4: Hope Is Not a Plan: The First Steps to Financial Freedom
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How often do you go to log into your bank account, but instead of feeling calm and confident, you dread what you might find?
This is a very common starting point for a lot of my clients. Maybe you rely on mental accounting, where you keep track of your expenses in your head so you think you know what's in there, but you’re never entirely sure so you're always a little too nervous to actually check. And unfortunately, that fear keeps us from looking at the one thing we need to see most: our numbers.
That feeling? It's the opposite of the calm and confident feeling I want you to have with your money. And it’s exactly what happens when we don't know the most critical financial information of all: what is coming in, versus what’s going out. Today, I want to talk about why that simple piece of information is so critical, and what you need to do immediately if you discover your expenses are more than your income.
It’s easy to get caught up in trying to keep up with the Joneses next door or the Miller’s lavish trips they keep posting on Instagram. It’s true, we all want to travel, we want to start a family, we want to buy a house, or maybe just go out for a guilt-free dinner with friends. But these dreams all require one thing: money.
I absolutely believe that money should be a tool to help you achieve your biggest, wildest dreams—not an obstacle. But before you can use it as a tool, you have to understand one key piece of information. And that starts with a simple, yet very likely, uncomfortable reality check: comparing your income to your expenses. Knowing which one of these numbers is bigger is the absolute first piece of information you need to know when you are starting to work on your finances. Because if your expenses are more than your income, you are likely creating debt every month, and that simply is not sustainable and you need to consider making some changes, and quickly.
Maybe you are thinking, wouldn’t it be easier to just stick your head in the sand and hope everything works out? Absolutely, it is easier. But it likely will not solve any of your financial problems because unfortunately, hope is not a plan. You’ve made it this far into this episode so hopefully the real talk isn’t too much! But you are here for a reason! If you haven’t figured out what your reason is, go back and listen to episode 1, so that you can use that to get you through this uncomfortable step! If you already know your why, take a deep breath and go find your numbers - monthly expense vs monthly income, which one is more? I’ll wait here while you do!
Ok, so, you've taken the leap and looked at the numbers. You’ve added up all of your monthly income—your salary, any side hustle money, maybe a little extra from selling things on the side—and you compare it to your expenses. First of all, congrats on facing that number, I know it is not easy. I am all about celebrating all the wins, no matter how big or small, so take a moment to give yourself some credit for that.
Ok, now for the result. Is your number positive or negative? Let’s say that you are looking at a negative number. Your expenses are actually more than what's coming in.
I want you to hear this loud and clear: this is a signal, not a judgment. It is your money's way of telling you that something needs to change. This is the moment to get serious about your financial well-being, because if you don't, you will simply continue to build up debt. And that is not the future I want for you, and I’m guessing you also the one you are not wanting either.
Now, because you are starting with a negative number, I can tell you that you are going to need to make changes, but if you don't know why you're making those changes, you’re never going to stick with it. This is the part of the money journey that often gets skipped, but it is so, so important. We can cut all the lattes and subscriptions we want, but if we don't have a clear vision of what we're working toward, it's just going to feel like restriction without any purpose.
Think about it this way: what's the difference between a sacrifice and an intentional choice? The difference is your "why." A sacrifice feels like you're giving something up for nothing, but an intentional choice means you're giving something up for something better. It's about deciding what is truly important to you and making sure your money is aligned with that.
Let me share a quick personal story with you.
My husband and I recently returned from a trip to New Mexico and Colorado. I actually went to college in Colorado and have loved it since my first visit in 2004, always wanting to move back, though it just hasn't been in the cards.
So imagine my surprise when my husband started talking about how much he was loving it out there!
If you've never been out West, there's something truly magical about it. Even I was surprised by how much I enjoyed New Mexico's deserts this time around. I'm generally not a hot weather person and prefer the mountains, but those deserts pulled at me in a different way this time around.
As we explored Albuquerque and northern New Mexico, we started envisioning some dream scenarios:
What if we could live here?
What if we found a property in New Mexico? It's close enough to Colorado and still seems affordable.
Okay, but really, what would we have to do to make this a reality?
As the days passed and we talked more, we both began to realize that, as crazy as it sounded initially, why couldn't this actually happen? Many people have done crazier things, after all!
So, we started talking more seriously about how we could make it work. What kind of cash would we need to have on hand? What would a monthly payment look like? How do we go about finding a realtor in that area?
In fact, I went so far as to put it as a new category in our YNAB budget!
Since those first days of our trip, everything has shifted for us because we now have a tangible goal we are both incredibly interested in achieving. Pretty much every conversation we have had since then gets turned into something related to how we can make this happen. Found a penny in a parking lot? Let's add that to the NM/CO property budget! How can we make more money so that we can put it towards a NM property? Should we go out to dinner tonight or would we rather save it for a property out west?
It is so easy to make decisions with our money because we both want this so much more than the things that used to distract us in our daily lives.
This is how I want you to look at money. That it is easy to make a spending decision because you already know what is most important to you.
So, I have a little homework for you before our next episode. I want you to sit down with a journal, a piece of paper, or even just your thoughts, and define what your priorities are. If you need some help here, I have a free workbook you can grab.
I'm not talking about a to-do list. I'm talking about the big stuff. Ask yourself some questions, like:
What does your ideal day look like?
What about your ideal week?
What makes you feel truly alive and joyful?
What are you willing to do just about anything to achieve?
Maybe you want to travel without worrying if you have enough in the budget for it or how you are going to pay for the credit card bill when you get home. Maybe you want to take a new class or start a business. Maybe you just want to be able to go out for a guilt-free dinner with friends every month. Whatever it is, get clear on it. Your priorities are the emotional fuel that will get you through the uncomfortable reality check we talked about earlier.
Knowing your numbers, that’s what will move you from a place of fear and confusion to a place of calm and confidence.
The numbers give you the truth. Your priorities give you the motivation. The numbers tell you where you are, and your priorities tell you where you’re going. Together, they form a powerful combination that can lead you to amazing places.
What's Next?
In our next episode, I’m going to get into the three specific steps you can take once you know your numbers and have a clear set of priorities. We’ll talk about how to stop the bleeding, find the leaks in your spending, and make intentional cuts that actually feel good because you know they’re serving a bigger purpose.
Until then, your biggest, wildest dreams are within reach. Let’s make some money moves so that you too can start to experience financial freedom.
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