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2021: 3 Steps to Get Your Financial House in Order

Updated: Feb 2, 2023

New Year’s greetings! 2020 was a challenging year in many ways and it was especially challenging financially for many of us.

Like me, I’m sure you are ready to turn the page and begin 2021 on a great note. I’m here to ensure that 2021 is a financial success for YOU. I will introduce you to a simple 3-step process using The FI Woman HouseTM. Let’s get started with building your financial house.

The FI Woman HouseTM

The FI Woman HouseTM shows a simple 3-step process for achieving financial independence. Like a real house, it is made up of a foundation, pillars and a roof. Let’s take a deeper look.

Step 1 (The Foundation): Knowledge, Tools, Goals and Habits

The first step to achieving financial independence is a solid foundation of knowledge, tools, goals and habits.

Knowledge: How often do you read books, articles, listen to podcasts, or watch vids discussing tips and strategies for improving your finances? It is hard to improve if we do not expand our knowledge! Here are some resources (besides this website, of course!) to get you started:

Tools: Managing your finances and reaching financial independence doesn’t need to be tedious. There are tools, from apps to spreadsheets, that help you record, track, measure and analyze every financial move. Here are some great tools to get you started.

Goals: It is hard to achieve success in anything if you do not have a clear idea of what you are working towards. How will you know when you get there? To set goals for yourself, think of them in 3 ways: short-term (<1 year), medium-term (1-5 years) and long-term goals (>5 years). To make your goals meaningful, use the S.M.A.R.T criteria as a guide. SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound.

Habits: Our habits shape us. What are your financial habits? Are they habits that serve you well, or do you need to change them? Take the time to observe and assess your financial habits; be brutally honest and make note of the habits that are holding you from financial success.

Step 2 (The Pillars): Cash Flow and Net Worth

Cash Flow: Without cash flow it is hard for anyone to save, invest, or take advantage of opportunities. Put simply, your cash flow is: Income (money flowing in) minus Expenses (money flowing out).

Simple, right? In theory, yes, but in reality, many people do not know their cash flow position. They have a vague idea of how much they spend but do not have a clear picture of their expenses. Do you know your cash flow? Here are some resources to help:

Personal Capital: Link accounts and track cash flow and net worth.

Net Worth: Your net worth is a good indicator of your financial progress. Net worth is: Assets (what you own) minus Liabilities (what you owe). There are many schools of thought on how to calculate net worth. I recommend thinking about everything you own with value and everything you owe. It is ok if you are not precise.

Step 3 (The Roof): A Financial Plan

Finally, Benjamin Franklin said “If you fail to plan, you are planning to fail.” I love this quote because it sums financial independence in a nutshell: plan, plan, plan. Steps 1 and 2 above are important building blocks for your financial house, but if you don’t tie it all together, you are doomed to fail.

What is your plan for achieving your goals? Where have you written or documented your plan? With whom have you shared your plan? Who is your accountability partner or partners? How do you track progress? How often do you review your plan to make sure it is still appropriate? These are important questions to answer as you develop your plan for achieving financial independence.

The FI Woman Plan Template is a great tool for tying all the pieces together and gets you well on your way to achieving financial independence in 2021.

Need a sounding board or additional support? Take advantage of a complimentary planning session. Consider it my new year’s gift to you!



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