S5 E21 | How to Start Financial Planning

We have over 15 tips that will change someone's life. In this episode, we're talking about how to start your financial plans, the basics, the beginnings, the blocks. And if you already know this information, please share it with someone in your circle, in your friends and your family that would need to learn how to start to create an amazing path to true wealth.

In true Broke to Woke fashion. Brittany Turner. I would love to talk about how some of our listeners might feel about the last episode. Right. The future of money future. We're thinking and talking and discussing 20 years, 10 years, 50 years, 15 years. But that might be too far. But what if some of our listeners out there are struggling, thinking two days ahead of time, two weeks ahead of time?

Oh, yeah.

And I mean, the podcast is called Broke to Woke. So we want to help those who might be in that spot where you're beaten, you're downtrodden, and you're at a low point. How do we go from broke to woke? What do they do?

Well, yes, Universal Basic income isn't here yet, so you still got to get after it, people. You're going to have to get after it. And so we're going to talk about how to shift your energy from Broke to woke shortly. But right now I want to read you how we do our financial planning for beginners. And then we can go into more and more in depth strategies. But if you've never made a financial plan because schools spent so much time teaching this.

Yeah.

And you just weren't paying attention.

You weren't paying attention when they were teaching you. This went over your head.

Just in case you missed that class.

Here'S a couple things that you can start doing. So number one is just know where you are. Again, you can't go anywhere you want to be unless you know where you are. And don't get lost in beating yourself up. I should have. I should have, I should have. Stop shooting all over yourself.

Okay, don't do it. Don't look good.

Do it. Just understand where you are, make a plan and work the plan. So number one is assess your financial situation. Where are you currently at right now? And you can do that by understanding your net worth if that's important to you. If you actually have anything, that's a good thing to calculate. And so you can summarize all your assets, all the things you own. And that can be anything from a house. Again, not all these are truly definitions of assets because in our opinion, assets actually make you money. But this is just value of assets.

And so the number.

Yeah, what's the number? So it could be your house, can be your car, that can be your guns, could be a plethora of guns that you own. It could be your web domains, if they're actually worth something. And there are web domain calculators out there so you can google that, figure out what you're worth. And then you can also calculate your liabilities to determine your net worth. So if all you do is add up all your assets and then you subtract all your liabilities, what's left over, that's your net worth.

Okay, makes sense.

Should I give an example?

Yeah, hit me.

All right, so if your house is worth 600,000 and you owe 400,000 on it, so it's your asset minus what you owe on it, what's left?

Over 200.

And if that's all you own, then what's your net worth?

200.

200,000. All right, so it's pretty easy. Number two is, is start tracking your spending to understand your current financial situation. I cannot express enough how many people I talk to that have no clue. It's like this, just mystical card swiping and just hope there's enough left. And they've never monitored the data on themself. How much am I really spending on coffee? How much am I really spending on going out clothes? Amazon.

Amazon will get you how much you spend on Amazon.

It's already in there. So to understand how to even create a plan, you gotta know what are your habits. Same thing for your health plans again. What am I eating, what's my output? Same thing. So calculate your net worth, know what you got to work with, what am I spending? And then the next one is to really have a big picture on your clear financial goals. So what's your short term goals and what's your long term goals? So short term goals are things like I would like to have an emergency fund. I would like to pay off this credit card that's at 18% interest. I'd like to pay off my school loans. I'd like to.

You know, save for this significant purchase next year. Like we want to buy a house, we're having two more kids or whatever your deal is. So that's a good short term goal. And a long term goal is things like retirement, buying more assets, funding different education, like for your kids, achieving financial independence. But if you are ever going to make any goals, you've got to remember that they need to always be smart goals. Do you remember what smart stands for? I believe we've covered this in Other episodes.

Specific, measurable, attainable, achievable. Achievable. Close, realistic. And time. So close.

Relevant.

Relevant.

And time bound. All right, so very good. Yeah, close, specific.

Right off the top of my dome.

What's an example of a specific goal? I mean, we're going to go through all these examples. Smart goal.

Yeah. So a specific goal with the S. So that would be, I have $3,000 in credit card debt. I want to pay off that credit card debt by the end of the year.

Okay. Measurable.

Did I pay off that? Can I track? Do I. Am I able to see? Is that number now less than 3,000 or a 0?

Relevant.

