How to Turn Your Finances Around in 6 Months

Summary

Money Guy Show: How to Turn Your Finances Around in 6 Months

Host: Brian Preston and Bo Hanson
Episode Title: How to Turn Your Finances Around in 6 Months
Release Date: April 18, 2025

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The Money Guy Show episode titled "How to Turn Your Finances Around in 6 Months" offers a comprehensive, month-by-month blueprint designed to help listeners overhaul their financial lives. Hosted by financial experts Brian Preston and Bo Hanson, this episode delves into practical strategies, insightful discussions, and actionable steps to achieve financial stability and growth within half a year. Below is a detailed summary capturing the key points, discussions, insights, and conclusions from the episode.

Introduction: Setting the Stage for Financial Transformation

Brian Preston begins the episode by emphasizing the urgent need for financial change:
“We know three out of four Americans really do feel overwhelmed with their finances” (00:38).
Bo Hanson echoes this sentiment, highlighting that many individuals find themselves on an unintended financial path and are eager to shift direction. The hosts aim to serve as catalysts for this transformation, urging listeners to overcome procrastination and take immediate action.

Month 1: Data Gathering and Financial Reassessment

Key Focus: Understanding where your money is.

Brian and Bo stress the importance of starting with a clear picture of one’s financial status. This involves gathering data on income, debts, and assets to create a comprehensive net worth statement. Bo introduces their free net worth tool available on their website, which aids in tracking and visualizing financial health.

Notable Quote:
Bo Hanson: “The very first thing that you want to do if you need to reassess your financial life is you have to know where your money is” (01:45).

In addition to quantitative analysis, the hosts emphasize the necessity of a qualitative assessment. This includes identifying personal financial goals, understanding the motivations behind financial decisions, and recognizing areas of confusion or worry. Communication with a spouse or significant other is highlighted as a critical component, ensuring both parties are aligned in their financial objectives.

Overcoming Avoidance: Confronting Financial Realities

A significant barrier to financial change is avoidance. The hosts discuss how many people tend to ignore their financial shortcomings, leading to prolonged financial struggles. Brian underscores the importance of confronting financial realities immediately:
“You have to go ahead and take today to be the moment that you actually start building towards a solution” (07:34).

Bo adds that the unknown aspects of finances can be terrifying, but facing them is essential for progress. They encourage listeners to break free from excuses and take proactive steps, reassuring that even small actions can lead to substantial improvements over time.

Month 2: Expense Tracking and Budgeting

Key Focus: Understanding and controlling spending.

The second month shifts focus to analyzing where money is actually going. This involves detailed budgeting to ensure that expenses are less than income, thereby creating a financial margin. Brian bluntly states:
“If you don't have the discipline to live on less than you make, you'll just never get ahead” (12:25).

Bo introduces a color-coded system for categorizing expenses:

• Green: Essential, unavoidable expenses (e.g., utilities, rent).
• Yellow: Non-essential but desirable expenses (e.g., dining out).
• Red: Unnecessary or impulsive expenses (e.g., impulse buys).

Notable Quote:
Bo Hanson: “Do not sleep on the data. You have to get the numbers in so we can actually start looking at the data” (02:17).

The hosts emphasize that budgeting should go beyond mere tracking. It requires setting specific financial goals and adjusting behaviors to align spending with these objectives. Practical tips include meal prepping to reduce food expenses and utilizing grocery pickup options to avoid overspending.

Month 3: Deploying Financial Margin

Key Focus: Utilizing the surplus effectively.

With a disciplined budget in place, listeners now have extra financial margin. The hosts discuss three primary avenues for deploying this surplus:

1. Paying Off Debt: Eliminating high-interest debts to reduce financial burdens.
2. Saving: Building an emergency fund to cushion against unforeseen expenses.
3. Investing: Making money work through investments to foster long-term wealth growth.

Bo explains that the choice depends on an individual’s current financial situation and goals, aligning with their financial order of operations.

Month 4: Tracking Progress and Optimizing Systems

Key Focus: Monitoring and refining financial strategies.

The fourth month is dedicated to evaluating progress. Listeners are encouraged to revisit their budgets and net worth statements to assess whether they are meeting their financial goals. Brian likens this process to the “wax on, wax off” philosophy, highlighting the importance of consistent effort:
“It's going to be the thing that really funds your future offense when you start making your money work harder than you can” (11:24).

Bo suggests making small adjustments based on this review, such as automating bill payments and savings contributions to reduce the mental effort required in financial management.

Month 5: Projecting Future Financial Scenarios

Key Focus: Forecasting and planning for future financial health.

By the fifth month, listeners should begin projecting their financial future based on current habits and strategies. Bo discusses using tools like debt calculators and investment projections to visualize long-term outcomes:
“How much sooner could you pay off debt if you save a little bit more each month?” (33:10).

Brian encourages listeners to run various scenarios, adjusting for factors like inflation and investment returns, to understand the potential impacts of their financial decisions.

Month 6: Reassessing and Repeating the Process

Key Focus: Continuous improvement and habit formation.

