Regain Control of Your Finances: Three Steps to Create Calm in the Chaos

regain control of your finances, man in chaos
regain control of your finances, man in chaos

Looking back about six months ago, I was just a mom and a business owner. Now, once again at 8:00 in the morning, I’ve been up for hours working, and I’ve completed my transformation back to mom, business owner, teacher. I’m about to take over the parent role while my husband goes to work in the home office. And I’m sure this probably sounds very familiar to lots of you.

I’ve come to realize that one of the biggest challenges of navigating these unknown waters has been feeling completely out of control. And it’s been emotionally exhausting. I was fighting a losing battle. So, as a family we took action to regain control. We’re adapting to the new normal, and personally, I’m focusing on controlling the things that I have some influence over, and trying to let go of the things that I don’t.

Let Go… and Regain Control

It’s a good time to really sit back and take stock. Think about where you can regain control and where you can let go. There’s a lot that we can’t influence right now, but there’s a lot that we can. We can take back control of some little elements of our lives. Small actions can produce some really big wins. We can tighten our grip on our finances, and make our personal lives more manageable.

You can’t control when the kids are going back to school. You can’t control when the pandemic will loosen its grip that it has on the nation. You can’t control the policy makers when they make decisions that affect all of us. But instead of feeling out of control, you can take little steps to feel like you are focusing your energy in the right places. You can regain control of your personal life and you can regain control of your finances.

Making Sense of Chaos

Only by learning from mistakes, my husband and I realized that there are a couple of really effective ways to regain control over our personal lives.  We go through each day being wife, husband, teacher, parent, coworker, expert, student, daughter, son, brother, sister. We have to embody so many different roles all from the same space. And we have to give each of those roles their own time and their own space.

The Importance of Having a Routine

We were trying to be all things at all times. We spent each day dividing the duties up as we went along. My husband and I would both be trying to work at the same time as trying to parent. We had complex schedules of work calls and we tried to bounce through the working day by deciding whose call could be muted so that we could spend time with the children.

This, obviously, didn’t work for anyone. We both felt stressed and guilty and we weren’t giving any part of our lives the attention it deserved. So to regain control of our workday, we totally overhauled our routine.

We Made a Schedule

I get up first, and before dawn. I can work uninterrupted until the kids have had breakfast and are ready for school to begin. Then my husband “goes to work” – upstairs in his home office. Depending on workload, we can then swap back again in the afternoon.

But hopefully at that point instead, we can have some quality family time together. My young boys are usually desperate to get rid of some of their energy outdoors, and I’m always happy to get some fresh air.

Working out a really solid routine helped us to regain control of our days, and I feel so much better for it. In more straightforward times, we of course observe a strict routine that we’re probably not even that aware of. The alarm clock goes off at the same time each day, and if we’re not out the door by a certain time, you know something’s going wrong.

Then, we all have very rigid times for when we’re at work or at school, right? Afterwards, we come home for family time, dinner around a similar time each day, and then bedtime. So why did we think we could freestyle our routine during these chaotic times?! If you feel like you need to regain control over an unstructured day, build yourself a routine and stick to it. 

Control What You Consume

I’m not talking about diets here. I’m talking about the media. The other main problem for me during these strange times has been the news I’ve been trying to take in each day. At the start of the pandemic, I would wake up and devour the news. And it was inevitably a terrible start to the day.

For at least 20 minutes, first thing each morning, I’d try to make sense of what was going on here, what was going on nationally and internationally. It was impossible, but it was all consuming. I’d then have to get straight into work mode, but my mind was racing with all of the numbers, all of the science, all of the different opinions.

So I’d start my workday stressed and anxious and fuzzy headed.

I decided to implement another change. When we constructed our new schedule, I was getting up a little earlier to work. So, I decided, no news until that first work session was done. No news until 8am. I needed to keep up to date, so I knew how my clients would be impacted by what was going on. But I didn’t need to be driven to distraction by worry.

By taking care of the important items first, I could make more conscious decisions about which news I was going to read. Then I could take time to digest it, without feeling panicked and overwhelmed.

Prioritizing work and family – i.e. my most immediate concerns – really helped me to regain control over my day and also my wellbeing. If you’re feeling overwhelmed, turn news notifications off on your phone. Allow yourself some time in your schedule to purposefully search out the news, once you’ve dealt with your own priorities.

Regain Control of Your Finances

And now, I need to put my professional hat on.  Instead of worrying about things outside of our control, it makes much more sense to look to the things that we can have a positive impact on, and enjoy that success. By turning our attention to our finances, we can make some really beneficial changes, quickly.

Step #1:Reassess Your Spending

Understanding where your money is going allows you to use it in the most efficient way possible and in turn to fund your financial goals.  It is so important to know where each dollar is going so when there is money left over it is put to the best use.  One of the first questions clients have when discussing their cash flow is how much should they be budgeting for each expense category.  Every situation is different but the best place to start is to itemize your fixed monthly expenses (mortgage, insurance, loan payments, etc.) then list out the categories for your variable expenses (the expenses that change every month) which includes groceries, dining out, entertainment.  Track your expenses on a monthly basis and categorize them appropriately.  

If you can reduce your expenses, you can increase your savings and make your money work harder.

Step #2: Review How Your Accounts are Invested

When was the last time you reviewed your overall investment portfolio allocation?

As markets move you may wind up invested more or less aggressively than you originally intended therefore increasing or decreasing your investment risk.  For example, a portfolio that was initially allocated to 60% stocks and 40% fixed income may have drifted over time to now be invested in 65% or 70% stocks depending on market conditions.  

Rebalancing may also offer better investment returns as you may be able to take advantage of opportunities to sell high and buy low (selling what is overweight and buying what is underweight).  While the potential benefits of rebalancing are fairly obvious, the timing of this activity is a little more complicated; some items to be considered are transaction costs and tax consequences, depending on your account type.    

Remember that tax-loss harvesting is the silver lining of market volatility and you can really make your losses work for you. A financial advisor can help show you how to “harvest” investments at a loss at the right time, so you can use that loss to lower your tax bill. While you’re doing so, you can rebalance your portfolio back to your target allocation which can allow weaker assets to bounce back. Rebalancing and tax-loss harvesting are both proactive strategies that will help you work towards your goals.

Step 3: Review Liabilities and Outstanding Loans

While interest rates are low, have a look at what that might mean for you and your money. Look at your liabilities as compared to your assets. Does it look like a healthy picture?  You may well be in a better position if you consolidate loans, or refinance your home, for example. 

You may want to have a look at the interest rates, which can change over the life of a loan. Find out whether you should be prioritizing paying any high interest loans off first. You might also want to check your credit report and see if there are any steps you can take to improve it.

Let Go of What You Can’t Control

It’s been a challenging few months, and it can be easy to get caught up in the chaos. You really need to cast aside any worry about things you can’t control, and just focus on the things you can. Your financial situation is such an important example of this, and little steps can be hugely effective. 

Simply knowing that you are making positive changes in any area of your life can offset some of your other worries. If you’d like some help to regain control of your finances or need any further tips, please just reach out and book an appointment. I am here to help you find the calm in the chaos.

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