Do I get stressed out by having that $3,000 credit card debt time bound? I have to do it by the end of the year.

Yep. So he. So his first sentence was a smart goal, which is amazing. All right, so again, short term is I want to pay off this card. I want to, you know, start saving for an emergency fund. Long term, I'd like to retire by this date. I want to own this many assets. I want to pay for my kids college. Those are short term, long term. Next, you need to create a budget. If you've never created a budget, the basics are really looking at your income versus expenses. So based on your spending tracking, you then categorize your expenses and compare them to your income. And so you can see Your housing is 55% of your monthly income.

Going out to the club is 22% of my income. And then you can just look at it and be like, wow, is that even reasonable?

Spend too much money on my dance moves.

Well, in order to, you know, be successful, I believe in these areas, you have to say, I would like my goals to have my.

You know, I would like to have my goals be going out as 5% and giving is 10%. So you start creating your categories and the percentages you would like them to be, and then you can change your behaviors. Okay.

For me, when I first started doing this, I realized that I spent like $150 a week on booze.

Oh, yeah.

When I was like 21:22, it's really.

Easy to go through.

It's. That's a drink. Are expensive, Drinks are pricey. Right. And so when I'm 21, 22, this is a decade ago, 13 years ago, forever ago.

$500 now.

Yeah, exactly. It's fine.

But.

But yeah, though. Yeah. So $500 a week is $2,000 a month. Yeah. So if you're strapped for cash and you have no money There's a large chance you either have a bunch of tattoos or a bunch of alcohol. So stop getting tattoos. I'm talking to you, Gabrielle. I love you. My niece, she has a bunch of tattoos and no money. It's like, gabby, you know, stop tatting it up all the time. My gosh, save some cash. But number two, Gabby, stop drinking as much. Right? So I drank water. That was it. I was like, I got no money. I'm going to stop drinking alcohol. I'm going to drink water. And I took all the money that I did spend on alcohol and I put it into Apple.

I think that's great.

Huge shift.

It's a huge shift. And I know that when people are raising money, they're like, it's the price of one coffee per day to save a kid. And how embarrassing is that? That we're blowing so much money on coffee that we could be saving, you know? So it is important to know where you are. It's important to recognize those habits, track them. You don't want to be living life as a drifter. No, we don't want to be just avoiding our own reality. If you can't optimize your own life, what are you doing? What are you doing? So it might hurt when you first start looking at these things, but get over it. You're an adult or becoming an adult, or you are a smart kid looking at your stuff before it's too late. Write this down. No one's going to bail you out.

No one's bailing you out.

No one's bailing you out. So start planning now. Start taking ownership now. Okay, Next is saving for your goals. Now, you and I are big investors. We're not big save. We just have a goal and we like to go invest around that goal. But the point is to just allocate portions of your income towards your short term and long term goals. So again, if you're buying Apple, what is that Apple profit going to be associated towards? What we're trying to say here is have a why behind your income and make sure it knows what it's building, what is it growing. The more I get, the more I'm achieving these visions and goals in my life.

Sure.

Okay. Prioritize your saving must haves or your, you know, allocation must haves in your budget to help you stay committed. So I must have food on the table. I must have this card paid off or else I'm going to drown. You know, like, really, it's crazy. I used to actually help people in debt consolidation and like quick, quicker payoffs and just making people map out how much money they had on each card and even finding out what their interest rate was. People had no idea. They signed up for these cards because it was zero percent interest the first year, and then they blacked out. Never looked. I didn't realize it was 35%. Like these insane interest rates.

Yeah.

And so they were hard outrun. They were never able to get ahead. They were never able to plan because they didn't even look.

Yeah.

And what was crazy is I was teaching them how to get a home equity line of credit and pay off all of their debt with a home equity line of credit and then use their income to sit in that same home equity line of credit bank account to basically keep that interest rate lower and pay all their bills from there, which is a crazy strategy. So it was a really good strategy. And so we were taking people's. I know that if they actually stayed true and they didn't gain any more debt, which, of course, people in debt gain more debt.

Right.

Instead of paying it off in 32 years, if they didn't change their income or expenses, we got them down to like a year and a half.

That's awesome.

My point is, there's strategies out there, but you don't need some crazy magic wand. You just need to even know what you're paying so that you could pay off this card. With a different card, you can do those things. So just understanding is a huge, huge piece of it. Should I keep going? You think the people are interested?

