Psst … If you missed it, do check out the first part of this practice. In Part One: Looking Back, I guide you through a mini money ritual to honor and close last year. Because every transition (whether it’s a new year or a whole new phase of your life) involves saying hello to the new and saying goodbye to the old.
Once you have done a thorough, grounded review of last year — including your numbers, your emotions, and all your celebrations around money — you’re ready to look forward.
Part Two of your annual money practice is about clarifying your vision, getting current with reality, and setting up an appropriate (and inspiring + heartfelt!) map for the coming year.
We’re about to take those gems + insights from the past year and turn them into fresh goals + intentions for the coming year. To set the groundwork for a brand new year of your money story. One fueled by clarity, awareness, and consciousness.
Love Up your Surroundings
Just like you did in Part One, it’s important to create a space for this work that feels good to you. Perhaps the setting you created for the Looking Back phase feels perfect for Part Two, too.
But maybe you want to shift your environment a little bit here. Clear off that desk and light a fresh candle. Throw open the curtains. Shift the music. Bring in your sweetheart. Switch from milk to dark chocolate. Whatever feels good and meaningful to you is the right answer.
Here’s how we’ll map out 2017:
1. Get Current
2. Define Your 3 Lifestyle Tiers
3. Bring in the Numbers
4. Choices, Intentions, Clarity
Phase One: Get Current
You’ve just said goodbye to this current year. And you’re about to welcome next year. Shifting from looking back to looking ahead hinges on one essential question:
What is current for me?
Now’s the time to look at what’s true for you … right now.
- In the Big Picture Vision of your life, where are you, right now?
- What’s the general theme + context for this upcoming year? How does that affect your money goals?
- Life milestones are also money milestones. Have you just gone through a big transition? (Or are you about to?) Marriage, baby, divorce, empty nest, job loss, new career, health challenges? These will all deeply influence your overarching goals and intentions for the upcoming year.
How do your life milestones translate into money goals this year? For instance: if you’ll be having a baby in the next year, perhaps your main goal is saving as much money as possible so you can take an extended leave from work.
No big money or life milestones on your radar? You can still establish big goals. Maybe you want to shift your chronic pattern of overspending, and so your main goal for the year will simply be to live within your means, not adding a single cent to your debt. Perhaps it’s your time to do some emotional healing work around money, or welcome some bookkeeping support, or start getting honest with your sweetie. All of these are wonderful, important goals.
Phase Two: Define Your 3 Lifestyle Tiers.
The next step in your annual practice is creating your Map of Intention. (Doesn’t that sound so much better than “budget”?!)
I like to teach the Map of Intention in 3 tiers:
1. The Basic Needs Plan. These are you basic, bottom line needs for your life. And only you decide what that means. Does it include organic food? Is a daily latte a must? You’re the boss here.
2. The Comfortable Lifestyle Plan. Here, introduce a level of comfort in your lifestyle. What’s the next level up from basic needs, for you? What’s included? How much?
3. The Ultimate Lifestyle Plan. Here we progress another step. Imagine having sufficient income to live out the fullest expression of your desires. All your intentions are funded. Does this look like winning the lottery to you? Is it actually a surprisingly simple lifestyle? Take the time to clarify what this means for you.
First, write out your thoughts, feelings, and definitions for each of the tiers above. Don’t include numbers yet!
We want to start by getting a deep sense of what each tier looks like — and feels like — for you. Grab your journal and free-write about each tier. What distinguishes them, for you?
Remember: you are the only one who can define these for yourself. This is completely personal. No wrong answers, here!
These tiers will evolve over the course of your life. For example, there have been years in my life where organic food was under my “Basic Needs Plan,” and other times when it moved into my “Comfortable Lifestyle Plan.”
So. No hard and fast rules here. You will trim down, increase, shift, and evolve all the time, over the course of your life, depending on your priorities at any given moment — and the context of the year you’re living.