The final month involves reassessing the entire financial plan, ensuring that progress aligns with long-term goals. The hosts stress the importance of honesty and flexibility, allowing for adjustments to strategies as needed. Bo highlights setting short-term, achievable goals to maintain momentum:
“If you're trying to figure out, what's the very best, very next way for me to deploy my dollars” (32:23).

Reiterating the cyclical nature of financial management, Brian emphasizes that financial planning is an ongoing process:
“This is a long-term game that you're involved with", (37:40).

Conclusion: Embracing a Financially Empowered Future

Brian and Bo wrap up the episode by encouraging listeners to utilize the tools and strategies discussed, such as their net worth tool and the "Know Your Number" course. They emphasize the importance of celebrating financial milestones and maintaining motivation through genuine financial progress and improved habits.

Final Insights:

• Consistency is Key: Regular tracking and adjustments are essential for financial growth.
• Balance and Flexibility: Align financial strategies with personal life goals to ensure sustainable progress.
• Continuous Learning: Utilize available resources and tools to stay informed and empowered.

Notable Closing Remarks:
Bo Hanson: “If you do this, it really can change your life... you have to be willing to do something you've never done to change that” (37:40).
Brian Preston: “I'm telling you, it can be that easy. But I'm telling you, it can be that easy.” (09:17).

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By following this structured six-month plan, Brian and Bo aim to equip listeners with the knowledge and tools necessary to transform their financial lives. Whether you're feeling overwhelmed by debt, seeking to build wealth, or simply striving for better financial habits, this episode serves as a practical guide to achieving financial confidence and stability.

Transcript

[Brian Preston]

How to turn your finances around in six months or less.

[Bo Hanson]

Brian, I am so excited about this because sometimes we find ourselves in our financial life going in a path that we thought, man, that's not, that's not the path that I want to be going on. I need to turn, I need to shift, I need to go into a different direction. I love that we sit in the spot where we can walk you through how to do that. I also love that we sit in this spot where we release brand new content to you every single day. So if you're not subscribed to the channel, make sure you subscribe so that we can load you up with financial information.

[Brian Preston]

Bo, this is the thing is I just want this to be the catalyst to be the moment that actually creates change. Because procrastination is not your friend. No matter how much you think it's going to be okay to just push us off. But here's the reality. We know three out of four Americans really do feel overwhelmed with their finances.

[Bo Hanson]

Yeah, it seems complicated. It seems like, man, I just wish I knew what to do and how to do it or how to actually change my circumstances. That's what I want to speak to today. If you happen to be in that 75% of folks who don't know what to do or don't know how to do it don't know how to get your finances turned around. We want to help you. But maybe you're that one in four and you're not overwhelmed and you're thinking to yourself, okay, I feel okay about things, but I think I could be doing it better. Think I could reassess. We're going to walk you through a six month, month by month plan of how you can redirect and shift your finance.

[Brian Preston]

I think it's important enough, I don't care where you are, four out of four ought to watch this just so you can streamline, improve. There is going to be something in today's show that can actually make you better at your finances.

[Bo Hanson]

Alright, so let's jump into month one. The very first month, the very first thing that you want to do if need to reassess your financial life is you have to know where your money is. And month one frankly is going to be all about data.

[Brian Preston]

G. Yeah, I mean this is, I think about we're financial planners by day. The very first thing after you start interviewing and talking to people is you got to get your hands on the data. So don't sleep on the data. So you got to get the numbers in so we can actually start looking at the data. But when we talk about what the numbers are, what are we talking about?

[Bo Hanson]

Yeah, we want you to have an idea of what your income is. How much are you being paid? How much are you actually taking home of what you're being paid? Is your income variable? If it is, what does it average out to over time? That's kind of your shovel. What's that resource? We also want you to know about your debts. How much money do you owe to other people? What are you on the line for? What are your obligations? Those are kind of the income statement items. Then there's also the balance sheet item.

[Brian Preston]

Well, I love that because this brings in there's going to be tools that we're going to talk about all throughout the day and debts, assets, Both of these are components of your net worth statement or your personal balance sheet of how much you own versus what you owe. And here's the good news. We give you a way give you two options. If you just need a free resource, you can go to moneyguy.com resource and go download and get our free net worth tool or net worth template, I should say. But if you really want to streamline this process and actually have a dashboard view to know what's good, what's bad or better decisions you should be making with your net worth, feel free to go to learn MoneyGuy and actually get the net worth tool. It's the same net worth tool that actually bo's using, I'm using for our own personal tracking of our net worth statements.

[Bo Hanson]

So getting your mind around the numbers is one part of it, but you also have to get your mind around your mindset, your unique view and thought on money. Because a lot of it is going to be quantitative, but some of getting your life turned around is also qualitative. So there are some questions you need to ask yourself. A great question to start with is, hey, what are my short and long term goals? What are the goals I have around the decisions I'm making with my money?

[Brian Preston]

Hey, this is one that I talk about all the time. If you don't have your why for your financial life, it's not good enough to just say, hey, I hope I can save up $3 million or hey, I want to have my house paid off by this date. Hey, I want to retire here. That's not enough. We want you to focus on the why. What's the purpose? What are you actually trying to get out of this tool of money? Make sure you're spending some time on that very important question.

