"'To invent your own life's meaning is not easy, but it's still allowed, and I think you'll be happier for the trouble."
Imagine you're in the woods. You don't really know where you are, but you know you need to go somewhere. Before you figure out where to go or what path you should take, you need to first figure out where you are. Once you know where you are, it makes sense to figure out why and how you got there so you don't make the same choices when you start your journey. Next, you get to decide where you want to go and figure out how to get there.
Hiking can be fun, but if your objective is to hurry up and get home so you can throw your backpack off, you're missing the point of the journey. Hiking isn't the same as walking on a treadmill; there will be challenges and setbacks, but overcoming those is what makes it fun.
Living a good financial life is much the same as this hiking scenario. You have to understand where you are, figure out where you want to go, figure out how to get there, and understand ahead of time that there will be challenges and setbacks. If you don't like hiking or haven't hiked before, this analogy isn't great, but I hope you can still see the big picture.
What follows is an outline of the steps you can take in order to live your best financial life.
Knowing Where You Are
The first step toward a good financial life is understanding your current situation. This includes financial statements like your cash flow statement (how much money is coming in versus how much is going out) and net worth statement (what you own and owe), but also what your current behaviors are. What are your thoughts and beliefs about money? What do you not like about your situation? What are you doing well in your current reality?
Getting crystal clear about your current reality will help you define what's possible and how you can achieve what you want out of life.
Knowing where you are includes knowing about your behaviors and beliefs about money. These are called money scripts. Money scripts are unconscious beliefs that we have about money that drive our financial behaviors. Sometimes we develop scripts that may have been helpful in the past, but we've grown out of them. Other times we develop unhelpful money scripts right away. Without self-exploration, we are completely unaware that we have these beliefs.
Identifying and changing unhelpful beliefs needs to be done if we want something different to happen.
Values and Purpose
Once the path is cleared for you to design your life, you get to decide what kind of life that will be. Get clear about your values so that you know what you want your money to support. What's the money for? Taking some time to determine what money's role in your life is will give you confidence, and that confidence will help you ignore outside influences.
Who You Want to Be
You already know your current reality, including your money scripts, and you know your values and what money's purpose is in your life. The next question is where do you want to go? You get to determine your ideal future. Sometimes it's helpful to think in terms of what kind of person you want to be. What would that person do? Imagine yourself in your ideal future state.
This choice is up to you.
If you understand where you want to be and that place happens to be different from where you are, then you have some work do. You need to do something different from what you are doing now. Change is hard. Take some time to think about how important it is to make a change, and follow up with why it's so important. Likewise with how ready you are to change. Knowing it's important to change is different from being ready to change. Lastly, how confident are you that you can make a change. What are the traits you have that you can rely on to help you? What resources would you need to boost your confidence?
Systems Over Goals
As you think about your financial future, it's tempting to try to set goals. Goals, however, are outcome-focused. Outcomes are outside of our control. The systems we create, on the other hand, are fully (or at least mostly) in your control. Changing your mindset to think in terms of systems instead of goals will help you focus on things you can control while giving yourself permission to ignore things over which you have no control. Eventually, you'll be able to set up your systems in such a way that you're happy with any outcome you get.