Phase Three: Bring in the Numbers
Now it’s time to take that deep visioning — and get practical and smart about it. We’re marrying heaven and earth here. Spirit and numbers. Yin and yang. This is the real, beautiful work, my friends!
So. Take each of your 3 Lifestyle Tiers and apply numbers and totals to them. Use whatever format you like, here. Pull out the old-fashioned pen and paper. Create your own Excel spreadsheet. Do what feels grand, for you.
1. Basic Needs Plan. List out and total up all of your monthly expenses. Don’t forget those big ticket and rainy day expenses that happen less frequently. (Insurance premiums, car maintenance, medical bills, etc.) Divide annual expenses by 12 to include in a monthly budget. Also include savings, debt repayment, and investments — if those fit into this tier, for you.
I’ve listed out some of the standard categories of expenses to get you started — but make sure to customize this to reflect your personal lifestyle, values, and spending habits.
Add up the total expenses for your “Basic Needs Lifestyle” and calculate your average monthly expense.
2. Comfortable Lifestyle Plan. On a fresh sheet of paper, make a list of all the expenses in your “Comfortable Lifestyle” tier.
Remember: this will include everything from the “Basic Needs” tier, plus any additional expenses that come into play for you in “Comfortable Lifestyle” tier.
Refer back to the definitions you came up with a moment ago. Consider what additional expenses you’ll include here. Add up your total expenses for your “Comfortable Lifestyle,” and calculate your average monthly expense.
3. Ultimate Lifestyle Plan. Finally, on a third sheet of paper, list out all the expenses that fall into your “Ultimate Lifestyle” tier.
This will include everything you listed out from the “Comfortable Lifestyle” tier plus everything you’d add in to reflect your “Ultimate Lifestyle.” Again, refer to your freewriting about what the words “Ultimate Lifestyle” mean for you to help you discern what’s included here.
Once you’ve listed everything out, total up your expenses for the “Ultimate Lifestyle” tier and calculate your average monthly expense.
Phase Four: Choices, Intentions, Clarity
Now, you now have clear definitions of what each of these 3 Tiers feels like to you. And everything that includes. Plus, you’ve created a list of expenses + dollar amounts for each one.
It’s time to make some choices. Set intentions. Get clarity.
But first: Pause. Breathe. Do a body check-in.
Already, this is a cause for celebration! You’ve just taken a huge step towards creating a more honest, aware, and conscious relationship with money. Looking squarely at your numbers in this way is so brave. Loving. Responsible. And rare!
Pat yourself on the back. Nibble a treat. Do a little dance. Celebrate this victory.
Right now, which of your 3 tiers are you in? And which one are you moving towards in the coming year?
Take a look at your current monthly income and compare it with the expense totals for each tier. Look those numbers squarely in the eye. Breathe. Be honest and gentle with yourself.
Which financial lifestyle is yours right now, in this moment? And which one is realistic to move into in 2017?
Once you land on the tier you’re going for this year, then you can input all of that data into the budgeting area of your bookkeeping tool of choice (Mint, Quicken, Quickbooks etc).
Remember, these choices emerge from inside of you. These are yours. Allow this exercise to bolster your confidence, clarity, and sense of empowerment.
And: none of this is set in stone. You will continue to make choices, throughout the year (and your life!). All of this is a reflection of your relationship with money. And it is flexible, dynamic, evolving.
So let this framework support you in creating more of the money relationship you want. Peaceful. Aligned. Informed. Mature (whatever that means to you).
Congratulate yourself for taking this time to love up your money relationship in this way. You just did an annual money practice! And: you now have a framework you can rely on to check in with your finances on a regular basis.
Use it well. Review it often. Revisit and adjust every year or every month, if you like.
I hope the tools and invitations you’ve found here have opened some doors for you in your relationship with money. Did you find this easy? Surprising? Challenging? Hilarious? All of this is just perfect.
Creating your own end-of-year money practice is just one piece of the puzzle as you deepen your relationship with money. As you mature, grow with it, and become more conscious and honest and confident with it.
Wishing you a beautiful, sovereign, and successful next year! However you define that!