Re-coding the Mind to Improve your Finances — Step 6 — New Financial Strategy

Now that you’re working on your financial mindset, the next step is to work on your financial strategy.

Your financial strategy should have three key components:

Where is it coming from?

Where is it going?

What do I do with what is left?

Each of these components should have a tool to answer the question.

Where is it coming from? — Income Plan

Where is it going? — Spending Plan

What do I do with what is left? — Investment and Growth Plan

Let’s start with an income plan:

Most people make money from a job. And while we are grateful for the income, the job doesn’t always supply the income we need to meet our goals and aspirations. That’s why we need a detailed plan of bringing in the necessary money.

The first step is to decide how much money you need to run your household, saving 20% for cash and investments (including college funds for your children, home and real estate investment purchases, paying down and paying off debt, taking vacations, and having fun. For me, I would plan enough income to

- Build cash savings equal to 6 months of expenses

- Money to start investing in the stock market (if not already)

- Pay off all high-interest debt within six months

- Invest 10% in retirement and college funds

- Take four vacations a year

- Have a monthly outing for the family

If your job does not provide enough income to make this happen, you either need to get a new job or tap into another stream of income.

There are endless ways to make money, but your best is to do things you already know how to do, but for other people.

When starting an online business, the key is to keep it simple:

1. Find three proven methods of making money

2. Do things you already know how to do

3. Figure out what works and do more of that

Your income plan doesn’t need to be perfect, just completed.

Now that you’ve created a income plan, let’s look at where the money is going.

Spending Plan (or Budget)

Create a simple spending plan based on your spending for the last 30 days.

If you are spending more than you are bringing in right now, then obviously you need to cut those expenditures out.

If these things can’t be cut (medications, daycare, etc.), then adjust your income plan to bring in enough to cover those.

Investment and Growth Plan

You should invest some of your money no matter how much money you make. This strategy may seem counterintuitive, but I’m a big believer in building habits. The better your financial habits, the better your finances will be.

Apps such as Robinhood and Stash have made it easier than ever to invest money.

I typically invest 10% of my income in proven commodities such as index funds and blue-chip stocks like Apple, Meta, Google, and Amazon.

If one of your side hustles has the potential to become a business, then that could be a potential investment too.

Write out in detail how you will grow your money in the next 12 months. You don’t have to have it all figured out now; very few of us do, but something on paper.

The plan is a call to action for you to move toward financial stability and ultimately financial independence.

Final Thoughts

• Money is your employee, and you need to tell it what to do and where to go, or it will do what it wants.
• You have to give money detailed and specific instructions for it to move.
• Budgets bring order, stability, and expectation to your finances.
• It may take a while for your life to reflect your budget. But if you stick to your financial plan, it will become true.
• Businesses release financial outlooks all the time. And your life is a business, so treat it as such.
• If you don’t hit the income number, don’t beat yourself up. Just like riding a bike for the first time, you likely fell, but you kept going.
• Money needs structure and boundaries, or it will leave you.
• Create the system so your money can work for you and do what you want it to do.

As you keep improving your financial mindset, your financial strategy will bring it to life.