Can you remember when you have started a new habit?
When you reflect upon something that in the beginning was not so easy, but now is second nature and the feeling of overwhelm has migrated to be one of clarity.
And I think it comes down to cultivating a practice of some kind. It can be exercise, food, hobbies or work and then it dawned on me, why not our finances. Who doesn’t want to feel serene ‘calmness’ when it comes to their personal or business finances.
So here are my thought on cultivating a financial practice!
A financial practice for me cannot exist without systems in place.
A system is essentially an organised method or scheme in regard to how a task is completed. It is an interconnected chain of events or responses to complete a task or tackle an issue in the same kind of way each and every time.
Why are systems so important?
They eliminate the need to make decisions regarding a particular question or issue when it repetitively occurs. And it means that- no matter how busy we get, particular tasks are completed nonetheless, saving energy and time. Similar to direct debits in your bank account. You no longer worry about the due date of your bills- its done like magic. Paid in full, on time, every time- that’s a great system.
So where do you start cultivating a financial practice? You start by identifying the tasks that require a system to be completed without a fuss, and tasks that are essential to life and business. Where do you need more ‘direct debits’ in your life?
There are three approaches to identifying potential tasks the need a system set up.
- Tackle repetitive financial tasks- stuff you have to do over and over
- Identify annoying financial tasks- what do you dread doing (remembering to pay bills on time anyone?)
- List out areas or categories that encompass your pbusiness financials and create a list of tasks (receiving money, paying money, paperwork)
Using one of these approaches, write a list of these tasks. Things you may do daily, weekly or monthly.
In a businesses life this may include sending out invoices, checking invoices are paid or matching transactions in your bookkeeping system, emails for missing payments, paying bills and paying staff wages.
Highlight the tasks you already (unknowingly) a system for. Do you always place your bills in the same drawer when you receive them, or do you check your credit card statement when it comes in to see the transactions are all your own. Some tasks must happen, paying rent on the same day each week or mortgage on the same day each month.
It could be paying staff on the same day of the week or do you check every Monday morning who’s paid invoices and email those who haven’t?
Now identify your motivation as to why this task just gets done but others don’t. Some people will not have any tasks that are done regularly. Paying bills just as there due, or waiting for reminders. Other people may have 80% of their task set up as a system. Already reaping the benefits of a practice of system and order.
Reflect upon the list and see which type of practice you already have:
Read below for some general categories or types of people and their practices to help you recognise your own financial behaviours.
NOT QUITE A NOVICE: Some people have no financial practices or systems at all- thriving in the reactive manner because everything is so overwhelming. They almost rebel against order and calmness. Their natural state is chaos in some aspects of their life. They almost can’t even contemplate or imagine what others do- like when someone says to me ‘start a meditation practice’ I think what?!? sit still for 20 mins- I wouldn’t have thought to do that. Why would anyone want to do that- feel my resistance there? Some people have resistance to creating systems for order also. Anxiety level about money- Pretty darn high!
NOVICE: This is where a person may have some practices sorted- usually those practices are related to legal requirements. You must pay your mortgage or rent on time to keep a roof over your head. Or your phone will stop working if you don’t pay that bill. This level of practice is where only the bare minimum is completed. Enough to keep life working but your financial life still feels overwhelming. Anxiety Level about money- High.
INTERMEDIATE: You’ve got most things sorted. You pay majority of your bills on time, you place invoices all in the same place once you open them, you have an idea of how much has gone in and out of your account. You probably have a 50% chance of reciting the balance of your bank account right now. Anxiety level about money- Low- Moderate.
ADVANCED: You’re all over this cultivating a financial practice shenanigans. I’m not even sure why you’re still reading this? You have a system set up for most, if not all repetitive tasks. Money goes where it needs to be, bills are sorted to be paid in full on the due date, you’ve moved your money where it needs to be in advance and you are generally smashing financial goals. And dare I say it- you could probably tell me your bank balance 5 out of 7 days of the week. Anxiety level about money- Low.
Just to let you know- there is no gold medal for reaching the ‘advanced’ level. There is only one internal reward and it consists of the feeling of calm. Less anxiety, less fuss and less stress.
So how do you work on developing a practice now that you have a list of tasks and know what level you’re at?
Like those starting to train in a gym, if you’re ‘not quite a novice’ you don’t go and grab the biggest weights you can find.
Go get a 1 kg weight and do a few sets of 10. Same for your task list. Where is the lighter weights in your list?
What task can you attempt to devise a system for that you can’t fail.
For some novices, it will be opening bills, checking the due date and amount, and putting them in the same place every time. Check- system 1 done. Once you have a practice of knowing where your bills are- system 2 can be checking that pile of bills every pay day and paying anything due between this payday and the next. See how these simple tasks are the stepping stones to a practice of financial order?
For those in business: which is your first system to design? Are you keeping receipts all in one place? At the end of the day or week do you place all your receipts in one location? A plastic sleeve or folder with month written on it? Do you check your customers have paid you every Monday morning? Where is your starting point? Look for an easy system to start with, where you will feel the impact immediately. This will then build the motivation to create systems elsewhere.
For those intermediate people: what is it about those tasks you haven’t created a system for? Why do you have some tasks sorted and others not? Do you do tasks that are legally required well- BAS done on time? Tick. Of course, the tax office requires you to. But what about those tasks that would make life easier if there was a system but aren’t legally required.
And those advance people: so you have tasks and systems for order in most of your life. Why not the last few things? Are you feeling resistance to setting something up? Or life got busy? Pencil in some time in your diary to get that stuff sorted. You’ll feel a million bucks once the last few stray tasks are completed without a fuss.
It requires an energy and time input to set up the system, but from then on, it’s smooth sailing to complete all those financial tasks. What task are you going to start on today?