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First Steps: Financial Awareness


Keep in mind, I didn't name this "financial management" or "planning your financial future" or anything forward-looking, strategically-oriented, etc. The first step to becoming financially independent, following the loss of a partner, is taking stock of what and where the different pieces are.


Your financial adviser (if indeed you have one) looks at where your investments are, what their return is, and how much they might grow between now and the time you'll need them, whether for college tuition, retirement, or whatever big things might be coming down the pipeline. She is the forward looking one. I'm better at day to day budgeting and management. What should your budget be? You can't set that until you know where and how you spend and how much you're earning. Let's figure that out. This is a long post. This is, if we're honest, a BIG process to untangle for most of us. And some of it is information we don't always want to know. (For me, it's like chronicling everything i eat and actually seeing, in black and white, how many calories I'm taking in... Horrifying.)


For the day to day peace of mind most of us want (especially after a disruptive dissolution of a personal partnership) we need to know what our "run rate" is -- which is a fancy term for what we spend on a monthly basis. Some of this is obvious. Some of it, you likely already know. Some of it, you have some idea about, and there's a vague notion of what it might be, or what the timing is, but it's a little fuzzy. Other pieces are a black hole of not knowing. Those are the bits that make me the most nervous.


So how do you do this? Obviously, you could call a friend or adviser and get help with this, but ultimately, you want to have a good handle on it yourself. (Just in case you're wondering, this is something I've done for multiple friends and clients before -- sometimes it's part of the divorce process, and sometimes, it's part of the post-divorce "where do I go from here" phase.)


Note: This is not a "sit down and knock this out in an hour" sort of task. Give yourself a block of several hours to chip away at this, and recognize that it's not quick, or simple, or something you "should" be able to complete easily. For most people, it's not something they've ever completed, so allow yourself some grace. And by all means, ask for help when you need it!


Step 1. Look at all the places money comes in and goes out. This means credit cards, bank accounts, savings accounts, investment accounts, etc. Think about making purchases and how you pay for those -- sometimes paypal or venmo - sometimes credit card or Apple Pay, and sometimes cash. Then think of how you fund those. You likely have a checking account of some kind, and a savings or investment account with cash in it that is occasionally used to pay for those things we purchase.


Step 2. Set up online access to all of those accounts and save the passwords somewhere secure. A notebook that you keep in your purse is NOT a secure place to store those. There are several password storage services out there. I've been happy with Dashlane myself, and have used it for a couple of years. It installs in my browser, and on my phone, and keeps everything I need. And we all have a jillion passwords. For more on Dashlane, here's my referral link: https://www.dashlane.com/cs/J8btZk1fwAvw. If you don't use that one, use a different one. (If I were you, and I was you not too long ago - I'd stop here for session 1. It's overwhelming, and the task seems endless. Take this in small chunks.)


Step 3. Be sure you know how much is in each account - whether assets or debts. What do you have, and what do you owe? What are the monthly due dates on the credit card bills? Mine are almost all on the 10th of the month, and the mortgage is due on the first of the month. Paychecks arrive every 2 weeks, and I get income periodically from clients or other sources that come in on an inconsistent basis, though I try to send out bills around the first of the month most months.


Step 4. Download the last 1-2 years of statements - in excel or google sheets format if you can. In pdf or printed format if you can't. Trust me here. In an ideal world, you'll download these, and then sort them and see what repeats. (Why don't I just download the last month? Because there are some repeating expenses that are annual or quarterly instead of monthly, and you want to be aware of those, too. In Texas, we have property taxes that are paid in December or January of each year. For many of us, we have annual subscriptions that come up at different times of year, and sometimes we have something like auto insurance that's quarterly. Just be aware that you won't see every line item every single month.) Again, take breaks! Even if you come back to this another day. Don't try to do this all in one sitting!


Step 5. Start a list. Look first for anything that comes up regularly - like Netflix, health insurance, mortgage, electricity or water, cable tv, or even your nail salon or grocery bill. If you're a spreadsheet person (and this is the simplest method, I promise) start a list in there of the categories and vendors that are regular expenses for you. Make notes of what the expense is for (entertainment, utilities, personal care, food, dining out, insurance, etc.) and make a note of the due date for those that are on a regular schedule. Ultimately, it's helpful to have a calendar with these things on it.


Most of the recurring expenses will show up on the first month of statements. (If you're spreadsheet-inclined, and can export your transactions and then alphabetize them, you can look for anything that has more than a couple of entries, and know that these are your recurring expenses. Try to make sure you haven't missed any of the big categories:

  • rent / mortgage

  • food, both grocery and dining out (pay close attention to dining out, and be sure to include Doordash, or other food delivery services in there!)

  • utilities -- gas, water, electric, cable, phone, internet, streaming services (netflix, hulu, etc.)

  • household services -- housekeeping, trash service, lawn service, pest control, drinking water, and more if you have more

  • medical - insurance, doctors, prescriptions, other medications

  • kid activities - school tuition, uniforms, fees for sports, subscriptions to learning services, tutors,

  • personal care - nails, hair, facials, massages, Botox, whatever you do on a regular basis

  • travel and vacation - if it's a regular expense

  • transportation / auto - insurance, gas, state inspection, maintenance, car payment, Uber or Lyft expenses

Step 6. Look at income in the same way. Do you have a regular job with regular paychecks? If so, this is simpler. You know your paycheck schedule, and you probably know roughly how much comes in each month. Make a note of this. If you don't have regular income, then go through and look at what the last year has looked like and make a rough projection of what the coming year might look like. If you don't know the coming year, look at the coming month. Remember, we're taking baby steps here. We're not solving all your financial questions and issues in one sitting.


Step 7. Add up the monthly expenses and monthly income. Make sure that one of those numbers is higher than the other one. You can guess which one should be higher. If it's not, see where you can trim. If you have several streaming tv services, see which ones you actually watch on a regular basis. Cut or trim the others. (Cable tv is a biggie -- I cut mine the month my ex moved out, and haven't regretted it since. I spend more on streaming services than I used to, but the big cable bill is gone, and the streaming services come and go. I drop Starz when Outlander isn't on, and pick it back up when it returns, and the same goes for Ted Lasso and Apple TV. I *try* to keep the streaming services active while I'm actively using each one, and cycle through which ones are live in different months. I've suspended Hulu for the time being but will pick it back up when The Handmaid's Tale comes back on in mid-September, about the time I shut off Apple TV again.)


This gets you started. This should tell you what it "takes to live" from month to month, and it's a good thing to know, even if you're not changing anything yet. And if you want help with this process, I'm here for you. Message me when you're ready, or when you get stuck. I can help un-stick you.

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