Deciding to take control of your money and learn more about your personal finances is a great step. But it can feel intimidating if you are not sure where to start or what to do. Don’t get overwhelmed in trying to learn how to do everything immediately. Here are 5 easy steps you can start taking right now to feel in control of your money.
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Table of Contents
Take note of every account you have
So many times in a relationship one person manages the money. When this happens the other partner may not even know where the money is kept or how to access it. This can be a recipe for financial infidelity.
In our household, we have multiple different accounts (chequing account, high-interest savings account, investment accounts, etc.) so there are a lot of moving parts. I am the one who manages and tracks our finances but what if something were to happen to me?
My husband would need to know where all our money is and how to access it.
This is an important and easy first step to feel in control of your money.
Schedule some time to sit down with your partner to go over all your accounts.
Need help keeping track of everything? I’ve got your covered. Check out my Getting Started Bundle for everything you need to keep track of your accounts.
Request your free credit report
Requesting your credit report from either Transunion or Equifax is free and easy. Once you receive your copy of your credit report, look it over for errors or fraudulent activity. Fraud happens more often than you may think. According to Simple Rate Canada, 71% of credit card accounts have reported at least one case of fraud.
And don’t worry if you are not proud of your credit score.
Your credit report only includes all of the information related to borrowing, it doesn’t include a score. The main thing is to review it for accuracy. Mistakes do happen (so does fraud) and you don’t want a mistake on your credit report to affect your credit and borrowing ability.
For more information on how to get your free credit report in Canada, read: Free Credit Report in Canada – Why You Need It.
Schedule a monthly money date
Scheduling time to talk about money with your partner if you have one is a great way to get onto the same page financially.
What is a money date?
A money date is a dedicated time for you and your partner to discuss your finances and goals in a comfortable open way.
In my experience, the easiest way to have a money date is to block out some time (usually 30 minutes to an hour works great) and to have a few questions or topics that you would like to discuss during this time.
What to focus on in a money date?
Here are 10 topics or questions you can discuss on your next money date:
· What is our investment strategy?
· What level of risk are we comfortable with within our investment portfolio?
· How much money in our emergency fund would make us feel at ease?
· Where is the best place for us to keep our emergency fund?
· If we won $1 million tomorrow what would we do with it?
· How long do we intend to work?
· What is our number one money goal right now?
· Where do we see ourselves financially in the next 5 years? 10 years?
· Are we on track to reach our retirement goals?
· What did our expenses and income look like last month?
For each topic have both partners think about their answers and then respond individually. The purpose of these questions is to get you thinking about discussing your money. The more you discuss money and personal finance the more comfortable it will feel and the more you will feel in control of your money.
Personal example
A few weeks ago hubby and I had a money date.
Even though we talk frequently and openly about our finances those conversations are often on a superficial level and I wanted to discuss some of our long-term goals.
The conversation started with us talking about some options on what to do with my defined benefit pension. I know that I will not teach until I hit my magic number so I wanted to make sure that we had a plan for the day I decided to leave my job.
By the end of the conversation, we didn’t have a plan on what to do with my pension, but we had a plan on what questions we needed to ask. And what information we needed before we felt comfortable making the decision.
This is a big decision and one that cannot be reversed so I want to make sure we make the best choice for our family.
I foresee pensions being another topic of discussion in a future money date for us.
Review and analyze 3 months of expenses
Taking the time to review your monthly expenses is probably one of the easiest first steps that can have the greatest impact. If you have ever wondered where your money went, then you need to take some time to track your expenses.
This is a judgment-free zone and the goal of this exercise is to gather information.
The expense tracking workbook (that you can get for free right here) will help you keep track of all of your expenses as well as help you analyze them.
Knowing what your expenses are is one thing, taking action to optimize them is the next step.
How to analyze your expenses?
Besides putting your expenses into budget categories, you can also review each expense. Looking at each line item, decide if you want to keep the expense as is, eliminate the expense, negotiate the expense, or optimize it.
Some expenses may not be able to be changed, for example, your mortgage payment. While other expenses can be eliminated (maybe you decide to cut out cable), negotiated (for example calling your internet service provided to negotiate a lower rate), or optimized (shopping around for a better phone plan).
