This is a beast of a checklist. It’s pretty high-level overview of the things you need to do, questions you need to answer and math problems you need to solve to feel like you've got control over your finances.
It’s going to take time. You might get stuck on the budget step for a while or on the figuring out how to make enough money to live your life step for a while.
You can do some of the steps concurrently, but you’ll see that it’s hard to jump around the list and make headway.
The contents of this checklist comes from an amalgamation of my formal education (s/o to everyone with a degree in finance) and my work experience in the years I was a financial planner, a small business consultant and how I work with folks currently.
Please realize that this is all total and absolutely nonsense, but it can help you feel a small sense of control in a universe of uncertainty; It can help you exist in the world we live in today, one that is governed so profoundly by economics and money.
1. What the hell do you want to do with your damn life? And how much will that cost you?
Figure out what the hell you want your life to be like. Am I asking you to create goals for yourself? Yes. Am I asking you to take a hard look at your life and to figure out what you want out of it? Yes.
Here are the questions you should ask yourself to help you figure out what the hell you should be doing to get your damn life together.
What are your personal values?
What are your personal goals?
Map out your goals in terms of timeframe: short-term, intermediate, long-term.
What are your business values?
What are your business goals?
Map out your goals in terms of timeframe: short-term, intermediate, long-term.
Not only am I asking you to explore the inner terrain of your damn self, I’m also going to make you turn that shit into a math equation.
For your personal goals: breakdown your goals into dollar amounts. How much money does each goal need? Use the time frame to help you understand how much money you should save over time. For example, if you want to save $10,000 and you can save $500/month, that means you can reach your goal in 20 months. These figures might be arbitrary right now because you still don’t have a clear picture or other important aspects.
For your business goals: breakdown your goals into dollar amounts. How much money does each goal need?
This breakdown will help you prioritize your goals and figure out which ones you can start moving towards. For example, maybe you think buying a house is a short-term goal, but the fact that you need to save $120,000 for a fucking downpayment might make you push it further to a long-term goal or maybe you’ll realize you ultimately value flexibility and you will decide to build equity and wealth in other ways.
2. Get Good At Earning Money
Now that you know what your goals are going to cost you, you may need to earn the money to make it happen.
Here are some questions you should ask and answer that will help you on your journey to stacking the cheese:
What problem does your business/freelance work help solve? (If you work for an employer, what problems can you solve for your employer?)
Who are you solving it for?
Will those people pay you to solve their problem?
Can your potential customers/actual customers afford to pay for what you’re offering?
Is the price you’re charging a reflection of the value they’re getting? Is it too cheap?
3. Know Your Numbers
As you’re getting good at earning money, you should figure out how much you need to earn to live day-to-day, week-to-week, plus additional cash you need to stack for your silly goals. Here are the questions you need to ask yourself and answer to find out how much cash you need to be bringing in.
First, figure out how much do you personally need to live?
Add up all your bills, monthly obligations, cash for spending on having a good life.
Don’t forget to include savings and debt payments.
Express that amount in terms of your business model. How many hours do you need to work, projects do you need to sign or milestones do you need to reach each month to fund your life?
Next, figure out how much your side hustle/business needs to earn to run.
Add up all your business expenses. Don’t forget to include expenses that might happen in lump sum like insurance.
Add in the amount you need to pay yourself (the first part of this exercise).
Express that amount in terms of your business model. How many hours do you need to work, projects do you need to sign or milestones do you need to reach each month to fund your business?
Taxes are also a variable. Talk to your accountant to help plan for this.
Figure out how you’ll keep your budget. Will you actively manage your budget or passively set up systems to protect you from overspending?
Finally, do a Reality Check: Can you realistically earn what you need to support the numbers? You might need to rework the numbers if it’s not realistic. Maybe you need to adjust savings goals for a longer term. Or maybe you need to do some Tony Robbins, voodoo magic shit to make your wild dreams come true.
4. Setup Your Savings
First, fund your emergency fund. The general rule of thumb for an emergency fund is 3-6 months of your expenses. Make sure you’ve budgeted for this.
Set up a high-yield savings account the bank you don’t have your checking account at (to protect yourself from yourself).
If you can set up an automatic transfer each month or twice a month, do that. Get out of your own way. If not, then do it manually, but beware that robots are better at savings than you are.
