also need to find some additional income sources (a part-time job, selling off things you no longer use or want, etc) to help pay off your debt quicker.

Some people dislike budgeting, but I think that stems from their fear of seeing their true financial foundation.

But once you know where you are, you can start planning on where you want to go. That’s a powerful position to be in and worth taking the time to figure out your current reality. In my next post, I will show you how to give your money purpose through clear, financial goals.