Creating Structures for Financial Order and Stability

Lesson Overview:

In this lesson, we will explore the importance of bringing order to our financial sphere to achieve stability and happiness. Disorder in our finances can lead to dissatisfaction, irritation, and a snowball effect of problems. We will learn practical steps to analyze our financial situation, set goals, and take control of our finances. Before diving into the analysis, we will discover a life hack that helps improve our mood and sets the stage for success. We will explore how organizing our physical living space can bring clarity to our thoughts and tasks, and create a positive mindset for learning and applying financial principles. By creating order in our surroundings and clearing out unnecessary items, we will make room for new opportunities and motivate ourselves on the path to achieving our financial goals.

Lesson Objectives:

1. Understand the negative impact of disorder in our financial sphere.

2. Acknowledge and accept the presence of financial disorder.

3. Cultivate optimism and a positive mindset for financial transformation.

4. Initiate the Analysis process to assess our current financial situation and goals.

5. Recognize the connection between organizing our physical space and structuring our thoughts.

6. Implement a practical task to bring order to our living environment and motivate ourselves for financial success.

First practical task: Before starting the course and completing the financial tasks, it is necessary to bring your home into impeccable order. It is advisable to review all your stuff and get rid of unnecessary one. To make room for something new, you need to clear space. This step is a small self-adjustment and will help motivate you on the path to achieving your grand goals!

So, the order is restored in the house, a no lot of space is freed up in the house and... in your mind. I suggest starting the journey towards financial stability right now. Let's move on to Part 2.

Lesson: Financial Analysis and Budgeting

Download Money Magnet File attached to this lesson.

If you are using Google Spreadsheet - make a copy of the file to get edit mode. ​

In this lesson, you will learn how to analyze your financial flow and create a budget to gain a better understanding of your monthly balance. We have provided a comprehensive file for you to work on, which consists of several tabs:

1. Analysis: This tab serves as the starting point for understanding your financial situation. You will find a table where you can list all your monthly incomes in the left column. This includes your salary, additional income, interest, cashback, subsidies, dividends, and more. It's crucial to accurately calculate all sources of income. If you don't have multiple income streams, we recommend exploring Robert Allen's book, "Multiple Streams of Income," to discover opportunities for earning more money.

2. Goals: In this tab, you can set your financial goals. Take the time to identify what you want to achieve and establish clear objectives for yourself.

3. Planning: The planning tab is where you will allocate your expenses. Analyze and remember all your expenditure categories, such as groceries, utilities, rent, transportation, entertainment, and more. Thoroughly examine your spending habits and ensure that you capture all your expenses accurately. You can refer to your banking app for expenditure statistics to help visualize your spending patterns.

4. Financial Tracking: This tab will be your go-to resource for monitoring your financial progress. It will display the data you enter in the planning tab in a structured manner, allowing you to track your income and expenses.

5. Cash Flow: The cash flow tab will provide an overview of your monthly cash flow based on the information entered in the financial tracking tab. It will help you understand how money moves in and out of your accounts.

6. Savings and Funds: This tab is dedicated to concepts like the "Financial airbag," "Funds," and "Investing Excess." While a brief overview will be provided in this lesson, you will learn more about these concepts in the subsequent sections of the course, particularly from Nick, my husband, in the section about MDH (Money Distribution Hub).

7. Reference: The reference tab serves as a helpful resource containing additional information, tips, and references to support your financial journey.

To get started, download the provided Excel file or use Google Sheets if it's more convenient for you. Throughout this lesson, I will guide you on how to effectively utilize this file, so don't worry if you're unfamiliar with spreadsheets.

Begin by opening the file and navigating to the "Analysis" tab. There, you will find a table where you can list all your monthly incomes in the left column. Include every source of income accurately, leaving no penny unaccounted for. On the right column, carefully note down your expense categories, such as groceries, utilities, rent, transportation, and more. For better visualization, you can refer to your banking app for expenditure statistics.

It's important to become familiar with concepts like "Financial airbag," "Funds," and "Investing Excess." While a brief introduction will be provided in the planning section of this lesson, further elaboration will be shared by my husband, Nick, in the MDH section.

By the end of this lesson, you will have a clear overview of your monthly income and expenses, allowing you to better understand your financial flow. This knowledge forms the foundation for effective financial management and will empower you to make informed decisions.

Remember, take your time, be thorough, and don't hesitate to ask questions if you need clarification. Let's begin the journey toward financial stability and prosperity!

Practical Task 2: Pause the video and work on what was described above. Take as much time as you need; this is a crucial step, so think about each category thoroughly. Every single expense of yours should be scrutinized. You need to face your expenses truthfully. It's important to record even the smallest expenditures, like the ones you spend on coffee during your commute. After completing this task, move on to the videos in Part 3

In this lesson, we will delve into the significance of setting life goals and the importance of allocating finances wisely to achieve those goals. By understanding the role of goals in our lives and mastering the art of financial planning, you will be on your way to improving your overall financial situation.

Once you have analyzed your income and expenses, you may be surprised by the results. It's common to discover that you spend more than anticipated in certain categories or unintentionally save in others. This analysis provides a true snapshot of your financial affairs and serves as a starting point for progress.

After assessing your current situation, it's time to focus on your life goals. Within the context of our method, goals are essential as they represent progress, satisfaction, motivation, and the overall quality of our lives. Improving your finances is likely one of your goals, but it's crucial to recognize that you may have other goals that require financial resources.