Figure out how much of a cash cushion you need in your business. The exact amount depends on the business, but 3-6 months of expenses is a good rule of thumb.
Come up with a savings plan to reach your goal. You can set up your savings with the bank your business checking is at. Try to fund it regularly with an automatic deposit.
NOTE: It’s uber important to save even if you’re in debt. So you might have to cut expenses to make this happen.
Start saving for other goals in your life the way you do for your emergency fund: What’s the goal amount? What’s the deadline? How much will you save each month?
5. Get Your Shit Together (Get Organized)
The following checklist will help you tidy up your finances. You’ll feel great and you’ll great.
Make sure your checking accounts are only for spending and not for saving. Set up your emergency fund as a separate account from other savings like wedding or retirement or travel savings.
Assuming you have the cash, pay your bills on time. Try setting aside time to look at your finances or making it a ritual, get booze involved, or just stop being a baby and handle your shit.
Don’t forget about old 401(k)’s. Call HR and ask them where your damn money is. If you have money in an old 401(k), don’t forget about it and maybe even roll it over into a different retirement account.
Keep your business and personal separate. Please, for the love of cute dogs, separate your side hustle from your personal accounts. Only business expenses and business income and paying yourself will happen with your business accounts. And everything you spend for personal stuff should be in the personal accounts.
Start scoping out your business team: attorney, accountant, bookkeeper.
Hire a great accountant.
Understand when it makes sense to set up a proper entity so when you get there you know to set it up.
Will using technology help you or make you less organized?
6. Make a Plan to Get Out of (High Interest) Debt
First ask yourself, how and why did you get into debt?
Next ask yourself, can you fundamentally alter the circumstances that got you into debt so you won’t get into debt again? Meaning, if it’s something like medical debt that you couldn’t foresee, then can you put systems in place to help you prepare in case something similar happens again?
Examine the options for getting out of debt and determine your plan. Options can include a loan from a rich friend or family member. Warning: there may be psychic or other types of non-monetary interest that you pay when you borrow money from someone you love.
Other options include a personal loan, negotiating with the credit card companies or starting a side hustle for extra income.
7. How to Care About the Long Run
You have to care about your future self because nobody else will. It’s sad, but it’s true. Here’s what you need to do.
Understand that investing is magic and that cash can lose value over the long run, which is why we’ve been taught it’s important to invest. Then start actually investing.
Your accountant can help you determine what type of retirement account you can and should open up.
Learn about wealth and how you can build it, if you’re into that sort of thing.
Make projections for how much money you’ll need in the future.
First you might need a good cry when you see how much you need to save. The, start implementing a plan for your old self. Some examples include the following: getting a boring job selling insurance so you can earn money and save for retirement, planning to eat cat food in retirement, marrying someone rich. The options are endless, really.
Stop not having a will and an advanced medical directive.
8. Love Thy Accountant
Get an accountant whose job is to learn the new tax code and help you navigate it when it comes to your unique tax situation. Here’s what your accountant might help with you:
Figuring out all the types of taxes you’ll be responsible for
Figuring out how you’ll pay for taxes
Keeping you updated with important tax dates
Ask around for accountant referrals, interview them and figure out if it’s a good fit.
9. Manage Your Risk
Figure out what kinds of risks you’re exposed to and determine what risks you’ll outsource to insurance. For example, driving a car has a lot of risk, but you can outsource the risk by getting auto insurance.
Understand what’s out there. In general there is health, auto, renters, homeowners, general liability, professional liability, disability and life.
Determine what kind of insurance you need personally and professionally.
Determine how much insurance you need.
Choose the insurance, buy the insurance, make sure the insurance policy covers what you need it to cover.
There you have it. The definitive guide to help you get your finances in order so you can live your damn life. If you’re more overwhelmed after reading the list, I’m sorry for the momentary discomfort. And you’re welcome for lighting the fire under your ass. Here are some pro tips to get through the list:
Pro Tip No. 1
Realize it might take time. Sometimes it takes years to master earning money or reaching a big savings goal. I feel you. I’m an impatient idiot about everything.
Pro Tip No. 2
Don’t beat yourself up. Control what you can, but realize there is a lot you can’t. What a fun ride life is, huh?