People are pumped. They want to know.

Awesome. All right, next is build an emergency fund. So my advice, and I'd love to hear your advice on this, is if you are somebody who needs some kind of security because you don't like living paycheck to paycheck, which is most of us, it is smart to have six months worth of your expenses.

Saved and are extremely liquid and not volatile.

Right.

So if your monthly expenses are $3,200 a month, then multiply that by. I know, I know.

Sorry.

It'd be a dream. Then multiply that by six and have that liquid before you go invest.

Sure.

Because investing, you've got to be willing. Even though it's unlikely, you've gotta be willing and able to lose all of that money. That's just the risk.

Yeah.

And now if you. If you have kids, I love to say aim for one year because you are responsible for more people than just yourself. Aim for one year of expenses. Set aside, what is the number that you Tell people to use. And how do you tell them to set that up?

Yeah. So my. My vision on that is just have a conversation with your partner and see, is there a number specifically that would make them feel comfortable?

Well, that's. That's how to get people to allow you to invest, period.

Right. Sure.

If you have a husband or a wife, one of you. One of you is definitely more secure, driven than the other, for sure.

It has to be the case.

And one of them is going to try to block you from investing.

Because they are terrified that you don't know what you're doing and you're going to lose it all and you're going to destroy the family.

Yeah.

And so this is wisdom.

Sure.

This is straight wisdom. So tell them how to do it.

Yeah. Have that conversation. Because there. There probably is an exact number that makes that person feel really, really, really safe and secure. So if you talk to your wife and she's like, listen, honey, if. If we had three months of mortgage payment or rent payment and car payment and food payment, just sitting in a bank account doing absolutely nothing, it's a savings account, just liquid Wells Fargo ending in 6847, sitting there with $20,000 of cash, I would feel so happy. And if she tells you that that's a really good goal to work for, it's not going to happen by Thursday, but you can go, all right, baby girl, let me work on my best to get that done the next year so that once it's there, you'll feel really secure. Because generally in most relationships, it is the lady that really loves that security and that certainty and that comfort. And oftentimes, it's her needing a certain number that's just doing absolutely nothing just.

To make sure the household doesn't get destroyed in the path of progress. And in my experience, the number's normally $100,000, and that is not easily achievable for most people. And so I try to tell them, don't just think of the number $100,000.

What does that $100,000 mean? And then you can back it into being X amount of months.

Yeah.

Because a lot of times a hundred thousand dollars is like nine months for people. And so if they understand really what they go through, and they sit back and ask yourself, with our, you know, disability insurance and life insurance and all these different insurances that we have, if I got fired from my job or we lost this investment, how many months do we really think it'll take us to be able to get back to Being able to just pay our bills and so help them think through that math before they just make up a number out of their butt. Make them put some kind of logic behind it.

Right, right. Like three months of all the bills. Every single bill. Because then again, you're doing this work. You're creating that financial plan. You're writing down the numbers because you need to know these numbers.

Yeah. All right. Love that one. All right. So aim to save enough for this emergency fund. Again, My suggestion is 6 months and or 12 months, depending on if you have kids. And understand that that is going to help protect you around really your learning curve before you go investing. But also all the unexpected things in life. Covid. And there's just crazy stuff. Emergency medical. All right, next is managing your debt. Most people listening to this sadly do have debt. And so you need to strategize your repayments like we were just talking about prior those high interest debts like credit cards and repay them first. You wouldn't believe. People are just like, I'm doing an even $500 on all my cards. I'm like, well, this one's 0% interest, that one's 27% interest. Why are you. Yeah, why would you. They just don't.

Yep, you said the word strategize. The time to have some strategy strategize your repayments. Good term.

So consider debt repayment strategies like snowball method, which is.

I like the snowball method. I tell people.

Do paying off your smaller debts first or the avalanche method, which is focusing on your high interest debts first. So it's just important to have an awareness of what the heck you're doing.

Yeah.

All right, next is understand and improve your credit score. So what we're doing just to recap is we've got understanding where we are. We've then set some goals. We're now creating a budget. Then we have some savings over here and then we're managing the debt that we have now. We want to be what I would call more investable grade, which if you don't know the credit score system is for the lenders. It doesn't mean that you are good with money. It means they can make money on you.

