It’s a surprisingly common challenge among our community of smart, capable women: Managing budgets is part of your role at work and you’re competent – even talented – at doing it. But when it comes to your own finances, it’s a different story.
Why is it that we can be firing on all cylinders when it comes to our business finances, and yet stuck in a rut when the money’s our own? After all, it’s not as though your own cash is less important. Well, I have a theory – and I'd love to know if this resonates.
The power of boundaries
One of the reasons why we can be so successful in one realm, and yet feel like we’re floundering in another, is this: in our work, we tend to be constrained by clearly defined parameters within which we have to make our decisions.
You’re operating within a framework that leaves you in no doubt what you’re aiming to achieve, how you’ll monitor it happening, and when you’ll know if you’ve hit the mark or not.
At home, it’s a different story. Often we lack a basic structure to allow us to make informed decisions about what our goal should be.
- Spend less?
- Earn more?
- Figure out investing?
And often we focus on the wrong thing. (That’s if you’re making the time to choose on a clear focus at all – when you don’t feel confident about your finances, it’s really easy to keep putting off the day when you’ll “have a proper look” at what’s going on.)
So let’s break down the 4 key areas that we can often find ourselves struggling with when it comes to personal wealth.
Any business needs to have a grasp of the basic numbers: how much you’re spending versus how much cash your business is earning.
At work you likely have data on hand to explain why those numbers are what they are, and depending on the industry there will be varying levels of detail available to back up those numbers and give you further information.
But many of us have a very different story at home.
You might have an idea of what comes in, and perhaps certain fixed expenses, but what if things go up or down unexpectedly? What happens to spontaneous purchases or surprise expenses? And what’s the money you’re not earning or spending doing?
Cat Townsend is a graphic designer who started her journey towards financial freedom when she took a closer look at her own financial history... and was surprised, to say the least, to find her assumptions about her freelancer earnings proved wrong.
“I was amazed to discover that despite feeling like a financial failure, and not always having dependable income, that I had actually earned as much over the last decade as my partner had in his stable and steady job.
It turns out I was doing pretty well with the ‘making’ money, I was just lacking in follow through with the ‘manage’ and ‘multiply’ parts of wealth creation.”
When you have the data you need, you can make a better decision about what your focus is going to be – do you really need to be making more money, or is it more sensible to begin to look at what happens to that money when it comes in?
Getting a handle on where you currently are is an essential first step when it comes to taking back control.
In a business, you likely have a clear goal – hopefully, that guides your strategy when it comes to generating income.
Conversely, many of us haven’t been taught how to set our own financial goals. At One of many we use a simple structure called The 4 Stages of Wealth. These describe where you’re at and then use that to reveal what your current priority should be.
When Cat realised the stage she was at, it gave her another “aha!” moment.
“Jo also taught us about the four stages of wealth – Stability, Security, Independence and Affluence – and I realised another reason why previous financial education hadn’t worked for me. I was so far in the realm of instability that I hadn’t even reached the first stage of wealth yet! You can’t just jump straight to financial independence or affluence.
Each stage of wealth builds upon the next, so if I wanted to improve my wealth situation I needed to do the work to progress through each stage. Because as Jo explained, the strategy that gets you to one level is NOT the strategy that will get you to the next level.”
If you look after numbers in a business context, you might be called upon to report them at a team meeting, via email, or in a meeting with your accountant. What’s important is that there’s an element of accountability there.
At home, the opposite can be true. There might be no one who has a clear picture of what your money situation is. Meaning pushing financial stuff to the bottom of the to-do list is fatally easy to get away with – after all, no-one except you will know...“It fascinated me that stability is also about accountability" says Cat. "Scott and I never even spoke about our finances. I immediately knew this had to change.”
One of the biggest differences when it comes to handling budgets at work compared to tackling your own financial situation is emotion.
Of course, as a responsible team member it’s going to be important to you that the business you’re in performs and gets results. But the level of personal attachment to those numbers is likely to be significantly less than the emotions you feel when you look at your own figures. You might feel worried, guilty or angry if the business isn’t doing well, but you’re less likely to feel personal shame.
This is a clue to one of the most commonly overlooked aspects of financial confidence: dealing with and recognising our own emotional “baggage” when it comes to money.
The good news
The great news is, if you’re on top of things at work the evidence is clear: you’re absolutely capable of nailing your personal finances too.
When you have the right framework in place you’ll discover the joy of making financial decisions from a place of empowerment – so that tending to your finances can feel fulfilling, exciting, and even joyful.
And even if you don’t handle budgets at work, you might be more talented with figures than you think. A 2017 survey by Fidelity insurance in the US found that in an analysis of more than eight million clients, women actually tended to save more and outperform men when it came to generating a return on their investments.
"The results of Fidelity's latest analysis reinforces that women too often underestimate their strengths as savers and investors," – Alexandra Taussig, senior vice president of women investors at Fidelity
Which is great news, right? When we have the right tools, women on average make sound decisions. So if you’re wondering why you can’t seem to manage your own finances like you do your business’s, it might simply be a case of creating the structure that will allow you to shine.
How about you? Are you a financial maven at work, and yet find yourself floundering behind the scenes? Or do you feel confident in both areas? Let us know in the comments.
If you’d like to explore a new way of thinking about money that takes away the shame and gives you practical, powerful actions to take at whatever stage you're at, come along to Wealth Insights. It's our focused money workshop that gives you the chance to talk about your finances in a safe and friendly environment – and leave with a map of how to change your financial situation for good. Read the full details and book your place here.
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