Gaining more financial control - some ideas for beginners!

I'd like to introduce you to a young couple who I will call William and Lisa. They have just set up home together and have plans to start a family - you may remember how it felt? You may also remember the debts you already had and the overspending that you indulged in whilst trying to create your ideal home (within the budget that you had).


William and Lisa seemed stuck in a rut with their finances and had run out of ideas on how to achieve this on their own.As a life coach my methods are normally to guide my clients into finding their own solutions rather than impose a plan of action on them, but some gentle bullying was called for here!


To gain a better understanding of their situation, in our initial free 30 minute consultation I found out their background and the two questions that they needed help with:

• How can we stretch our income?’ and


• How can we successfully budget?’ (I needed all of us to be clearer about what they would see as successful, and whether they have a goal in mind)

They were ‘stuck’ in their current spending patterns and use of their credit cards. The first issue to unravel was the level of current credit card debt and how much it was growing – are they just paying minimum monthly payments, or was there a single incident that caused the current balance, such as shopping for the new house?

To start to establish their goals, we explored the ideal situation as far as stretching their income – what does it have to stretch to, and how far is this away from the current situation? Budgeting is a scary word for many people, so my role as coach was to take some of the anxiety way and make the budget as simple as they needed it to be.

Looking at the current reality of joint household spending, I set them the task of tracking their spending and listing everything that they spend on both credit cards and cash purchases for a full month, plus all of the household bills

They each kept a small notebook to enter everything purchased each day. I didn't want this to be a really onerous task, it was just a list of expenditure, not a formal budget, but gave them both a better awareness of how their money was being spent. I also suggested that they spend a few minutes each day (possibly over dinner?) reviewing the days expenditure and whether it was really necessary.

Once expenditure was identified, they could give some thought to what they are buying at present and consider alternatives that will help them stretch their income. For this I set them the task of answering the following questions:

• 5 things we will stop buying


• 5 ways we could increase our household income


• Steps we will take to start saving
  

The next challenge for me as their coach was introducing them to a simple and workable budget. There are many simple budgets availabel free on-line, which they could download for themselves and keep updated. One that I find easy to use is from www.vertex42.com

We also looked at making the most of their money by having their income paid into an interest paying account. Our discussion was about the concept of saving for the future, however tight budgets are. There is an old saying about becoming rich requires you to pay yourself first. A suggestion to save just $5 per week (what might they give up to the cost of £5?) would mean that they are $130 better off in 6 months time. At that point they can review their saving regime with the aim of setting another goal with a higher amount. I helped them set a SMART goal to help here:

Specific – we will save a minimum of £5 each per week
Measurable – A total of £10 will be paid into our savings account each week

Achievable – Definitely, we will establish this as a new habit
Realistic – As this is less than £1 a day each, we can realistically save this amount
Timed – Starting tomorrow, we will maintain this for the next 6 months when we will review our progress and increase the amount of our savings.

I finished our four week coaching interaction with a review of their longer term goals (which included starting a family) by encouraging them to visualise themselves having complete control of their expenditure and having some money set aside by the time their first child is born!

If you would like some help taking control of your own finances, in visualising your goals or setting SMART objectives, take advantage of my 30 minute free coaching session to see if coaching is right for you.

Call Amanda o 781 697 7608 or email - manda.miller@verizon.net