When you go to a high-profile concert, you’re in for quite a show. The band is flawless; the lead singer commands the stage with swagger and charisma; the backup dancers are in perfect step; and the sound and lights coordinate seamlessly with the performers to create an overwhelming experience.
It seems exhilarating and effortless, but the truth is that each two-hour live show that you enjoy is the culmination of months of intense rehearsal (not to mention years of prior training). Every musical note, dance step, lighting cue and introduction has been carefully planned, down to the tiniest detail. You have a great experience because the show’s producers intended you to.
Nothing really great ever happens by accident — it’s always the result of planning, strategy, hard work and a big-picture vision. We call this “doing things intentionally,” and it can make a huge difference in the effectiveness of your life’s endeavors. It certainly makes a huge difference with your money.
Real life rarely feels like a rock and roll show, and there are a number of reasons for that. Perhaps chief among those reasons is the fact that daily life contains a lot of tasks and hassles that aren’t exciting or glamorous. But there’s also another important reason — we often encounter chaos in situations where we haven’t been intentional with our planning and strategies.
When it comes to your money, it’s easy to see what a difference intentionality makes. If you don’t have goals, purposes and plans for your finances, you can earn a lot of money and yet find yourself broke at the end of the month. You can work hard your whole life to earn a living, and then come to the end of your career and realize that you haven’t saved nearly enough for retirement. You can look back on your life, realize how much money you spent on yourself, and regret that you didn’t give more away to people who needed your help.
Living intentionally means being conscious of your values, your purposes, your resources and your responsibilities, and then making decisions that maximize your potential to achieve the things that matter most to you. It’s not always easy, but it does always lead to success.
If you feel like you’re treading water in your personal finances, there’s a good chance that you haven’t been intentional with the way you handle your money. To change that, build intentionality into your financial life by taking these five steps:
1) Determine your values.
The things that we do with our money are indications of what we value in life. In order to do the best things, you need to be aware of what your most important values are. Do you value education? Giving? Missions work? Convenience? Eating well? Traveling abroad?
Each of us will have a somewhat different set of values, and that’s okay. What’s important is that you know what you and your family value most, so that you can intentionally use your money toward the things that are most important to you.
2) Set financial goals.
Once you have identified your values, you need to set goals that will help you translate those values into real-world actions. These goals can include getting out of debt, saving a certain amount of money for a home, investing for retirement, funding your children’s education, buying a new car or giving a percentage of your income to charity.
Your goals don’t have to be something you can achieve this month — some of these goals will take years to achieve. But they give you a big picture of the things that you should be doing with your money on a regular basis to help you reach success in the long term.
3) Make a plan.
If you’re going to reach your long-term goals, it’s going to require a series of short-term actions to get there. So you need to make a plan for how you’re going to spend your money this month in order to create progress toward your goals. In financial terms, we call that plan a budget, and it’s absolutely essential for winning with money.
This is also the place to examine life changes — such as finding a better job or learning a new skill — that might help you toward a goal.
4) Execute your plan.
Here’s where the rubber meets the road: A plan is only as valuable as the paper it’s written on if you don’t follow through with it. Plans only work if we execute them, and execution is often the hardest part. This means that just writing out a budget isn’t good enough. You actually have to live according to the plan you made.
If you’ve created a plan to further your education or get a better job, you have to take the steps to make those things happen, too.
5) Track and evaluate your progress.
If you’re trying to keep your spending in line with your budget, you need to have a way of keeping track of what you spend so that you’ll know how you’re doing. And if you have a savings or debt payoff goal, it’s a good idea to watch your account balances to make sure you have a real-world understanding of the progress you’re making toward your goal.
In addition to showing exactly how you’re doing, tracking also helps you evaluate your success and determine if you need to make any changes. In reality, it’s rare for a plan to be executed perfectly the way that it was laid out. The messiness of real life will necessitate some flexibility and adjustment along the way. Evaluating your financial progress on a regular basis will help you figure out the best ways of pressing on toward your financial goals, even if you have to tweak your steps to getting there in the process.
Living intentionally with your money is a lot of work, but it comes with a great reward. Nothing really great ever happens by accident. And if you learn to handle money intentionally, you’ll see really great rewards in the future.
Photo by Marco Lazzaroni. Used under Creative Commons license.