Struggling with money? Feel overwhelmed with bills and debt? In this post I’ll show you the first step to become a Money Badass. This secret is what every money pro uses to get their money under control fast!
The secret strategy to manage your money like a pro is called a Money Discovery.
You’re probably saying, “what is a Money Discovery?”
Imagine you are a detective at a crime scene. You can’t just jump in and start questioning people. You don’t even know who to question!
The first step is to take photos, search for fingerprints, and collect evidence.
You need to gather all the info you can before you can begin getting into the details.
Money is the same way. The first step is to gather all the info before you even begin to consider budgeting, bills, and investing.
By the end of this guide you’ll have a complete Money Discovery and will be well on your way to understanding and organizing your money.
Note: You can do this as an individual or if you share your accounts as a couple you can do this together as well.
Grab a pen / paper or open a spreadsheet on your computer and follow along.
Step 1 - List Out All Your Monthly Income
First off, let’s talk about your income. This is one of the easiest because I bet you know all the money you have coming in don’t you?
To help you get rolling here are some examples that may apply to you:
Side Hustle Income
Rental Property Income
There’s plenty more out there. Just think of anywhere your money comes from monthly.
List out each source and the monthly amount you get.
Here is an example:
Job Paycheck: $3,800 Per Month
If it varies, it’s better to estimate on the low end rather than the high.
For a Money Discovery just focus on your net income. That basically means what you take home or what is deposited into your bank account.
Forget about gross income which is what you get before everything is taken out like taxes and health insurance.
Step 2 - List Out All Your Monthly Bills
Now let’s talk about where your money is going. This is a huge eye opener for most people.
A lot of times, we feel overwhelmed with our financial situation and begin to ignore our finances. One of the key Money Badass mindset values is to be aware of your financial situation.
That’s the whole point of a Money Discovery. You are going to understand everything about your money. You’ll know what’s going in, what’s going out, and more.
This step is where you get a handle on your money that is going out.
I want you to list out all of your monthly expenses. Sit down and really think about everything you spend money on monthly.
It will be helpful if you pull up your transaction history from your bank account from the last few months and review each transaction.
To get you started, here is a list of possible categories of expenses you may have.
Real Estate Taxes
Maybe you have more expenses than the ones I listed out above. If you do, put them on your list. Anything you spend money should fall into some category on your list.
Hopefully this will give you a “a ha” moment once you realize where all of your money is going to.
Step 3 - List Out All Your Bank Accounts
This step will be a bit easier. Think of all your bank accounts. Let’s get a handle on everywhere you have money right now.
Do you have checking accounts? Do you have a savings account? Do you have any joint accounts?
List them out on your paper or spreadsheet.
Sometimes people will have old accounts they haven’t checked on in a while. Try to think of any bank accounts you haven’t used in a while as well.
Here are some possible accounts you may have:
Health Savings Account
Step 4 - List Out All Your Debts
You may have a lot of debt accounts or no debt accounts.
If you’ve got 0, keep on moving to the next section. Congrats, by the way that’s awesome!
More likely, you do have some debts though. Most people do have debt unfortunately.
The less the better, but most likely you are going to have some and if you’ve been ignoring that debt it’s now time to stare it in the face and take the first step to tackling that debt full on.
Pull up that spreadsheet again or grab your paper and fill in every debt account you can think of.
Here are some common debts that people have to help you brainstorm all of your debt accounts:
Rental Property Mortgage
Misc Vehicle Loans like RV’s, Motorcycles, and Off Road Vehicles
Lines of Credit
Step 5 - List Out All Your Physical Assets
We’re moving right along, now let’s list out all your physical assets.
This is anything physical you own that has value.
Lots of items you own probably have some value, but for Money Discovery purposes it’s best to focus on high priced items like your house or cars.
Here are some examples of physical assets you may have:
Misc Vehicle Loans like RV’s, Motorcycles, and Off Road Vehicles
Enter each of your physical assets into your spreadsheet or write them down on your paper.
Step 6 - List Out All Your Investments
Now, let’s look at your investments. Think of every investment account you have.
If you’ve worked at several companies over the years do you have multiple retirement accounts?
Do you have private investment accounts like a Roth IRA or Robinhood stock trading account?
Here is a list of some example investment accounts to get you started:
Stock investment accounts like Robinhood
App investment accounts like Stash
Finish up your spreadsheet or paper Money Discovery with every investment you can think of.
Step 7 - List Out Your Money Goals
Lastly, lets focus on the fun stuff.
What do you want to do with your money? Remember, money is just a tool to help you achieve want you want in life.
What do you want in life?
There is where you get to have some fun! What do you ultimately want to do with your money?
Take some time and think about what goals you want to save for. Here are just a few ideas:
Down payment on a house
List them by total amount and how much you would need to save monthly to hit your final goal in the time frame you set.
To calculate how money you would need to save per month you can use this formula: Monthly Amount = Total Amount / Years / 12
What Do I Do With My Money Discovery?
Once you’ve got everything listed out you have the whole picture of all your finances.
This should be a mind opening experience if you haven’t been tracking your money in the past. Now you know where all of your money is, how much you have, and how much you owe, and where you want to go with your money.
This is good to see and know, but this is only the first step. This is a launching point to the next steps in becoming a Money Badass.
From here you can now begin to build a budget, track your net worth, pay down your debt, increase your income, reduce your expenses… The list goes on and on.
You’ve taken a solid step further on the journey.
Remember, taking control of your money is a journey, but you don’t need to focus on the whole journey. Start with the first step, then the next, and so on.
In the end you’ll get there and you’ll be happy you did.
So, let’s wrap up with the actions steps you need to take.
Money Discovery Action Steps
List out all of your monthly income
List out all of your monthly expenses
List out all of your bank accounts
List out all of your debt accounts
List out all of your physical assets
List out all of your investment accounts
List out all of your money goals
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CREATOR OF MONEY BADASS WITH MY LOVELY WIFE KRISTA