The True Definition of Financial Empowerment
Let’s admit it: Money can be downright terrifying sometimes.
No matter how much money we do or don’t have, we live in fear of it if it controls us. Paycheck to paycheck living can happen at all income levels, and building a house of cards with your finances can incite a state of fear that never goes away.
But money doesn’t have to be scary.
When we create a financial cushion for ourselves, we suddenly have room to make mistakes or absorb the curve balls life throws at us. Then money can start to feel more like the thing we use to manage our lives rather than feel managed by it.
Financial empowerment isn’t about being rich. It’s about setting yourself on a path to financial wellness, feeling ready for life’s unplanned events, and being resourceful enough to bear the fiscal challenges of adult life.
What’s more, financial empowerment can be within your reach no matter your income. That’s because the beginning steps don’t start with dollars and cents, the beginning steps start with a mindset shift. Let’s get started.
How You Can Financially Empower Yourself
1. Take Charge
First things first: You’ll never feel financially empowered until you take charge of your money. Even though it can feel as though financial situations suddenly happen to us, we can make choices to change them — and the first choice needs to be a decision to be the boss of our money.
Remember what we said above:
Financial empowerment in no way relates to the amount of money you have, but instead how you handle the money you have. Wealthy people can live in fear of losing it all as easily as others can.
So what does it really mean to be the boss of your money?
It means not saying, “I can’t afford…”, and say “I choose not to spend money on __ in favor of __.”
It means not saying, “I’m so broke…”, and say “I don’t have much of a financial cushion at the moment but I can build it up by…”
It means not saying, “I can’t afford to quit my job that I hate”, and say “I’m not enjoying my job right now, but here’s how I can build up a transition fund to leave and find something I like.”
Deciding to become the boss of your moment isn’t a quick cure-all. It won’t help you get out of debt ten times faster, and it won’t enable you to leave that sucky job tomorrow. But what it will do is clear the fog of frustration clouding your brain and help you see what is in your power to control.
And from there, you can get to work on creating a plan.
2. Make a Plan
Just like with financial empowerment, your income doesn’t dictate your need for a financial plan. No matter how much money you make, you can’t maximize its potential until you have a vision and a strategy.
So, what does that entail? BUDGETING. (Yep, you weren’t going to get out of that one.)
Budgets are often misconstrued as setting limits around your money — but that’s not really what they’re about. Budgeting is simply about understanding your monthly flow of money and then putting your money to work for your goals.
Think of it this way. You can go on a road trip with a full tank of gas, but where will you end up if you don’t have a destination in mind?
Sure, you might end up on the greatest adventure of your life. But you could also end up in a ditch.
That’s exactly what a budget can do for you.
Your life goal is the destination, your money is the gas, and your budget is the map. Not only will you want to use your budget as a plan to reach your goal, you’ll want to make room for emergencies, life’s unexpected events, and the occasional missteps.
So, go ahead and daydream. Consider your destinations in life and let your budget outline your journey and the timeline to make it happen.
3. Roll With the Punches
Remember that point above about accounting for traffic on a road trip? That needs to happen in your financial plan, too. But let’s admit it, the obstacles are hard to foresee and unpleasant to confront.
Consider two lessons adulthood tends to throw at us:
Unexpected events are the norm, not the exception.
Adulthood amounts to understanding the trade-offs that come with the decisions we make.
The sooner you understand those, the easier it is to roll with the punches.
Those who feel they can’t stray from their plan or take calculated risks can easily get stuck. And even if they think they’re doing the best thing for their money, the feeling of being stuck can lead to other financial missteps.
If you find yourself making decisions that don’t align with your plan, consider if you need to adjust your plan. How we spend our money reflects what we value. And if that’s out of alignment, you can’t fix it until you get to the root of the problem. For example:
Maybe you realize your destination was what others wanted for you, not you for yourself. (Such as seeing that the “good idea” degree isn’t what you want to do after all.)
Maybe you no longer want what you’ve achieved. (Like when you work so hard for a promotion only to realize you miss the work you were doing when you weren’t a manager.)
Perhaps you’re overcome with boredom, anxiety, or any other number of things that make it emotionally difficult to achieve our logically-driven goals. (This could include boredom in life or at work, anxiety about money or the future, or feelings of financial frustration that are so deep — especially with debt — that you almost can’t imagine how to move forward at all.)
To be financially empowered, you also need to be emotionally empowered. It’s okay if you don’t know what you want — or find that what you want has totally changed. The only way to discover yourself is to start on the journey and learn as you go.
Don’t live in fear of what might happen. Expect the unexpected, practice the ability to be flexible in the face of life’s curveballs, and keep rolling with the punches.
Financial Empowerment Can Be Yours
Following the road to financial empowerment takes practice, to be sure. But when we create a financial plan and, ultimately, a financial cushion for ourselves, then we can absorb mistakes or sudden changes to our plan. We can start to manage our money rather than being managed by it.
And that’s what financial empowerment is all about.
Need a little help executing on your financial plan? You’ll want to bookmark the following series to help you in every stage of your financial life: