I am sure when you hear word “Detox,” you automatically think of diet and cleansing your body and mind. No argument here. All of these are practices are very much needed. However, today I would like to focus on our finances. Guess what? Your money also needs to be cleansed and I am going to show you how!
It’s the end of the month of April. The tax season is over for most of us. I usually review all of my finances, pay bills, or check to make sure everything is in order, since I have a Money Flow System in place.
I got to wondering how awesome would it be to detox your finances? Just think about it; how stressed we all are about making money, paying bills, spending and even enjoying our hard earned dollars.
Her are my leading tips for your Financial Detox:
Audit income and expenses
I love word “audit.” Sounds fancy! My husband used to be an auditor for Deloitte. He used to tell me lots of stories of how most people would be intimidated when an auditor shows up in their place of business unexpectedly! Not here.
But in reality, it just means examining and reviewing what you have. The reason I want to start with income and expenses (and yes, I know it’s painful) is because that’s where most of us are stuck and we need to let go. Breathe in, and breathe out!!! See… it feels easier already!
What creates worry for all of us is the fact of “not knowing” or having a concrete idea of where our income comes from and where we spend it. Wouldn’t you agree?
My favorite passive tool to track expenses for a few months is www.mint.com. It aggregates all your transactions from credit cards and checking account and provides a real time report.
This exercise will also help you understand if you make enough income and what expenses you might want to eliminate to make sure you come out even.
This first step is the most difficult to take, because it makes us face the reality of our situations. I feel your pain, but until we know where we stand we can’t make changes. Right?
The power of “Unsubscribe”
Once we have identified where we are with our income and expenses, let’s look at what we can start getting rid of; what no longer serves us and is perhaps costing us money that we can stop wasting.
What services are you paying for on a monthly, quarterly or yearly basis that you don’t use?
• Cable subscription
• Netflix, Hulu
• Gym membership (when were the last time you went to the gym? Come on…be honest!)
My rule of thumb for deciding to unsubscribe is “3 months.” If you haven’t used the service for over 3 months, why pay for it?
This exercise shouldn’t take very long time. Get your credit card and checking account statements out and look thru what recurring monthly transactions there are. Log in to your accounts and unsubscribe! Don’t worry, you can always sign up again and please stop worrying about a discount or promotion you got a long time ago for a service or subscription. It’s not worth it!
Remember, we are trying to create space for new and fresh “financial energy.”
The power of “Automating”
Alright, by now we are feeling refreshed; we know how much we make and where we spend it all (and where we can save a little as well!). We’ve unsubscribed from services and products we no longer need or use. Now let’s answer the following question:
What can you automate in your life that you forget to do, or want to have less worry about doing?”
Is that a service, a subscription (note that I am for useful subscriptions!) a task or a chore (cooking, cleaning, shopping)?
I love the phrase “Out of sight, out of mind”…now, of course, I want you to be aware of what’s going on. The more things you have on auto pilot, the more success you have in accomplishing anything. It creates a better structure in your life and assures that you don’t forget to do it and stress less about it.
What can you automate in your finances?
1. Saving– this is the big one. Americans fall short of being good savers. So, I suggest setting up a direct deposit, or transfer from one account to account on the monthly basis.
2. Bill pay – I notice that there are still a lot of folks who don’t take advantage of this. Why not? They still like to write checks or manually pay bills. Automatic bill pay is very easy to set up and every bank offers the service. Setting up bill pay means you won’t make payments late (or forget to make them at all).
Remember the goal of financial detox is to reduce unnecessary expenditures, tasks, and activities and then automate so that you can reduce the stress and worry around money and open up yourself for new opportunities.
Once you complete your financial detox, what do you with the time and financial energy you’ve freed up? Stay tuned for the answer in my next blog post.