The Financial Effect is about more than money, it’s about progress. By making small, intentional changes today, you create lasting impacts on your financial future. It all begins with leadership: taking control of your finances, setting clear direction, and turning actions into outcomes.

Because when you lead with financial confidence, the effect can change everything.

Details: Personal financial leadership blends financial literacy with intentional decision making and long-term planning.  It’s about taking ownership of your financial life.  Financial literacy is the knowledge and confidence to make smart financial choices in areas such as spending, earning/income, saving, borrowing, and investing.  It may seem like a big undertaking to understand and become knowledgeable about all these topics when you’ve been financially asleep your whole life and/or were never taught the basic skills of personal finance.  We’ll take it slowly and in small chunks to make the information easier to absorb and you will slowly become financially awake.

Become financially awake – The first step in becoming financially awake is to be aware of your spending habits and to understand that your daily financial decisions, big and small, do matter.  It comes down to the little things such as cash flow and budget discipline, and the bigger things like deciding when and how to buy your next home or car.  A good starting point is to know your financial nut.  Your financial nut is your monthly fixed expenses and includes things such as rent, utility bills, insurance, groceries, and gas.  Download the Know Your Nut spreadsheet and start putting together your monthly Financial Nut.

In today’s world where most financial accounts can be accessed online, it only takes a little bit of a time commitment to log into all your accounts to gather the information to put together your monthly Financial Nut. 

Start with the easy categories within Living Expenses where the monthly expense is constant, such as your rent.  You may have a mortgage payment, which we’ll discuss further as part of our conversation on debt.  For the living expenses section, I understand that a mortgage payment can be more than just the principal and interest on the loan.  Most mortgages escrow/include your homeowner’s insurance and property taxes in your monthly mortgage payment.  Once your mortgage is paid off you will still need to pay for homeowner’s insurance and property taxes, so we pull these out separately in the Know Your Nut categories.  Your homeowners’ association fees may also be part of your mortgage payment. The breakdown of your monthly mortgage payments into these categories can generally be gathered by evaluating your mortgage and escrow statements.  Your Cable/Satellite and Telephone/cell phone bills also tend to be consistent so add your latest monthly bill to the Know Your Nut tracker.

Next, check out your accounts that fall into the Utilities (Gas/Electric/Water/Trash).  These monthly bills tend to fluctuate with usage and seasonality.  It’s best to evaluate a year of monthly bills to get a monthly average or at minimum understand your maximum and minimum amounts across a year.

Finally, the remaining categories may need to take a bit of digging into credit card statements.  Tally up your monthly grocery expenses, entertainment/dining, clothing, transportation, etc. and add into the tracker.

Within the Insurance category, you will have already gathered the Homeowner’s insurance amount from your mortgage/escrow statements.  Many of the other insurance categories if you have may come out of your paycheck, such as life, disability, long-term care, medical, dental, vision, and flexible spending account. For these expenses coming out of your paycheck you’ll need to understand your paycheck frequency to calculate the monthly amount.  For example, if you get paid every other week (26 paychecks), you’ll need to take the paycheck amount and multiple by 26 and then divide by 12 to get to your monthly amount.  If you get paid twice a month (24 paychecks), you’ll take your paycheck amount and multiple by 2 to get your monthly amount.  The easiest one is if you get paid once a month, then enter your paycheck amount. 

Once all the amounts are entered, you’ll have a total for Living Expenses and Insurance, as well as a Total Expense.  This is your starting point to becoming Financially Awake!