I recently discussed the five fundamentals of financial success which bases your financial foundation on preparation, planning and the relationship that money has with other aspects of your life.
It’s a great concept in theory, but let’s put it into action to see if it really works. Here is how we built our finances around the fundamentals.
Applying the Five Financial Fundamentals
Set financial goals. We created our dollar plan which contains our goals for financial freedom. It’s a 14 year plan with 9 years to go. I calculated how much we need to save each year and added interim goals each year.
Communicate. When my husband and I first met we couldn’t have been further apart in financial habits. I was a saver, he was a spender. However, we found a happy medium – he keeps me from saving every single dollar and I keep him from spending too much. We work together to plan our big purchases and discuss our goals frequently.
Commitment and motivation. Most of our need for financial freedom revolves around our kids. We want to be there when they get home from school. We want to travel and enjoy sports. Our financial goals align with those wants. Because they are personal we are more committed to them. For motivation, I update spreadsheets yearly to show him how much progress we’ve made. With My Dollar Plan, the updates are now monthly [1] so we can see how much further we have to go.
Plan for the unexpected. When we started the plan, we knew we wanted to have kids, work part-time, and build a new house. We were sure that we would be surprised along the way, but we didn’t know how or when. Recently we were hit with the cost of preschool which was unexpected, but able to be absorbed into our plan.
Don’t delay happiness. Even though we have our goals and action plan in place, we’ve chosen to do things that set the plan back. We worked part-time and took lots of time off to be with our kids. I didn’t want to look back in 9 years and wish that I would have spent less time earning money and more time with my kids.
What are you doing to put the fundamentals into action?
Article Featured in: Carnival of Money Stories [2]