How’s your relationship with money these days?

Money is a touchy subject for many people. We don’t like talking about how much money we make, spend, or save. It touches on our feelings of self-worth and, I’d wager, a lot of us really don’t know what’s going on with our money beyond the paycheque that arrives in our bank accounts every two weeks. Plus, it can be really tough to find good information out there!

If you want to achieve financial independence and reach life goals like buying a home without going into piles of debt, you have to make peace with money. But, how?

Listen to today’s episode of the Own Up Grown-Up podcast with Ben Van Dyke, a financial planner and founder of New Growth Planning. Bust your notebook out for this one.

When our money bucket is leaking and we have holes everywhere, there’s no way of knowing how to save if we’re not even looking at the bucket”—Ben Van Dyke, New Growth Planning

What’s most important to you

Getting smart with your money requires the same prioritization techniques you employ in any goal-setting situation. Figure out what’s most important to you, and what you need to survive, align your goals with these priorities, and then focus on taking small steps to achieve your goals. You will never afford a home if you don’t put away money every month towards your downpayment.

Understanding your finances

Do you avoid looking at your online bank accounts because you’re afraid of what you’ll see? That was me a few years ago! I’d racked up a pile o’ debt and was living paycheque-to-paycheque. I never missed a bill or rent payment, but there were months where I wondered how I would scrape the money together to pay for these things.

The crazy thing about this situation is that I wasn’t that poor! I wasn’t making a lot of money, but I was so terrible at managing it that I felt poor. Like Ben says on the podcast, if you make $100,000, you’ll find a way to spend $100,000 and if you make $50,000 you’ll find a way to spend $50,000.

It’s time to get organized about your finances, and that starts with reading those ugly bank statements to understand where your money goes every month.

Here are some surprising things that I found that added up:

  • Subscription fees (Netflix, cloud-based software like Adobe, etc.)
  • “Unplanned” groceries (aka: snack attacks) and dining out
  • Impulse shopping—I was bad when it came to consignment stores
  • Coffee and alcohol
  • Gym membership that I hardly used

When I started my business, Be Rad Media, I cut out just about everything because I had to. I was running on a shoestring budget and while stressful it was probably the best thing that could of ever happened to me in terms of my personal finances. Now, I track my money almost to point of being obsessed.

Ben’s tips: what you can start doing right now to get smart with your money

Once you’ve analyzed where your money’s going, it’s time to look at where you would like your money to go. Choose your big goals, whether that be a home, traveling, saving retirement, starting a business, or whatever.

The next step is to figure how much you will need to make and save to reach your goals. Create a plan and a budget. Mint is a great site to use for this.

Every month or two weeks, pay yourself first, meaning that once your big bills like rent are paid, put the required money towards your goals. The remaining money is your spending money.

Automate as much as possible. If you’re on salary or you make roughly the same amount of money every month, set up automatic transfers to move your money around. For example, every month I automatically transfer money to two separate savings accounts (one’s a specific big-goal account) and my RRSP. You can also set up automatic withdrawals for bills too. It’s a nice surprise when you login to your bank account to see that your savings has magically grown!

Spend what you have. Prioritize your goals—those things that are most important to you. You can spend the remaining money, but also consider what you’ll spend it on. Can you be a bit more frugal in some areas, like impulse shopping, to free up money for other things you enjoy doing more?

Talk about money

Money shouldn’t be a taboo topic. Talk about it with your partner, your family, your kids. There is so much shame tied to money, but it doesn’t need to be that way! When you talk about money with others, you’ll find out most people feel the same way you do.

Talking about money helps you problem-solve together. Over a couple of cocktails, I learned that a friend uses a traditional budgeting technique—sorting money into allowance envelopes—to stay on track, and I started doing something similar. We can all help each other get smarter about money.

If you feel like it’s time to finally face up to your finances, check out Ben’s business, New Growth Planning, and schedule a free 30-minute focus session with him. Also, check out his Gen Y Money Rockstars Facebook group, where you can learn about all kinds of things from how to do your taxes to how to change your mindset regarding money.

Head to the Library to find useful books on personal finances.