[Bo Hanson]

And when you're doing this reassessment, you should also ask the question, what do I find difficult? Or what part of money is confusing? Or maybe it's not even confusing. What's the worst worrisome part about money? If you can list that out and write it down at the beginning of this process, you're going to set yourself up to be able to clearly articulate and educate yourself around how to solve those problems.

[Brian Preston]

And then don't forget, you know, we wrote in a broad term here, say, you got to make sure do you feel good about your financial systems? When we talk about financial systems, I'm asking what does your budget look like? What is your automated or automatic investment plan looking like? All these things are the systems that are going to both hold you accountable but also be a big part of the building of your future wealth.

[Bo Hanson]

And when you think about your money, what are your financial priorities right now? What are the things that when you lay awake at night and you can't shut your mind down from a financial perspective, what are those things that are top of mind for you? If you can get your mind wrapped around those things that are occupying that brain space, you can then discern, okay, should these be occupying my mind or is this noise that I should ultimately put out of my mind?

[Brian Preston]

And then the last one, this is probably one of the most important ones. We could have very well ended with this one at the top too, is just how good your communication and our Are you on the same page with your significant other or spouse? This is one. Once again, we're going to be using tools if you dive into our content. We love the Net worth tool as a communication tool. But just make sure you're actually having those important conversations of what have each of you expect out of your financial life? Are you saving on the same page to when you want to retire or what your life goals? It doesn't matter if it's vacation in the future, paying down this debt, just make sure you're actually having those conversations. Here's the good news. It doesn't have to be boring. Bo and I have talked about this every year. After we do our net worth tool, we actually do work, skip work days to actually sit down with our spouses and kind of plan out the good and the bad of the year, including vacations, but also how we're going to tackle debt. Make this thing into a fun thing that can be part of the romantic side of your relationship as well.

[Bo Hanson]

Now you may be thinking, guys, this seems complicated. This Seems nuanced. And frankly, most people, when they try to turn their financial life around, they don't even make make it past the first month. And why is month one so hard? Well, I think one of the big reasons is avoidance is the biggest barrier. It's really easy to just put things out of sight, out of mind. Yeah, I don't, I don't like my financial circumstance right now, but I don't want to focus on the reasons why. I don't want to focus on my budget. I don't want to focus on where my money's going. It's easy just to avoid it. Well, if you're constantly avoiding having the hard realizations, it's going to be very difficult for you to actually put wheels in motion to change your circumstances.

[Brian Preston]

Well, I don't mind. We'll talk about this in greater detail later. But money is one of those things. Time can either be your friend or foe. And if you're a person that is saying, look, I'll just get to this, at some point in the future, I'll procrastinate on this, making any type of decision or getting any movement with my finances going, guys, you're misleading yourself because the sooner you tackle this, and I don't care if you're behind the curve or what, or even if you're finding this, this at a later age, it is still going to be to your benefit to tackle this asap.

[Bo Hanson]

And it's difficult though, because a lot of times the unknown can be terrifying. Well, I don't know if I'm overspending. I don't know if I'm under saving. And not knowing, that can be sort of a frightening proposition. But it's much better to have the reality that, man, I need to face this frightening thing and come to terms with it instead of just avoiding it. And even worse, you may not even realize that you are avoiding this. You may use excuses like this. I'm just, I'm not good with money. It's not something that I'm good with. Or, you know, I'm going to make more first and then I'll take this seriously. Or you know what, everyone's struggling right now. Why wouldn't I be struggling? Nobody can make ends meet in this type of economy. I am just like everyone else. So I probably don't even really have a problem.

[Brian Preston]

And that's why, look, without a doubt there definitely this could be a difficult time for many out there with some of the things we've gone through from an economic standpoint. But it still doesn't create the solution. I don't care how bad your situation is, I don't care how bad you feel like your gap of knowledge is, you've still got to go ahead and take today to be the moment that you actually start building towards a solution. And here's the great news. Little steps can have huge impacts. So don't let anybody dissuade you or tell you you have to be a victim in this thing. Let's try to figure out how you can start making small steps today. So when you look back 10 years from now, go man. It was the moment that I watched that show. Look, we have studio tours come through all the time and we had a couple come by just recently, got engaged and they were sharing some of the story Beau and he was like, look, I found your show and this is kind of what got us going. That stuff doesn't get old. But I'm telling you, it can be that easy. You watch this show, you get motivated, start making something happen today.

[Bo Hanson]

So even though this first month can be hard, it is vitally important. Why is it so important? Because you get to choose your hard. You get to choose. Do I want to make the hard decision right now to recognize what's not right in my financial life and take the steps to improve it? Or do I want to avoid it? Do I want to ignore it? And later on in life when I get further down the road, when time is not on my side, I'm going to have to make really, really hard decisions there. What hard do you want? Hard today or hard tomorrow? Because one of them is going to have to happen.

