It’s 2021 and many are relieved to see 2020 in the rear view mirror. There is plenty optimism that 2021 will be a better year, especially financially. I share that sentiment, however I’m wise enough to know that it takes a lot more than optimism to improve your finances. If 2021 is going to be a better year for you, it will be because you developed a financial blueprint and stayed with it the entire year.
If you’re hoping for a financial turnaround this year, there’s no point in leaving things to chance. The first step toward a better 2021 is establishing a financial blueprint. I come across too many people who are winging it with their finances and just hoping for the best. No specific goals, no system for managing their money, and no short or long-term plans. That won’t cut it. Without a financial blueprint, everything rides on a maybe. Maybe this year will be better, then again maybe it won’t.
What’s a Financial Blueprint?
A financial blueprint basically consists of three things:
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Your goals and objectives.
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Your money management strategy.
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Your overall system for keeping everything running like it should.
Now is the time to create a path forward by laying out a financial blueprint. That blueprint is centered around three important questions.
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What specifically do you want to see happen with your finances?
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How do you plan to manage your money?
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How will you keep your financial plan on track?
What specifically do you want to see happen with your finances?
The term “better” is a little vague. If you earn a hundred dollars more this year than you did last year, would you consider that better? Technically it is, but one hundred more dollars may not be your idea of “better”. You must be specific about what “better” looks like for you.
Specific things that you want or need to accomplish:
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Do you need to pay off some consumer debt?
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Do you need to build your savings account?
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Do you need to stop running up the credit cards?
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Do you need to increase your income?
Set aside some time to sit quietly with pen and paper to write down a list of things you need or want to accomplish. This process could potentially produce a long list, so be sure to start small. Pick one or two things and focus only on that. You don’t want to overwhelm yourself and end up accomplishing nothing. You can add more goals to focus on as you complete them.
One of the good things about goals is they paint a picture of what things will look like if you follow through. That provides motivation which comes in handy during the times you need something to help you keep going.
How do you plan to manage your money?
There is a common theme I see with many people who come to me for financial advice, they lack financial organization. They have not taken control over their money and they don’t have a complete picture of what’s happening. If someone asked how you spent your last paycheck, could you tell them? Better yet, could you show them? If the answer to both of these questions is no, you could use more financial organization.
Once you’re clear on what you are working toward, the next step is putting your financial management tools in place. Budget spreadsheets, apps, multiple accounts, scheduled reminders, auto pay, whatever you need to keep your money organized.
If you don’t have one already, the first thing you want to do using these tools is create a spending plan. (If you need help with this, see how to create a spending plan) Your spending plan has to become command central for your money. It will provide a complete picture of your cashflow. As well as a snapshot of where all your money goes. Your spending plan will set boundaries and provide a framework for your day-to-day financial choices.
How will you keep your financial plan on track?
I wish I could tell you that managing money is a set it and forget it kind of thing. Even after you have put all your money management tools in place, you will still need a system to ensure that you remain focused and keep things moving forward. You will need to continuously update your spending plan. You will also need to review your goals regularly to see how things are progressing and whether adjustments are needed.
This may require doing things such as:
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Finding an accountability partner.
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Looking over your financial blueprint at least once a week.
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Setting aside a regularly scheduled time to update your spending plan.
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Getting some professional help with managing your money.
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Predetermining how you will reward yourself as you hit your goals.
Conclusion
I’m hopeful 2021 will be an awesome year for you and that all your financial goals will be achieved. Give yourself the best chance to succeed by putting together a financial blueprint that consists of your financial goals, a rock-solid money management strategy and an overall system.