By Stephen Rhodes, founder of Signify Wealth. Stephen Rhodes is a Certified Financial Planner and has contributed to various media outlets.
Numbers don’t lie. Athletes—and financial planners—understand this.
Whether it’s the state of your bank account or the stats from your last season, numbers reveal a part of reality that we often want to ignore. A quick glance at your spending tells me where your priorities are or aren’t. Are you saving? Are you providing for your family’s future? Is your credit in a good spot?
As a certified financial planner who specializes in working with professional athletes, I’ve spent the last 19+ years seeing it all: athletes making millions and living like they’re still in college (with a hefty, brag-worthy investment portfolio to show for it) and guys making millions and living, believe it or not, paycheck to paycheck.
It’s my job, and the job of my dedicated team at Signify Wealth, to diagnose what’s lying beneath the surface of my clients’ financials. Money can still be a taboo subject. It’s just a fact that most people have no clue how they’re really doing financially.
Bad credit score? No savings? Missing payments? I call those financial pollutions. Indicators that things aren’t where they should be for you financially.
I am passionate about helping others reduce each financial pollutant as close to zero as possible, with the understanding that true zero isn’t attainable. It’s a journey, constantly bettering and perfecting your financial future over time.
So what financial pollutants should you be aware of? Here are a few:
• Overspending: It’s a classic example and the easiest way to see if you’re in the danger zone. Are you living beyond your means? Are you living paycheck to paycheck?
• Debt: We all go into a reasonable amount of debt for buying our homes and cars, but are you in over your head?
• Missing Credit Card Payments: Repeated missed payments are like your credit score taking a linebacker to the knees—over and over.
• No Retirement Plan: It feels like it’s so far in the future… until it isn’t. Planning and preparing for retirement is a life-long thing. If you haven’t planned for retirement, start now.
• No Financial Goals: What do you want to provide for yourself one day? Some people have literally no idea. How can you save and curb your spending without a true goal in mind? Unless you’re actively swimming upstream, financially speaking, then you’re floating… and going downstream.
• Investment Ignorance: At the very least, you should be contributing to long-term savings (ie, 401(k), IRA, etc), but building a solid portfolio of investments is a proven way to reach a new level of wealth for yourself and your family .
So what do you do next? Look in the financial mirror and face yourself. Look at your bottom line. Bring your numbers out of the darkness. Get a crystal clear picture of exactly where you are at the moment. It won’t be comfortable—change never is—but it is absolutely necessary if you truly want to eliminate what is polluting your finances. Here are a few practical ways to get started.
1. Mentally prepare.
We can all recall an example of an athlete that possessed the physical traits necessary for success but who failed to show up when the game was on the line. Big game moments require both physical and mental preparation and obtaining financial health is no different. Athletes spend time envisioning success and so should you. Spend time envisioning how good it will feel to accomplish your goals but also think about how uncomfortable it will feel when you start making lifestyle changes. Investing the time to think through these scenarios will give you the mental reps needed to make progress.
2. Set realistic goals.
Each time an athlete steps on the court or field they have a clearly defined goal. The same should be true with your finances. Goals give us milestones to celebrate, and they serve as motivation to keep on working even when it’s hard. Before setting goals, it’s important to first assess the pollutants that may affect your finances. These common pollutants can be turned into financial goals:
• Pay off credit card debt.
• Pay off student loans.
• Start an emergency fund.
• Improve financial literacy.
• Set a goal to save a certain amount in six months.
3. Establish a routine.
Just as an athlete’s routine of healthy meals, exercise, hydration and sleep helps them perform optimally, a realistic routine of good habits can help you reach your financial goals. Each person’s routine will look different based on their goals but here are a few examples:
• Track every single dollar you spend.
• Keep a running monthly or weekly total of the major “categories” you spend money on (ie, groceries, gas, social activities, etc.).
• At the beginning of each week, try to anticipate the expenses that you think you’ll run into—and allocate your budget accordingly.
Mentally prepare, set realistic goals, establish a routine, but most importantly get started today. You deserve to live with zero financial pollution.
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