And it's seems very weird, like, oh, I've got a great credit score because I don't have any debt and I pay everything off every month. Well, they want to know that you'll borrow money and they can make money on you.

Right.

Which is crazy. You know, you don't want to be hemorrhaging or maxed out that that also doesn't show somebody that's responsible with debt. So understanding where the heck you are. How would people know to even look at their credit score without pulling it all the time? Which also reduces your credit score.

Yeah. How would people know? I mean, we're not getting paid to endorse this company, but we should be.

We should be.

Credit karma dot com. I got my mom signed up on it, my sisters, cousins, brothers, nephews, nieces. It's free. It's a great, great service. I've used it for probably truly eight, nine years. And I've just recently had the goal to really, really, really work on my credit score to see if I could do it and just learn it and study it and read the books. Credit karma. Com. Great app. It's free. Use it. Track your score. Doesn't matter what the number is.

Sends you lots of emails.

Start with the number, figure it out, and just start spending an hour a month looking at your credit score and your life will change.

It's a really big deal. I mean, it's critical for your financial health.

Yeah. For those in the US I don't know if. What do they have in Canada?

I have no idea.

No idea. I need to figure it out. Need to figure it out.

All right, next is start investing. So once you've got your debt under control, you've got your emergency fund in place, then you're gonna wanna consider investing as a way to grow your wealth over time. Again, some people like to start with investing in a retirement account. And I know we've got all kind of really cool strategies. I want you to share in the next episode on how to u your 401k or your IRA to start building wealth. But that is nick. So after you've got debt managed and some visions and plans, and you've also got. So after you've got your debt under control, your emergency fund in place, that's when we start investing. So next, you want to get insured, Ensure that you have the right insurance, everything from health to life to disability to property to protect against significant financial loss. Yeah, there's too many people living on a hope and a prayer that are getting knocked out of the game after working so hard to build something for their family and or leaving their family with nothing. I've got a best friend that's a widow and she's part of a widow's community. And those widows have been left holding the bag with multiple children, lots of heartbreak and depression, and then on top of that, financial loss. So if you really care about the people who love you. Look into these things. Do you have any strategies you want to share in the next episode on insurance? Sure. All right, let's talk about those, too. I've got three more things. I'm going to go through them quickly. Next, you want to plan for retirement. You're going to want to start thinking through what does retirement even look like for me. Obviously, you and I are never going to retire, but we're retiring in the sense that we don't work for money. Yes, we're going to always be working on our dreams, our visions, and our impact, but we're never going to have to work for money after a certain point.

Correct.

And so that's what we mean by planning for your retirement. Educate yourself. So that's the next one. Continue learning about personal finance. Again, there's resources like books, this podcast, blogs, financial workshops. All of those things are going to help keep you motivated and learning the next and most up to date information you are needing to be a forever learner. I believe in this world and there's so many wonderful things to learn. And if you're somebody who knows how to play the guitar or any other language, learning finance is going to be so much easier than all of that. And I think you should learn from people like Jeremy Newsom. My gosh, there are so many boring stock trading classes out there in the world that you're going to feel like you're chewing on sawdust. But this guy is basically a really cool comedian that breaks down complex strategies and makes them fun to learn. He's a real person, which is why it's called real life Trading. All right, last one.

Yes.

Consider professional advice.

Come on.

I have a financial planner. I have an estate planner. It's really important to know that there's guidance available. There's people who go to school that can help you strategize. What do I have, where do I want to go, and how do I start planning this beautiful future with the tax laws and strategies available to me? So next episode, we're going to talk about investing at the next level. We're going to talk about retirement strategies and tell you a few cool things that you may never have thought of before. All available to you. Next episode.

If you are a man and you're listening to this podcast and you really enjoy the information that Brittany and I share about healing, about transforming, about growth, about inner awareness, I have a really awesome men's Mastermind workshop where I spend time teaching and going through a few different things. Number one how to heal Number two how to be a better dad Number three how to be a better husband and then number four how to make more money. Duh. So yes, it's an incredible program and I would love for you to go to BroketOak.com and check out the next time I'm hosting this really transformative, truly incredible, and I promise extremely powerful and soul shifting program that will help you heal your past traumas, heal your scars, and put you in a place where you find your purpose, get accelerated, and you love life more. Because at the end of the day, it's really what it's about. Hop over broke2book.com to check out more on my Mastermind for Men.