[Brian Preston]

Well, I think you also get to choose what you can control now because there will go a time if you del. Procrastinate. You're kind of stuck with hard life decisions because there's just not a lot of great solutions out of it. But if you maybe can tackle this and look, we've done a lot of research and done a lot of show content where even people in their 40s who are finding out about personal finance for the first time still have a lot of control on being able to pull levers of things that you can do and still have a great financial life in just a few years in the future. So don't put this off. I want you to understand you're still in control in a lot of this, but delaying it is not going to be the answer.

[Bo Hanson]

I love that. And then your future self is not going to be better with money unless your present self starts making changes today. We all say, oh, you know, I've got time. I'll wait for tomorrow, I'll wait for tomorrow, or want to have more. Tomorrow will not be better unless you start making decisions today to set your future self up for success. Procrastination is not your friend when it comes to making wise financial decisions. The earlier you figure these things out, the more impactful they can be, the more they can change your financial circumstance.

[Brian Preston]

Yeah. So let's talk about month two. We got to figure out, just like the first month was all about the data gathering, now we got to figure out where's that money actually going. Now, look, this is hard. I'll go ahead and tell you. This is the part I don't like it because there's a lot of accountability in this step. But this is going to be the thing that really funds your future offense when you start making your money work harder than you can.

[Bo Hanson]

And at the end of the day, this is the one that frankly, is going to take the most work. There's the most legwork that goes into this. But we have a goal. There's an outcome that we want to come out of. The legwork of figuring out where our money is going. And that ultimate goal is we want that money coming into our possession through our wages, through our investments, any sort of resource we have coming to us to be greater than the money that's going out. We want to be living on less than we make. If we can do that now, we're beginning to set ourselves up to make a change.

[Brian Preston]

Well, yeah, I mean, this is we. You just. Everything you just said in that sentence was two. Essentially two of the three ingredients of wealth creation is because, look, if you don't have the discipline to live on less than you make, you'll just never get ahead. I hate to be that blunt with it, but it's just the reality of the situation. So that's why that second ingredient, the money, slash the margin, meaning you live on less than you make, which creates the margin in your life that you can actually start putting your money to work. You can't sleep on either one of those ingredients.

[Bo Hanson]

It's so pivotal. We've done a number of episodes in the past on the financial planning pyramid and how you think about working through your different financial priorities. Cash flow and spending, managing that money in, money out. Knowing where your money is going is foundational. It is at the very base of the pyramid. We would argue you have to figure that out before you can figure out any other facet of your financial life. Because it is that key ingredient of wealth creation. So then the question becomes, okay, well, how do I do it? What's the process? How do I think about this? And most people have figured this out. The way that I figure out have more money coming in than more money going out is I have to start budgeting. I have to figure out what that actually looks like.

[Brian Preston]

Yeah. And what I like about being proactive with this whole step as we get into budgeting and other things is as I've already shared, a little bit goes a long way. So even if you're doing, you can find $100 a month by just doing a budget that is going to create dramatic results for you. But here's the other thing I like is that you're going to quickly realize when you do the budget is how, you know, essentially triage, oh my gosh, I've just got to make minor changes in my financial life and I'll be okay. Or, oh, good lord, I think I'm going to have to make dramatic changes. Maybe I have to change the car I drive, the area I live. This is why it's an important exercise. So you can triage how bad or how much adjustment is going to get you on the right path.

[Bo Hanson]

And what's great is in either one of those scenarios, that person has to make huge adjustments or even that person who has to make small tweaks. They can both have large outcomes down the road if you can begin to do them today. But you have to have a plan with where your money's going. So how do I plan? How do I think about this? Well, step one of creating a plan and putting a plan in place is to actually form a budget and to actually construct some goals and construct a plan around that budget.

[Brian Preston]

Now this is where I have to pick on those that are well intentioned, but they actually don't put pen to paper or actually open up the spreadsheet or download the app that actually lets them create the true budget is because it's not good enough. Just because you say, you know what? I think we eat out too much. So I think this month I'm going to spend two. I'm going to spend less on food. That's not a plan. You know what a plan is? Is when you actually get to say, I'm going to spend $200 less on food because maybe this month I'm going meal prep, or this month I'm going to eat out this many times less or I'm going to have frozen meals ready. I'm going to Switch to a cheaper grocery store. I'm going to do a pantry audit to know kind of what I already have. So I don't double buy things. There's all kind of things you can do so that you actually have a plan versus just good intentions. Good intentions don't create financial independence. It's actually doing the work of creating the budget.

[Bo Hanson]

So often I see people set up budgets, Brian, and they'll be like, all right, I'm going to have this much eating out and this much on housing and this much on gas. And then they link up their accounts and they link up their checking accounts and they just categorize. And all they're really doing is categorizing. If you don't actually set this goal, I need to hit X number by changing Y behavior. All you're doing is tracking where your money is going, which is valuable. But you need to figure out, am I tracking it and actually moving towards my goals? And so here's a great example of how we would recommend tracking through a budget. And this does not have to be complicated because there are tons of software, tons of applications you can use. But here's a really easy way to make sure that you're actually making it useful for behavioral change. List out all your expenses for the last. It doesn't have to be month. Maybe do this every week for the last week. What did I spend money on? Okay, once I have all those expenses, now I'm going to categorize them. Everything that's green. I'm just going to highlight all my green ones. This is stuff I have to spend money on. I can't get out of this. This is my utility payments. This is my rent, this is my electricity, this is my grocery bill, this is car insurance. These are things that I know are fixed. Alright, then I'm gonna have some yellow ones. These are a little more questionable. These aren't have to haves, but they're kind of nice to haves or okay to haves. And then I want to highlight everything else in a red category. And these are the. What was I thinking? That was dumb. I was in line and I bought the thing and I didn't actually need the thing. Why did I get the thing? These are things that you could very easily cut out of your budget. Well, as you begin to look at this on a week by week and then month by month basis, what you want to have happen is you want your budget to gravitate toward being all green, maybe some yellows, depending on where you are in your financial journey. And cut out all the reds. Because if you can cut out all of the reds and most of the yellows now you begin to establish some margin in your life.

