Transcription + links below the video

Over the last month alone prices have risen 1% which might not sound like a lot until you understand that means 12% over the NEXT YEAR if it keeps up [unlikely]

A lot of my clients are saying to me they’re surprised by their spending these days. I was surprised when my partner and I did our two most recent monthly finances check ins, too. It’s pricier especially for food, energy, and transportation – eg, basics, not “extras” – than it was a year ago, and even a few months ago, so if you haven’t looked in detail at your spending in the last few months, you are due for a check-in.

So what do you do? I’m going to tell you what I did, and about a method you can use to get a handle on your money during inflation. 

No dumb savings tips – I want you to start with strategy, and then decide if and where you want to cut your spend or your savings. Here’s how.

FRAMEWORK: NET POSITION

It’s called a Net Position —  something I always invite folks in my workshops and coaching to do: snapshot what do you have, what do you owe, and what you’re spending in a given month as of TODAY.

Often, our financial realities are set in the past. When things aren’t changing much, that’s fine. But during times of change – when your income goes up or down, or your COSTS go up or down, like they are today, you have to get your plan to relate to today’s reality.

Last month, my partner and I went through our expected costs and increased some of them, so that our budgeted spending to better match reality.

Of course, this money doesn’t magically appear out of thin air. After we updated our monthly shared spending, I needed to know what else in my spending plan I could adjust. To do this, I needed to understand the impact on my big picture finances. 

That’s the first reason a net position was helpful: in order to decide which savings goal could take a pause, I needed to remind myself what my money is supposed to be doing for me in the first place. Looking briefly at my savings and retirement accounts let me understand where my finances are at in relation to my needs – like for emergency backup money; short term goals – like for some home improvements; and long term plans – like retirement.

With that information, I decided to pause one of my automated savings, as well as some personal spending, so that the money coming in and going out still matched my income AND my [slightly adjusted] bigger plan.

Do I feel squeezed? Not really – I feel in control, I made an intentional plan.

WHY DOES IT WORK?

When I started working with people to achieve their money goals – seven years ago! – I always knew there’s more than just numbers in the mix.

Especially for those of us who’ve experienced money being tight, but truly for everyone.

Behaviorally: when your focus is on making your monthly bills, you might never step back and look at your bigger financial picture. “What’s there to look at?” you might think.

Later, if your income increases and you have more decisions you can make with your finances, you might not even know people look at more than monthly ins and outs!

This is the second reason doing a net position + spending snapshot is important.

Once we have our financial data laid out in front of us, we start to make sense of it. That lets you proactively determine our options, and make decisions about what to do.

And, while yes these can be experiments! In a time of change, it’s REALLY useful to know where you’re operating from. 

This exercise is illuminating because it forces you to dig around, look at accounts you might ignore, and break out of a monthly cash flow state of mind into a 10,000-ft view. You start to ask questions like: why is this account like this – how could it be like that instead? 

Importantly, those decisions need to relate to our goals and current needs.  

Getting curious about what’s up with your money makes the outcomes you start to wonder about and the decisions you make more meaningful. Could I pay off my credit cards faster? What if I took two months off and used some savings? What’s the distance from here to a down payment? Could I be putting more money to mutual aid or donations?

And later, it’s a good idea to circle back to see how these decisions impact our big picture, in service of our goals.

This is why I think design thinking applies beautifully to transforming our approaches to our money.

The framework for a values-based, goal-driven, financial behavior transformation looks a LOT like an innovative problem solving method: Goals > Challenge > Data > Understanding > Ideas > Decisions > Testable Actions > Evaluation.

You can do one of these self-audits today.

It should take you about an hour, depending on how easy it is to log into accounts where your money is.

Sit yourself down and look up what’s in ALL your accounts. Write or draw it out. Ask yourself if it’s what you thought it would be. Ask yourself if there’s anything you’d like to change, and then step back and start to think about how: it might be a change in your spending, it might be a change in your earning…

I’m teaching about this method twice in the next month, if you want to dive in with some support.

On June 17, with Rose Slam’s Money Club, I’ll be teaching people how to ask good questions of their money data, and apply what they learn to their goals. 

I also teach this method in my personal finance Money Like You Mean To Workshop – next one you can join is in July, or later on in October.

Actively using current information is one of the best ways to turn money problems into possibilities. 

And I always say: you don’t have to like the numbers for them to help you.

Because it’s not just about the numbers. Money is about what you want to see happen and be possible for yourself, your family, your communities. It’s about goals, today’s reality, and the best next step for YOU.