The 3 Cs Recipe For A Healthy Financial New Year
hr.com, by David Cunningham, January 09, 2019
As we head into the New Year, many of us will be looking to soothe our “credit card headache” from the holidays. You don’t need to have holiday debt to benefit from healthy finance practices, though. Whether you’re staring down fresh debt, or you’ve already got a clean financial slate, anyone can use the “3 Cs Recipe” to achieve long-term financial health or to meet other financial goals.
The 3 Cs Recipe
1. Clarity: If you're like most people, what you call “facts” are stories or interpretations about the facts. Most people confuse their own conclusions with what's actually true. For example, a financial fact is, “I owe $50,000.” A financial story is, "I'll never in my lifetime be able to pay this off," or "I'm stupid with money." It's important to separate fact from fiction.
Write down everything you owe, then separate the facts from the stories you've made up. Remember, your interpretations of the financial facts are not necessarily true, and regardless, they may get you in trouble by limiting what you consider possible.
Clarity quick tips:
- Get clear on what the facts are and what your story is about those facts.
- Write down financial facts.
- Limit “financial fiction.”
- Think like a business and cut expenses.
2. Commitment: Once you are clear about what is actually fact versus fiction regarding your financial situation, you can then ask yourself the question: "What is it I am really committed to?"
Is it paying off a portion of your debt by the end of the year? Is it paying off all your credit card debt? Maybe you want to start saving money. Create a commitment that turns you on, inspires you, and is a feasible goal for 2019.
Commitment quick tips:
- Be inspired.
- Create a project.
- Get accountable; tell someone else.
3. Calendar: This is the part of the recipe most people skip, and then they fail. Once you've got clarity about the facts and your commitment is front and center, it's important to take the right actions at the right time. Wishing does not make it a reality. Only one thing will alter your situation: action.
Go to your calendar and 1) schedule the specific actions you will do, then 2) schedule the specific dates they’ll be done by.
Just as you need a reminder on your kitchen fridge or a note on your phone to remember what’s on your grocery list, you need memory joggers for your finances. Use auto bill-pay options or smartphone alerts, or even use a wall or desk calendar as a visual reminder of what you will pay when. This way, every month, you'll be prompted to take the actions that will lead to success.
For example, if you want to pay off your credit card by January 2020, map out what payments you will need to make monthly or bimonthly to make that happen. You could also look at the calendar today and mark the date one month from now that you commit to cutting down your expenses by. Then, look over all you spend on a daily, weekly, and monthly basis and see where you can make changes.
Pay off high interest first, as opposed to high balance. It's best to first pay your minimum on all cards and then, with whatever extra you have in your budget, target the card(s) with the highest interest rate first. Be sure to schedule your minimum payments with auto-pay and auto-reminders so you're sure to pay on time every month. Then, schedule extra payments to the high-interest-rate cards.
Calendar quick tips:
- Plan for success.
- Schedule money milestones.
- Use auto-pay/auto-reminders.
Make this the year you forgo the “credit card headache” and instead use the “3 Cs Recipe” to create financial peace of mind.
To read this and other articles like it, visit the hr.com website.