[Brian Preston]

Well, and that's why, you know, the next slide we had was just talking about, you know, once you go through this exercise, you're actually going to be, it's going to reflect what are my priorities look like, what do my goals look like. But, but here's where I think it's even more important that I think what Bo showed is in the beginning. It is important just from the sheer feedback of doing essentially red, yellow and green to know what's good, what's bad. But then you can even fine tune this tool even more. Kind of like a business leader would as you compare what you did last year, or it could be last month or last quarter to this month, and even tracking the change. All these things are going to let you assess to see are we on track, are we making progress? And hopefully at the end of the day, this is all going to lead to you being able to get to that adjustment phase that actually creates money that can be put to work.

[Bo Hanson]

Yeah, you might have this realization, hey, my goal was to spend on X, but I'm actually spending on Y. Well, what you want is you want the things you spend money on to align with your goals. And if you're not doing that, then you're not moving in the right direction. So you budget and then you track it and then you adjust accordingly. You have to figure out, okay, where are the things I need to tweak? What are the areas where I'm weak on? And now look, this is difficult because you have to be self reflective when you look at your budget. You have to line up the left and line up the right and you say, okay, what do I really suck at? What are the things that I'm very bad at? And then what levers can I pull or knobs can I adjust to not be so bad at those things or to make the bad decisions hard? Here are a few very easy examples. If you impulse buy when you leave your house, leave your credit card at home. Don't take it with you unless you know you're going to need it where you're going. And don't have Apple Pay or some other payment function set up on your phone. How about this? If you find yourself on Amazon just kind of doom scrolling and shopping, cancel your Amazon subscription.

[Brian Preston]

It did crack me up that Amazon got its entire own row there.

[Bo Hanson]

Haven't we all been there? They make it so Easy. They make it so easy. It's super frustrating. Now how about this? Your kids add items to grocery cart when you go grocery shopping. Maybe. Now this is a hot take, but I really want you to think about this because my family would fall into this camp. Maybe you order groceries online and you're saying, oh boy, it's more expensive. Have you ever gone to the grocery store and you're hungry? I guarantee if you go to the grocery store when you're hungry, you will spend more on groceries than if you sat at your computer and like added it up and ordered. Even though there's a surcharge. You don't have kids throwing stuff in there. You're not making impulsive decisions. It may make sense to do that. Want to fight me on that? I know.

[Brian Preston]

Well, no, I'm not going to fight you because I know you're just, you're just doing the premium version, which is like an instacart or something. There's another way because every time I go to the Super Targets or even my local grocery store, I notice all the parking spots I used to park at are now for mobile pickups.

[Bo Hanson]

That's right.

[Brian Preston]

So there is nothing that says that if you go to a specific grocery store and you know they have a mobile pickup option, maybe you could be disciplined enough, go ahead and do the order online. So that way it keeps the kids from throwing it. By the way, it's not just the kids. We're blaming it on the kids. I have the tendency to throw in so many bags of dried mangoes even though those things are five bucks a pop and I can eat an entire setting right in the car in the parking lot. So it's just, you can do this in a cost effective way even if you don't want to pay the premium is maybe your grocery store offers a pickup option and all you do is you pull up with the kids, you just pop the trunk or you pop the hatch and you let them bring the groceries out and you save the money because you didn't add all those extra things in there.

[Bo Hanson]

I love it. Maybe you're someone who you blow through your budget. Maybe you need to try a cash system or novel envelope system. Or maybe you have a hard time sticking with your strategy. You ought to put, and I literally mean do this, put time on your calendar to review the last week, two weeks, month, whatever it is so that you know you have built in accountability. Or maybe you're someone who you find that I'm just influenced. I see other people doing other things. And I want to spend money doing things. Great. Fill your feed or your Discover page with people talking about their financial journey. Stop looking at the folks whose lives you want to have and start looking at the folks that are giving you sound financial information like the Money Guy show. So that that is what is filling up your feed. So you list up all of these things you're bad at and make those bad things very, very hard to do.

[Brian Preston]

Now look, we made a very long list of things that you're potentially bad at. Can we flip the script? I'm the eternal optimist. What are the things that you're actually good at? Because I know our saying, just like we say make the bad habits as hard as possible, we want to make the good habits as easy as possible. What are we talking about when we say to be good?

