Now that you have a grounded review of 2011 under your belt, you’re ready to look forward to 2012 with clarity, awareness, and consciousness.
You know what worked, and didn’t. You’ve celebrated your victories, big and small.
It’s time to take all those gems and insights, and turn your attention toward this brand new year!
Part Two of your annual money practice is all about clarifying your vision, and bringing it into your current reality so that you can set up appropriate (not to mention juicy and inspiring!) goals and intentions.
Here’s how we’ll map out 2012:
- Get Current
- Define Your 3 Lifestyle Tiers
- Bring in the Numbers
- Choices, Intentions, Clarity
Onward . . . !
Phase One: Get Current
We shift our focus from one year to the next with one essential question: What is current for me?
Take time to assess what’s true and what’s present in your current situation. We want to distill the general theme and context for the upcoming year.
Where are you at in your life?
Ask this question and then consider your goals for the coming year in light of its answer.
Maybe you just got married or maybe you’re about to have a baby. Maybe you’ve just gotten divorced or your youngest child has just left home for college. Perhaps you’ve just lost your job or started a new business. Maybe you’re in the midst of serious health challenges or a major career change. Headline features such as these will obviously influence your overarching goals and intentions for the upcoming year.
For instance, if you’ll be having a baby in the next year, perhaps your main goal will be to save as much money as possible so you can take an extended leave from work. If you know you want to purchase a house in the next year or two, maybe your priority will be to pay down a bunch of debt so you have a better chance of qualifying for a mortgage. It’s also possible to establish your main goals in the absence of major imminent events. Perhaps 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.
Phase Two: Define your 3 tiers
The next step in your annual practice is the creation of your map of intention, which I like to teach in 3 tiers: the Basic Needs Plan, the Comfortable Lifestyle Plan, and the Ultimate Lifestyle Plan.
The Basic Needs Plan consists of the basic, bottom line needs for your life.
The Comfortable Lifestyle Plan, as the name suggests, introduces a level of comfort in your lifestyle. Here there is money available above and beyond what your basic needs require.
The Ultimate Lifestyle Plan takes the progression another step. Here you have sufficient income to live out the fullest expression of your desires and intentions.
First, write out your thoughts, feelings, and definitions for each of the tiers above. Don’t include numbers yet.
Here, you simply want to grasp what each of these three lifestyles mean to you. Take out your journal and free write about each tier, to get a deep sense of what the distinctions between them mean to you.
Phase Three: Bring in the numbers
Next, apply numbers and totals to each tier.
This is where you calculate your average monthly expenses (including savings, debt repayment, and investment) for each of the 3 tiers.
Pull out the old-fashioned pen and paper for this one. Below is a snapshot of a handout from my Homestudy Program to give you a visual for how you can list and total up all of your expenses.
Using a template similar to the snapshot above, begin by listing out all of your expenses that fall into the “Basic Needs Lifestyle” tier. I’ve listed out some of the standard categories of expenses, but you’ll want to customize these to your life and spending habits. Add up the total expenses for your “Basic Needs Lifestyle”.
On a second sheet of paper, make a list of all the expenses in your “Comfortable Lifestyle” tier. This will include everything from the “Basic Needs” tier, plus any additional expenses that come into play for you in “Comfortable Lifestyle” tier. Consider which additional you’ll include here, referencing the definitions you came up with a moment ago. Add up your total expenses for your “Comfortable Lifestyle”.
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, reference what the words “Ultimate Lifestyle” mean for you to help you discern what’s included here. When you have everything listed out, total up your expenses for the “Ultimate Lifestyle” tier.
Remember, this is completely personal, and changes 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, where it was under my “Comfortable Lifestyle Plan”.
No hard and fast rules here. We’re increasing, decreasing, and shifting all the time based on our priorities at any given moment, and the context of the year we’re living.
Phase Four: Choices, Intentions, Clarity
You now have clear definitions of what each tier feels like, plus a list of expenses and total dollar amount for each tier. You’re ready to make choices.
But first: Pause.
Breathe. Body Check In.
And celebrate another huge step you’ve just taken! Looking squarely at your numbers in this way is courageous, mature, responsible, and rare!
So . . . Which one are you moving towards this year? What choices are you making?
Take a look at your monthly income, compared with the expense totals for each tier. Get real and honest with yourself about which tier is appropriate for 2012. Which financial lifestyle is yours right now, in this moment?
Once you land with which 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 (aka Mint, Quicken, Quickbooks etc).
Remember, these choices emerge from inside of you. You are choosing, and continue to choose. It’s relationship.
It’s a framework that is flexible and dynamic.
Congratulate yourself for taking this time to attend to your annual money practice. You now have a framework to be in relationship with your finances regularly.
Use it well. Review it often. Revisit and adjust each month.
I hope the tools and invitations you’ve found here have opened doors for you as you continue to deepen in your relationship with money. There are so many pieces to this puzzle. We all have some things in place, and areas that need more attention. My intention for this article, and all of my posts here, is to offer you pieces of this puzzle to support you in becoming more and more conscious around your relationship with money.
Wishing you a beautiful, successful and conscious 2012!