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Financial Literacy

7 Steps to Go from Zero to Hero with Your Money

Millennial couple using digital payment
Millennial couple using digital payment

The New Money Podcast host, Nathan Kennedy shares his tips to set your life up for long-lasting success with money.

Everyone knows they should be better with their money. If you aren’t doing the below (or some version of it), you shouldn’t be worried about Bitcoin or the stock market yet. Here is how you can start from nothing and create a fantastic base incredibly quickly.

Start consuming content

This is the easiest tip and yet it may be the most impactful. In fact, you are literally already doing it right now! Consuming content, even passively, on how to better your money (via articles, Youtube, social media, podcasts, audiobooks etc) is a fantastic way to not only build your knowledge but create a deep burning desire to want to sustainably improve your finances.

Write out income and expenses

This is the part everyone dreads, yet it’s so necessary. If done well, you will likely only have to do this once and then iterate or improve it as you go. Write out your monthly income and expenses on a sheet of paper. You can use a laptop if you would like – however, I believe pen and paper are more effective with sketching out ideas. Really makes you feel everything. After you’ve done a rough sketch, review your transactions using your banking app to further inform how accurate your initial assessment was and make adjustments as necessary.

Analyze what your current situation is

Do you have a surplus of money? Deficit? Are your bills higher than you thought? Really take in what your financial situation is.

Strategize how to improve

There are two fundamental ways to improve your cash flow, more or less:

  1. Reducing your expenses
  • Call up your bill providers to reduce your expenses by negotiating, asking for lower services or simply asking them how you can reduce your bill and some options they have. Be pleasantly persistent here.
  • Cancel services that you rationally can not justify.
  • Make your wants few (It’s okay to have that $5 Starbucks – just make sure you spend less elsewhere and optimize for what you really value).

2. Maximizing your income

  • Do an audit of your possessions. Sell everything you don’t need / value / use often. This will give you a quick surplus of cash.
  • Explore different side hustles. Driving Uber, renting your car on Turo, getting a second job or becoming a virtual assistant online, just to name a few. You could also take some of the cash earned from selling stuff and begin to flip other products. I’ve made thousands of dollars doing it.
  • Ask for a raise at work or explore new career opportunities. There are tons of opportunities out there with turnover in corporate as well as local businesses being extremely high. It’s time to level up and improve your situation if it’s subpar or begin to build a case as to why you deserve more at work.

Set goals and budget for spending (while being realistic!)

Now that you have a clear picture of where you are financially, you can begin to set SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound) as to how you would like to improve and craft a budget to get you there. Make them reasonable. Everyone wants to be a millionaire right now but we all need to start somewhere. Some examples could be:

  • Increase my savings rate from 10% to 20% by the end of Jan 2022.
  • Pay down 50% of my credit card debt by March 20th, 2022.
  • Contribute $500 per month every month for 12 consecutive months to a down payment fund.

As for how to set up a budget, think about a reasonable number for food, bills, leisure and misc expenses, then add 10 to 20% margin on top to account for potential overspending. I suggest writing this out, similar to the initial audit. I also suggest beginning to pay yourself first and incorporating this “expense” into your budget. This means setting up an automated deduction into your investment accounts (once you establish them) / savings accounts. Treat your savings and investing just like a bill and automate it.

Pick a system to monitor your progress

Remember how I said if you do it right the first time, you won’t have to do it again? Well with tech these days, there are fantastic phone apps that you can enter the resulting work (from the previous steps) into. This will allow you to easily monitor your progress. My personal favourite is Mint as I have been using it for years. It links with my bank account, so I do not need to manually enter transactions every time I buy something. It allows me to monitor my finances with ease every month. There are other options out there like You Need A Budget that also works really well.

Automate and iterate

Once you have minimized your expenses, automate all of them as best as you can. This can help you improve your credit as you will never miss a bill. Furthermore, even though everything is organized and automated, continue to check in every month via your system to see how you are progressing. If you are consistently saving more and more money, it’s time to graduate to growing your wealth via investing – but that’s for another article. One step at a time. You’ve got this.

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