To effectively work towards your goals, two key elements must be considered: setting goals correctly and allocating finances wisely. I will share an example from my own life to demonstrate a goal-setting technique.

Let's say I had an old laptop that was causing frustration, and my desired goal was to purchase a new MacBook valued at $1500. When setting a goal, it's essential to clearly define two aspects: 1) what you want to achieve and 2) the required amount of money.

Of course, I couldn't simply withdraw $1500 from my pocket and make the purchase immediately. Here's how I approached it:

1. I opened my Money Magnet file and examined my monthly income at that time.

2. I carefully analyzed my monthly expenses.

3. I identified the amount of money remaining undistributed, which went into my financial reserve. Let's say it was $375.

4. By dividing the goal amount ($1500) by the money in my reserve ($375), I determined that I could achieve my goal in four months without sacrificing comfort in other areas of my life, such as groceries or entertainment.

By following this approach, I was able to purchase a brand new MacBook in just four months without incurring any debts or loans. This method of planned purchases avoids spontaneous spending, which often results in skipped rent or bill payments and accumulating debts. Learning how to plan purchases in advance is crucial for maintaining financial stability.

The simplicity of this approach is evident, yet many people overlook it and choose to rely on debt or loans, often incurring unnecessary interest payments. These interest payments could instead be used to generate income. It's important to note that my husband, Nick, and I were once in the same situation until we learned how to manage and multiply our money effectively.

By mastering the goal-setting technique and allocating your finances wisely, you can avoid unnecessary debts and make progress towards achieving your life goals. This lesson will equip you with the knowledge and tools to plan your financial resources strategically, ensuring that your money works for you.

​So, here's the third practical task. Open the Money Magnet file on the second tab called "Goals," take quality time when no one disturbs you, think carefully, and write down your goals. Also, write down the amount needed to achieve each goal.

Learn the importance of planning in our lives and finances. Discover how to proactively plan expenses based on income, avoiding "living on credit." Explore Funds, separate "envelopes" for specific purposes. Examples include the Child Fund for child-related expenses and the Health Fund for medical emergencies. The Gift Fund helps us prepare for unexpected gift-giving situations. The Travel Fund lets us save for dream vacations. The Clothing Fund ensures we can afford quality clothing when needed. Additionally, establish a Financial Airbag, an account with at least six months' worth of salaries, for unforeseen circumstances. Set aside a portion of income monthly to build the Financial Airbag. Incorporate these strategies for better financial control and security.​

Fourth practical task. Based on the "Analysis" data, where you listed all your expenses for the month, you need to switch to the planning tab, where you will see two tables to fill out.

In the first table, you need to plan your monthly expenses.

First, enter all the essential items, such as loan payments, groceries, etc., and specify the amounts required for each.

Don't forget about the Financial airbag and Funds!

In the second table, you will see a breakdown by months within the year.

Think carefully and enter all the birthdays, holidays, major purchases, vacations, and other significant expenses that usually require advance preparation. Opposite each point, write down the amount you think is necessary for each one.

Lesson: Expense Optimization and Maximizing Income

Take full control of your finances by optimizing expenses and maximizing income. Understand the significance of seemingly small expenses over time. Explore real-life examples, like daily coffee purchases, and calculate the long-term impact on savings. Discover the power of refraining from unnecessary spending and redirecting those funds to interest-bearing accounts. Learn to value even small amounts and avoid dismissing them as insignificant. Identify and eliminate unused subscriptions and services to free up resources. Lastly, explore income opportunities offered by banks, such as cashback on purchases and interest on deposits. Utilize these strategies to achieve better financial control and make the most of your money.​

What do I want from you in the fifth practical assignment?

Open your working file on the "Analysis" tab, where you listed all your expenses, and honestly admit to yourself what you could easily give up.

Check all your subscriptions, automatic payments. Identify the irrelevant ones. Cancel subscriptions that are unnecessary. Calculate the amount you have saved.

Great! Now you will add this amount to your financial airbag every month.

Even if you have only saved $10 per month, it's an excellent result.

Remember that within the scope of your daily expenses, this money you would simply wouldn't feel.

But now, you will purposefully save and multiply it.

How? Nick will tell you about it in the next part

Lesson: Expense Optimization and Maximizing Income

Take full control of your finances by optimizing expenses and maximizing income. Understand the significance of seemingly small expenses over time. Explore real-life examples, like daily coffee purchases, and calculate the long-term impact on savings. Discover the power of refraining from unnecessary spending and redirecting those funds to interest-bearing accounts. Learn to value even small amounts and avoid dismissing them as insignificant. Identify and eliminate unused subscriptions and services to free up resources. Lastly, explore income opportunities offered by banks, such as cashback on purchases and interest on deposits. Utilize these strategies to achieve better financial control and make the most of your money.​

What do I want from you in the fifth practical assignment?

Open your working file on the "Analysis" tab, where you listed all your expenses, and honestly admit to yourself what you could easily give up.

Check all your subscriptions, automatic payments. Identify the irrelevant ones. Cancel subscriptions that are unnecessary. Calculate the amount you have saved.

Great! Now you will add this amount to your financial airbag every month.

Even if you have only saved $10 per month, it's an excellent result.

Remember that within the scope of your daily expenses, this money you would simply wouldn't feel.

But now, you will purposefully save and multiply it.

How? Nick will tell you about it in the next part

Download or use google sheet file attached to this lesson.

To edit it - make a copy. Watch the video manual. Inside the document there are also user manual in each tab. ​