[Bo Hanson]

Maybe you're someone who gets motivated by incentives. You know, if you have a goal you're working towards, you can reward yourself that you'll do it, do it. Plan out small celebrations. Hey, if I stick to my eating out budget this month, then next month I'm going to go out to eat at some nice restaurant that I wouldn't go into otherwise. That's great. Or maybe you're someone who's super competitive. Find a friend or a partner or your spouse and figure out how can we challenge each other and have a little competition to see who can live the most frugal, who can stick to the budget, who can nail it. Or maybe if you're someone who's really good at to do lists and like checking the box and accomplishing tasks, then maybe you just do that for your finances. Here is my weekly, monthly, quarterly, bi, annually to do list. Financially, I'm going to do these things. I'm going to do these things again. Make the things that are good as easy as possible. The things that are hard as hard as possible. Make the things that are bad as hard as possible.

[Brian Preston]

I love, I feel like the first two months or the two focuses we've had on today's show was about the initial planning of getting things going. And then we had all the accountability of tracking. That's a good defense. I like that by the time we get to month three, this is where we get to essentially the offense of this system. How are we going to take all that hard work you did on the planning, on the discipline of tracking your expenses? How are we actually going to now take action and start creating wealth?

[Bo Hanson]

That's right, you've created margin now. And the question becomes, what do I do? With the margin. And really there are three things that you do with new margin in your life. You can satisfy debt, debt that you've accumulated and pay. You begin paying that off, you can save it. And we're going to use saving here to be like synonymous with like going into cash, building an emergency fund. Or you can invest, you can now get those dollars working for you. And how you're going to decide on where you are, is going to, is going to depend on where you are in the financial order of operations. But you have to, without knowing month one, where I'm at in month two, where's my money going? I can't arrive at month three. How do I now deploy my extra margin in the best way possible?

[Brian Preston]

Well, I mean, there's even ways that you can break out because we've talked about the financial order of operations is the system we've created. If you go download your copy moneyguy.com resources or even check out Millionaire Mission, of course it's going to lay it out for you. But we want to go even deeper in that. We want to talk about, look at how much money you have coming in and knowing how that is being broken out or spent.

[Bo Hanson]

I love it. So let's think about this. Let's say that you have a $5,000 a month income. You're making $60,000 a year. Well, you're obviously gonna have taxes. You have a thousand dollars of taxes come out of that. Then you're gonna have maybe insurance come out and a 401k contribution come out and the HSA contribution come out. That's just you're saving and investing pay yourself first. So now your take home pay is actually like $3,345. Okay, well, out of that 3,345, you know, you've got, got $1,500 in fixed bills. And then you want to save in your Roth IRA, that's 583amonth. And you have a $500 sinking fund maybe for the next car or for the down payment or for whatever might, whatever intermediate term goal you might have. And so then that leaves you $762 of discretionary spending. So then you take that $762 down and you say, okay, I know that I have some fixed costs like groceries that can be variable or I got to get my hair cut or whatever those things may be. And I have those. And then whatever's left over, that's my fun money. That's my going out. That's my going to the movies. That's my hobby. That's my. If you can think about your budget and your cash flow plan this way, what you're going to recognize is you're not going to squeeze out the important stuff. You already took care of the important stuff on the front end and there wasn't money left over to waste on the non essentials.

[Brian Preston]

Well, I think it's also somewhat humbling. I know when I first got out, started making money, it seems easy and I'll just use. I haven't used this term in a long time. I was doing what I call go kart math. Is that when you know you're coming out of school and say you're making $4,000 a month, you go, well, if I'm making $4,000 a month,. It's easy to afford a 7, $800 car payment because that seems like that's a lot less than the $4,000 I make. But isn't it interesting when you actually do this exercise, you see how much of the money you actually have zero control over. It's because whether the taxes are coming out, whether it's the just things that automatically have a place already. This is why it's so important to do this exercise, because it will protect you. Because I think as humans, we do the spending part easily, where we do the mental math, where we say, hey, I can afford this. But we never think about it in terms of going on offense and saying, no, let's take how much money I have so I can go through this exercise and see how much is going to be left so I can put my army of dollar bills so I don't have to do this job for the rest of my life, I love it.

[Bo Hanson]

Again, if you're trying to figure out, okay, what's the. I see this cash flow example, but for me, what's the next decision I should make? What's the very best, very next best way for me to deploy my dollars? That's why we have the financial order of operations. That's why you can go get your free [e-mail] resources to show you how to deploy your next dollar. So we've made it through the first three months now, Brian. Now that we've done a lot of the hard part, a lot of the heavy lifting, we get into month four, and month four is all about tracking your progress. Okay, I, I did the thing. I know where I'm at, I know where my money's going, I know how to deploy my dollars. Now I get to look back in month four and say how am I doing? What am I doing? Well, okay, well how do we track our progress? Well step one, actually track it. Actually look back. Did I put the money in the buckets that the money was supposed to go in? Did I pay down the debt? Did I build up the emergency fund? Did I not go over my eating out budget? Did I do XYZ and did I not do not xyz?

