57: Why Your Money Needs Direction

Managing your money is a little bit like going camping or hiking. You spend a lot of time preparing and packing for the journey and then you’re off, ready to see where the road takes you. But what happens when you forget your map? And what happens when you don’t plan out where you’re going?

Starting off without a direction can feel exciting, but it can also prevent you from seeing (and doing) everything you want. The same goes for your money. If you don’t have a direction for your money, you may feel like it’s not enough, or that you’re not able to reach your goals. But your money can help you do all those things… it just needs a little direction. Listen to this episode to learn why your money needs direction and how to do it.

Here’s what you’ll learn

0:48 The importance of a roadmap when it comes to using your money successfully

5:47 Why Dustin doesn’t go hiking without a map anymore

11:05 How hiking without a map is a lot like managing money without direction

11:55 What ‘direction for your money’ really means

13:49 Dustin and Danielle’s favorite resources for giving your money direction

13:59 How to determine your direction with a net worth statement

14:30 Why you need a timeline for your financial goals

15:14 The power of an investment plan in giving your money direction

17:41 How the bucket strategy helps you give each dollar a job

 

Four actionable tips to give your money direction

In this episode, Dustin and Danielle give you plenty of reasons why you need a direction for your money. But where do you even start?

1. You need to know where you stand before you get started.

To give your money direction, you’ll need to start by calculating your Net Worth. Dustin and Danielle share a Net Worth Calculator in their collection of financial planning resources that makes this easy. This will tell you where you’re at with money and you’ll have a better view of where you need to focus your money most.

Dustin recommends doing this at least once a year. It’s an ongoing living document that needs to be updated so your money’s “marching orders” are in line with your current situation.

2. Create a timeline for your goals.

We all have goals and most of us have them written down. But what if you added a timeline to them? In this episode, Dustin and Danielle give you some great questions to ask yourself to flesh out your timeline — and they also give you tips on how to use a Financial Timeline to help you see your plan in action. (Note: They have a timeline you can use in their financial planning resources).

3. Create an investment plan

You might read that and think an investment plan is a financial plan. But it’s not. An investment plan is something you can do without an advisor, and it’s more of an investment goals analysis than anything. It’s not just for retirement investment goals, either. An investment plan is great for investing in a work-optional lifestyle at any age — or for travel, home buying, college savings, etc. To create an investment plan, Dustin and Danielle share their favorite investment planning tool that will tell you how to direct the right amount of money to your goals.

(P.S. Check out the episode if you want to see how to use this tool to the fullest.)

4. Create a savings system with the “Bucket Strategy”

The best way to give your money direction is to give it different jobs. At Worth It, we’ve talked about the “Bucket Strategy” before, which includes:

The first bucket: Your emergency fund. The second bucket: Your intermediate goals. The third bucket: Your long-term goals.

Dustin and Danielle explain what each of these buckets mean and how you can direct your money to fill each one, so make sure to check that out. They also explain how the investment planning tool will help you figure out how much to allocate to these goals (and how long it will take you to get the buckets full).

Hopefully, this episode gives you a great launching-off point for your new money “map.” The best part is that you can do these yourself and figure out where you stand… without ever asking for help.

Have you decided you need help giving your money direction? Toujours Planning may be able to help. See if we’re a good fit by answering a few simple questions.

Resources & people mentioned Big Bend National Park Worth It financial planning resources Saving for the Future While Enjoying Life Now (Episode 4) Connect with Danielle and Dustin Ask your questions! On Facebook On Twitter Connect with Dustin on Twitter: @DRGranger