Your Money and Your Life

"I don't want to be poor."

As a coach, this is something I hear, routinely, from men and women, around the world. Men and women who are thinking about changing their lives, or simply desiring change, in some manifestation, will email me for my advice, on how to begin their transformative experience, but they still have a lot of rules. They want to change their lives, but "no, Carlota, I don't want to be poor, and I don't want to network unless I'm sure it's going to work, and anyway, it probably won't work, I shouldn't even bother."

These people are not ready. Because true change is chaos. True change is a hurricane. To desire true change in your life, yet believe that you can put restrictions upon the results...yeah, good luck with that. True change has its own agenda.

Interestingly enough, the people who assure me that they're allergic to broke, are the very same people depressed by their resumes, thick with underwhelming, frustrating jobs. These are the people, subsisting from paycheck to paycheck, yearning for so much more, but--understandably--so frightened of failure, that they'd rather commit to a smaller-than-life existence, than dare to believe in the sickening enormity of the dreams inside of them. "Stop worrying about failing at what you love, and start worrying about succeeding at the things that don't matter." -Anon.

Listen, I'm an entrepreneur--fancy word for "broke,"--and I know, first hand, that poverty sucks. Poverty is not fantastic. However...what if choosing to live below one's means, choosing to be frugal and modest in the extreme, is what will, factoring in time, sacrifice and commitment, put us on the path to creating a new kind of wealth, the "wealth" of accomplished ambitions and goals?

"The first step [to changing your life] is usually a step backwards." -Brian Bedford

Earlier this summer, at BlogHer'15, I co-hosted a social media boot-camp. Afterwards, a woman who had attended my presentation, Monica E., introduced herself. When it comes to discipline and courage, Monica is the real deal. A few years ago, Monica was a stewardess, about to turn 40, lacking a college degree, and waking up the realization that she had no wish to spend the rest of her life flying the (un)friendly skies. Aware that her prospects of long-term employment were tenuous at best, Monica worked with a financial planner, creating a self-imposed severe frugality, in order to have the freedom to return to college on her employer's dime. Her employer paid for her classes, Monica paid for everything else by waiting tables and, crucially, by going without. She got her degree, then continued to save money to finance her life-long dream of long-term foreign travel, as a tourist. As I type these words, she just posted photos taken at an elephant sanctuary in India. All those Starbucks lattes she didn't buy, really added up. (Follow her journey on Facebook: www.Facebook.com/Inabackpack)

Naturally, given our green-eyed world, oh so many people hearing of Monica's financial journey said things like, "Well, it's easy for some, I guess." Guess whatever you like, but it wasn't easy for Monica. The only thing that's easy in life are excuses. Ambition is never easy. Ambition requires sacrifice. Ambition is terrifying. Even in 2015, despite all the "girlpower" hashtags, too many women are still conditioned to be revolted by their own dreams; too many women are still brought up to regard their own ambition as a complicated form of selfishness. (#horseshit)

As a coach, Monica's story immediately resonated with me: she had the courage to go without, for years, to end up with a different kind of reward, a reward of courage, achievement, and confidence in herself and her abilities. Monica's story reminded me of how many of us use money, or the lack thereof, as an excuse to withhold from committing to our dreams. How many of us seek prestige in all the wrong places.

Thinking of all of this, I spoke with Brian Bedford, Monica's financial planner*, getting his thoughts on how people can start to use money to empower their dreams, instead of neutering them.
What follows are the highlights from our financial conversation.

1. Have a budget.

The key to making positive change in your finances lies in consistent execution of the most basic of finance principles. I'm sure there are many people who would love an exciting secret formula that no one has ever heard of, but the path to financial success is similar to success in anything else; you have to put in time and effort. Many of the most important factors are simple, but not necessarily easy to follow. Here are some common things I see that can begin to "move the needle" in the right direction.

It is important to realize that many of us are thinking about the term "budget" incorrectly. It tends to have a negative connotation meaning that because someone's income isn't very high, they are forced to be careful with their spending. On the contrary, most successful businesses, which handle millions if not billions of dollars, operate on budgets. A budget is not punishment for these companies because they don't have enough income, rather it is a proactive spending plan so that they are able to keep some of the income they earned as profit. Individuals should think of a budget in this positive way, a proactive spending plan that allows you to keep some of the income you work so hard to get.

2. Create surplus in your budget.

The first thing that a budget will do will be to help you track your expenses. However if the expenses continue to eat up all of the income month after month, the budget is not acting as an effective tool. The reason that operating a budget is not easy is that it requires discipline, and often difficult choices, to make sure that not all of your income goes away.

3. Identify a sequence of objectives for the surplus in your budget.

Once there is surplus in your budget, you need to have a plan for it. If you don't, it will often start to "burn a hole in your pocket" and will get spent. There is a difference between goals and objectives. Goals describe the ultimate outcome you are going for, and objectives describe the work needed to get there. For example, getting out of debt may be a goal, but the objectives to get you there could be things like following a budget, creating an emergency fund, and paying off a credit card or a car loan.

This is part one of our conversation; part two will run the following day.

*Full disclosure: When I pitched this piece to Brian, I made it clear that I would not pay him, nor would I hire him to help me with my own financial planning. In fact, given the rules of Brian's industry, if I had tried to do so, he would have been forced to immediately stop talking with me.