[Brian Preston]

You see why this is all now interconnected is because this is where the budgeting is. Nobody likes a budget. I mean I'll just. Anybody tells you they like the budget, they actually enjoy it, they might like the results it's creating for them. But the actual work, there is work involved with it. But this is what's needed is to in order to track it. This is back to now. You can look at month to month changes. You can see the difference. Same thing with the net worth tool. You're going to be able to see tracking it what the ultimate change or delta that has become from your good behavior, from your discipline. It's important. That's why these things, all those steps, we're telling you, it's just like Mr. Miyagi, wax on, wax off and all the other things. It makes sense once you see it. You're not going to like doing it in the beginning, but you're going to say I get it now. This is why this is so important that I execute on this.

[Bo Hanson]

So tracking it is the first part and the second part is make small adjustments. What are the things I'm doing poorly? How can I tweak to fix that? What are the things I'm doing well? How can I do them even better? And what you're going to recognize is that as you make those small adjustments, you put yourself in the position to begin to optimize. Are there things I can do like set it on autopay, have all my bills be auto paid, have all my savings be auto drafted, have all this be optimized so that I don't have to think about it, I have to waste mental calories and it just sort of becomes second nature muscle automatic for.

[Brian Preston]

The people is just created. So many millionaires that I know, I mean I think about some of my clients investments. I don't think they'd be millionaires without me squeezing them. Hey, I saw you're making a little bit extra this year. Why don't we increase your automatic investments an extra $400 a month. They didn't realize it, but I was planting the seed of that one. Little behavior of making it automatic was probably the secret ingredient to creating their long term success. So don't sleep on the fact. Optimize and increase and automate as much as you can.

[Bo Hanson]

And then we want you to solidify the behaviors. Okay. Making it through month one, that's kind of like the honeymoon phase. You're really, you're motivated. If you, if you can make it through, you feel good. Month two is exciting because there's a new thing that I can do. Month three, I'm coming up with a strategy. Month four, if you think about this sort of in weekly terms, that's where it starts to get easy, to get lazy. It starts getting easy. Oh, well, I did it. And it's lost some of the luster and it's lost some of the honey moon. We want you to make sure that you continue to reinforce those good behaviors. Now you're moving from having to change a behavior to turning a behavior into a habit. How can I make the way that I'm approaching my financial decisions habitual, where it becomes second nature? And once you do that, then you can begin to put in little celebrations there to celebrate the milestones. Hey, I was going to pay off this debt. I was going to knock out this credit card. I did it. Now I want to celebrate. I was, I wanted to get my savings account to $10,000. Oh, I did it. How can I celebrate that to give myself the motivation to keep going?

[Brian Preston]

Well, it's also important you've got to celebrate because, I mean, once again, back to these studio tours. We have so many people come through and it cracks me up is that usually one of the spouses will be all into it and they watch a lot of our content or listen and then the other one is the drag along. Let me go ahead and tell you, you got to do these celebrations because you might be on fire or super motivated for a lot of these financial things, but if you're not involving your SP or significant other and even creating celebrations, you might be creating a wedge that you don't even realize because that's something that I've always tried from a healthy way. We're so good at the math. We give you the math. I think that's what makes the secret sauce of the money guy show work so well. We load you up on the analytics, but we're also sentimental guys enough that I'm trying to give you to live your best life. So make sure you are celebrating those milestones so that you can look back back so you enjoy your 20s, you enjoy your 30s, you enjoy your 40s, and you definitely look back in your 50s and go, Hot dog. I can't believe we did all this. Thank goodness we made those sacrifices, but also enjoyed every one of those milestones.

[Bo Hanson]

So you've made these adjustments, you've made these changes, you've made these tweaks. Now we get into month five. And month five is where I think it gets exciting. Now you get to project out your plan. You've done these adjustments where you've changed the way that you spend and you've changed the way you save and you change the way that you look at money in and money out. Now you get to figure out, okay, if I continue to implement this, if I continue to move along on this trajectory, where am I going to end up? What does my tomorrow actually look like?

[Brian Preston]

Well, I mean, we're math nerds. I just said that in the previous statement, is that I like that you get to actually run projections. And this is what's so cool. Depending upon how old you are and how long you have is those little tiny decisions can have such dramatic or huge impacts in your future. Actually, go run the projections, do the math. I think you'll be surprised at how just a little bit goes a long way. Whether it's $100 a month here, $500 a month here, it all adds up.

[Bo Hanson]

Yeah. Again, we're working towards ultimate goals here. So if you're, if you're paying off debt, punch it into a debt calculator. Say, okay, if I continue doing the thing that I just came up with, when will I have that knocked out? If I'm building my emergency fund and I know that what my six month of expense number is going to be, and I'm able to create some margin to save towards that, when am I going to complete it? Or if I'm investing, how do I know? Am I on the curve? Am I behind the curve? Am I ahead of the curve? If you can actually project out the behaviors that you're implementing today to see where will I be in the future, you can then use a tool like our know your number course. If you go to learn.moneyguy.com to show you what that finish line is. Okay, are the changes that I'm making today actually going to get me to the finish line that I ultimately want to be at one day?