Credit Canada lists 5 benefits to tracking your expenses:
- Can help you create a useful budget
- Assists in curbing unnecessary spending
- Helps simplify and consolidate
- Enables you to catch quick wins
- Keeps you on track for your goals
Calculate your net worth
Calculating your net worth is the only one of these tips on how to feel in control of your money that involves math. But don’t worry, it’s simple addition and subtraction (and you can use a calculator).
Your net worth is a snapshot of where you are financially right now. And once again, there is no shame or judgment involved with the number. Your net worth only represents where you are right now and not where you will end up.
To calculate your net worth you add up your assets and subtract your liabilities (debts).
And if when you calculate your net worth and the number is negative (meaning you owe more than you own) don’t worry about it. If you apply everything else in this post the next time you calculate your net worth the number should be trending in a positive direction.
You can’t manage what you can’t measure.
Peter Drucker
The benefit of calculating your net worth is that it is a number that is easy to track. I calculate our net worth twice a year but I know people who calculate it more frequently.
Bonus tip for how to feel in control of your money
If you’re feeling up for it, here is a bonus tip to help you feel in control of your money, do a one-month money takeover.
For a money takeover whoever was previously not responsible for the day-to-day money management takes over that role for one month. But to not add extra work to that person, the other partner takes something off of their plate.
Essentially you and your partner change roles for one month.
That month you work together on the household money management and it will help you gain a greater understanding of where your money goes every month.
To do this, record all the steps, accounts, and login information for anything do to with the household money management. This helps to create a system for the process. And when you write it down you can refer back to it as needed. Keep that written down system someplace safe, just in case.
Although this may seem very daunting at first, it can be a very empowering exercise. By the end of the month, you will feel in control of your money. This confidence will carry forward to other aspects of your life as well.
The bonus of a money takeover is that if something were to ever happen to your partner, you would feel ready to step in and manage the household finances.
How to feel in control of your money recap
1. Take note of every account you have
2. Request your free credit report
3. Schedule a monthly money date
4. Review and analyze 3 months of expenses
5. Calculate your net worth
BONUS – One-month money takeover
/>Final Thoughts
Money does not need to continue to be a taboo topic. The more we normalize conversations about money and bring it into the light the less shame there will be around money.
If you want to take control of your money (to eventually take control of your time) I applaud you. Start with an hour a week and begin to implement the steps above. It doesn’t matter what step you decide to start with, all are good first steps.
Focus on showing yourself some grace instead of feeling ashamed or embarrassed. With these easy steps and just an hour a week you will feel in control of your money in no time.
I just bought a new house and am renting my previous property. I think now (for the first time in a long while) I am going to really sit down and look at my expenses and make sure I have everything lined up properly. So much of my finances are on autopilot that I just make sure scheduled payments get made and then don’t worry till a contract is up for renewal but now I think I’ll make sure to take the time. I do most of the other things on your list so it makes me feel pretty confident I have things under control.
Pam – I love that you have things on auto-pilot. The benefit of that is that you don’t need to review your expenses every month. Once you have your money system in place things just go and you feel in control of your money without having to think about it. But I agree that it’s always good to check in from time to time especially when the situation changes.
I have never considered having a ‘money date’ before, but it sounds like such a great idea! My husband and I are pretty open when it comes to discussing finances in our house. That being said, it’s often a conversation that happens in passing and likely doesn’t get the attention that it should. Sitting down specifically with that focus would really help.
Britt – if you decide to have a money date my advice would be to just pick one topic to discuss at a time. This will enable you to go in depth on the topic without getting distracted.
These are really great tips, thank you for sharing. Money can be such an overwhelming subject some times. I really love the idea of setting a “money date”, and that way there is a more set time scheduled for this topic that you can prepare for. Great tips! 🙂
Thanks Maritime Meg – sometimes when it comes to money being intentional, like setting a money date can help us feel more in control. If nothing else, we feel in control of the scheduling of the money date and that’s a great first step.
Haha, a “money date”, I love it!
Jenni and I have managed to turn our evening walk into routine little money dates, I think. We do a little catchup about the topics you mentioned and highlight any questions/suggestions either of us has.
Once per month we also do a full budget breakdown to make sure we both feel in control of our finances and understand what the other person’s goals are. I think it’s very important to have open communication about money in relationships like you mentioned!
Chris – it sounds like you are already having money dates. Going for a walk is a great way to talk about money. Because you are not face to face with the person you are walking with, it can feel less confrontational.