I hope the first quarter of this year has gone well and the remainder of the year will be even better for you.  In order for this to become a reality and not just positive thinking, I encourage you to create a vision and plan to achieve it.  After all, any transformation will require your active participation.  There are many areas to consider but let’s focus on what you want to improve about your financial health this year.

Here are a few things to consider as you resolve to make new commitments:

1. Start a spending plan.

Did you notice I didn’t use the word, budget?  Most people cringe because they, like a recent client, think their lifestyles will become restricted by the process.  However, a slight adjustment in how you think will help you to see this as a rewarding process.  A spending plan is based on your values which determine what you want to do versus anything you can’t do.

A spending plan is the foundation for good financial health and will enable you to maximize your cash flow.  The same advice applies to those with existing positive cash flow that may be several thousand dollars per month.  Extra money that is not allocated for something is usually wasted over time.

If you want to get ahead, include two key categories in your spending plan: savings and goals.

2. Start saving.

Could you come up with $2,000 to $10,000 that doesn’t involve raiding your investment accounts or 401k?  In life, unexpected things happen and it is best to stay prepared and have peace of mind by saving. Savings should cover two major areas: contingencies or emergencies and non-monthly expenses. Both funds are needed to avoid using credit or taking out loans when issues arise.

A contingency fund is meant to cover all living expenses during a major disruption in life like a medical illness, job loss or divorce.  The ideal fund should cover at least six months of living expenses.

A non-monthly expense fund is designed to cover unexpected one-time events like a $500 car repair or anticipated expenses such as your child’s sporting events or graduation activities.

It can be overwhelming once you calculate the money you’ll need. Simply start—initially, the habit of saving is more important than the amount.

3. Reduce debt.

Debt can threaten your financial security and, according to some studies, even affect your health.  If you want to make the most of your money, develop a plan to reduce or eliminate debt this year.  Generally, I discuss how to cut spending and/or increase income and a payoff strategy.  However, I want to offer another perspective.

Debt is a symptom, not the problem.  The causes of debt may not be financial at all.  For example, many people accumulate credit card debt by overspending and not the result of a financial emergency.  Here are a few issues to think about: misplaced priorities (choosing lifestyle over freedom), instant gratification (failing to connect actions to results that could happen from 5 to 10 years later), emotional spending (buying to satisfy an ego), and having no spending plan, i.e., no system for growing assets.

Ask yourself, “Why am I in debt?” and then address the personal issues behind it.

4. Become accountable.

Good intentions don’t automatically produce good results unless there is consistent action.

I’ve helped many people who knew what they needed to do—spend less, save more, and  invest wisely but they didn’t execute well.  Like many of you, life got in the way with busyness, distractions, and a lack of focus on goals.

However, there is one tool that works best at fixing the problem so that you will get good results—accountability.

I must warn you; the accountability process is not easy.  Find someone who is willing to ask the hard questions, challenge you, and will often remind you of your goals—you may not always be in the mood to listen with an open mind.

Regardless of some discomfort, accountability produces results and will help you to make regular, incremental progress towards your goals.  Who will hold you financially accountable this year?


Robin Thompson is a money coach and author who left her fast-track career in engineering leadership to pursue her true calling: to assist women in achieving financial freedom and ultimately, a more purposeful life.

Robin has been featured as the Money Coach for ABC-TV in Detroit and a columnist for the Detroit News/Free Press, Women’s Lifestyle Magazine, Balance Magazine (for First Midwest Bank), Alaska Airlines Magazine, and Health Alliance Plan’s (HAP) Membership Magazine.  She is the author of two books—Increasing Your Cash Flow: A Practical Financial Guide and the 31 Day Action Guide to Increasing Your Cash Flow.