[Brian Preston]

What I like is you can use this as another one of those tools that allows you, you can change scenarios, you can change. If you're worried about inflation, let's hike up inflation. If you think you're going to do a better rate of return than some of the projections we show on the show. You can jack up the rate of return, or maybe you're scared to death that that was what happened in the past, isn't going to happen anymore. You can lower the return. What I like. One of the things that we built into this tool, Bo, that I like is that if you just save a little bit more, it'll show you how much sooner you potentially. So those little adjustments can actually create just great narratives that not only you can celebrate, but also use as a great communication tool.

[Bo Hanson]

And then as we get to month six, as we begin to round out this journey, we want you to reassess and then repeat the process. And we say reassess. We want you to check both your progress and your systems. Okay. If you're not on track, you just got through step five and you projected it out and it's not going to quite hit exactly where you wanted it to hit. What other knobs can you adjust? Is your progress in line with your priorities? Is the only way you're going to hit your financial goals by sacrificing something else that you care deeply about? And is that okay? Are you balancing life today with life in the future, Brian? This is one you see all the time that people screw up horribly.

[Brian Preston]

Well, I think it's one of those things. What I like about reassessing and just checking out where you are is what got you you. Success in the beginning might not need to be what you're still doing. There's a reason I talk about in the beginning, but dazzle your basic life. Meaning I do still want you making memories, going on vacation. But maybe this is not the time to be luxurious because it's just you don't have the money because that money, that time component and what it could become for you is so valuable. What I worry about is that you continue these behaviors once you get into your later 40s, 50s, and now you have enough army of dollars, your assets. But you're starting to create these weird dynamics within your relationship because you just come off as a miser. We want you to be a financial mutant, not a financial miser. So that's why you do need to reassess your goals and even the behaviors that got you there so you don't get trapped in those things and don't even get to live your best life. Remember your best life. Maybe it was super disciplined in the beginning, but that doesn't mean that you need to be living like that miser in your 40s or 50s, hopefully you get to eventually enjoy the fruit of all this hard work.

[Bo Hanson]

And as you're reassessing this, one of the things we want you to do is be honest with yourself. What are the systems that you have in place that are working well for you, that you're good at? And then what are the systems that you have in place that are difficult? And are there things you can do to make the difficult things easier? And are there things you can do to reinforce the good decisions? And as you begin to develop and define those, should you begin creating new goals? And now this is not what I mean by goal. I want to hit X number X net worth by the time I get to financial independence. That's a great long term goal. But we're talking about the short term, the short cycle goals that you can aim for. Like I want to hit a 25% savings rate, that's a short term goal that you can apply this process to and you can actually hit. Or I want to max out my Roth for the first time this year or I want to pay off X dollars of debt in the next month, period. If you can define your goals in that way and you apply this process to those goals, then what you get to do is you get to just recycle all the way back through the system, back to month one, back to month two, back to month three, back all the way to month six, reassess to find new goals and continue to work towards those goals on a continuous cycle till one day you wake up and you say, holy cow, I'm a financial mutant. And I didn't even realize it.

[Brian Preston]

I'm a big fan of the whole repeat process because a lot of people, I think they think we're playing to just finish. You have a goal, you accomplish the goal, you're done. This is not necessarily only a goal. Yes, you're going to reach milestones, you are going to go by those mile markers, but you're going to find out as you reach more and more success, this is a long term game that you're involved with that. If you do it right and you enjoy the process, you enjoy what you're doing, it doesn't have to stop, it's going to require a tool. And this is a celebration. That's not something to make it feel like, oh my God, it is daunting that this thing just goes, goes on. No, if you're doing this right, this is something you get to celebrate that you get to update your goals. Update and do life in a way that you never ever thought was even possible.

[Bo Hanson]

This is sincere. If you do this, it really can change your life. If you're in a financial situation that you don't want to be in right now, you have to be willing to do something you've never done to change that. You can follow this process. You can take the next six months and you can make decisions today and over the course of the next 180 days that can literally change your life. But you have to be willing to do it. You have to put in the time, you have to put in the work and you have to care more about your financial future because if you don't end up owning your financial future, then your financial future will end up owning you.

[Brian Preston]

Let me give you some quick homework things. Just as a reminder that Beau covered today on the show, you got to go check out Our resource page, moneyguy.com resources go get the free stuff there. But then a lot of you, after this, you're going to be motivated. You're going to want to go to learn.moneyguy.com because that's where you'll be able to find that net worth tool. Get to work on tracking where you're at so that you can look back in a year and have a celebration on all the debts you paid off, all the assets you built up. And then also don't sleep on that know your number course either because that is going to be the thing that lets you know, are you behind the curve, on the curve or ahead of the curve. And if you're ahead of the curve, this is when we get to get away from the miser life. You actually get to start celebrating so that the kids, the family members don't make fun of you and make you a punchline because you're actually adjusting because you have this great assessment tool. Guys, we load you up. This is why we're here, so you can live your best financial life. Thank you so much for letting us create this content for you, for you showing up every month. We don't take it for granted and we're going to keep creating this. I'm your host, Brian Preston. Mr. Bo Hanson. Moneyguy Team out.

[Bo Hanson]

The Money Guy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guide. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.