Being prepared in our finances can empower us because it impacts all of the areas of our life. Knowing this simple fact led me to put together a five phase journey based on my own experience with finances and the experiences of those I’ve helped along the way. My hope is that this framework will show you the path to financial freedom.
Knowing where you are at and which direction you’re heading in is vital to moving towards where you ultimately want your end destination to be. These are the five phases we went through. If you can identify which of the behavioral phases you are in, you’ll also be able to identify the steps you need to take to move forward on your journey.
Wondering which phase you are in? Check out my 5 behavioral phases of the finance journey!
Phase 1 – Denial
This is where most people begin their financial journey. When my husband and I were first married, we were definitely in denial about our finances. We thought we had all of the money in the world and we were spending on credit like there was no tomorrow. We racked up debt on over 11 credit cards. Since we could afford the minimum payments on them, we thought we were fine. You know the motto, “Buy now, pay later”? That was us. Trust me, we sure did pay later!
We were in denial that we couldn’t really afford these things. We were in denial that we had a spending problem.
Phase 2 – Avoidance
In this phase, you start to recognize that you have a spending problem, but you’re doing things to avoid the issue because you don’t want to deal with it. But, at the end of every month, you need to come up with money to pay the bills and you’re noticing that your credit cards are maxed out.
For us, we had our 11 credit cards, and we found ourselves signing up for new credit cards each month with 0% interest rates. Then, we would transfer our balance from one credit card with a high interest rate to this new low interest card. Essentially, we were just moving our problems around – not solving them.
This process took care of some of the fees, but it didn’t solve the actual problem – which was our spending. We knew there was a problem, but we were avoiding it. We didn’t want to address it.
Phase 3 – Frustration
Eventually, if you are stuck in the denial or avoidance phases for long enough, you will start to get frustrated with your lifestyle. Living paycheck-to-paycheck, being tired every month of not knowing where all of your money is going, and having those arguments every month with your spouse or partner about money are just so frustrating.
That level of frustration at not knowing where your money is going, being disorganized with your finances, and over spending will start to build up and catch up to you. For myself and my husband we were in the avoidance and frustration phases for a long time. We finally decided enough was enough and we didn’t want to be stressed out and frustrated anymore. This led us into the next phase.
Phase 4 – Exploring
Once you’ve decided that you’ve had enough of the stress and frustration, you’ll begin to explore your options. We knew we needed to do something so we started to look at our situation and considered getting outside help. We took a good hard look at our lives and began to think about what it is that we wanted for our future.
Whether or not you do this yourself with all of the resources out there, you ask family and friends for tips and suggestions, or you get professional help, it’s important to find a solution to the problem you are having and begin to work on the issues. And this slowly moves you towards the final phase – the place where we all want to be!
Phase 5 – Control
The final stage brings us confidence and control. This is where we all hope to end up with peace of mind and stress free living. This is what we all want for our lives and our families.
Ask yourself – which phase are you in now? This might sound crazy, but if you are in the frustration phase, this is a great place to be! Here’s why: If you are frustrated, you’re likely ready to take action and make a change.
Now that you’ve identified which of the behavioral phases you’re at, it’s time to make a plan to move you along on your journey. Lucky for you, I can help with that! Let’s set a time for us to chat about how we can get you in control of your finances!
Our kids are learning and getting skilled at so much in school these days. I’m surprised sometimes at what they learn at their age!
But there are three areas of life I’m sure we can all agree we wish we had learned in school—cleaning, cooking, and budgeting.
These are the three areas you must teach your children as soon as possible.
If your kids take off to college with these skill sets, they’ll be off to a great start as responsible adults!
This is one that you need to instill in your children early on. Make them responsible for small tasks like cleaning up the sink after they brush their teeth and then move on to more complex matters like making their bed.
By the time they go off to college, they should know how to do their own laundry, instead of bringing it back home for you to wash, and to take care of basic household cleanups such as stains. The college stereotype of students living in a pig-sty should not apply to your kids.
This skill is one that so many kids don’t master early on, leading to some major problems later.
First, your child needs to be taught how to cook healthy foods. When they go off to college, they’re going to want to lean towards quick, unhealthy junk foods that can ruin their health for years to come. (Anyone remember the “Freshman Fifteen”?)
But it also leads into the next area of budgeting as well. If your child learns now to cook his or her own food, then he won’t have to waste money eating expensive (and unhealthy) fast food.
I wish that I had learned how to manage money at a younger age. If I had, then maybe, just maybe, I would have made better decisions and not managed to rack up over $120K in consumer debt! (A word to the wise…don’t charge your entire wedding on credit cards!)
Thankfully, with A LOT of hard work and sacrifices, we were able to dig ourselves out of our mess. After that, I swore to myself that we’d never put ourselves into that predicament ever again and will make sure our kids don’t either. That’s why we help teach our kids early on about money management and how to delay gratification by saving up to buy the things you want instead of buying on credit.
Three Big Areas of Life That All Kids Can Benefit from Learning
Budgeting is just one of those life skills that every parent should instill in their children. And, of course, if they can cook and clean for themselves, it’s one less thing we have to worry about for them. If you can instill the importance of those skills at an early age, you can be sure that they will be much more successful as adults.