Many years ago, I got into a financial mess. For some time, I avoided taking action to resolve it. Eventually, I was forced to sit down and work out my figures, calculate key ratios, and recognise the true story of my finances, free from self-preserving assumptions and confabulations (aka lies).

I did not call it financial wisdom at the time, but this is what it was, a combination of detailed figures, an understanding of what they meant and wisdom from dealing with the pain by writing my true financial story.

Financial wisdom is found in your spending.

In my experience, people need help to form a realistic assessment of their expenses. This is because expenses are a mirror of life. The money flowing out of your account tells how you live, which is often uncomfortable.

For my client Drew, that was too painful a story to face. Accounting for her spending, analysing it and categorising it brought home the reality of her story. It needed deep compassion and support to look at her life before she could look at her money. For Drew, money was a mirror of her soul and brought home that she existed instead of thriving.

It should come as no surprise that very few people can immediately provide an accurate statement of their income and expenditures. It will also not surprise you to hear that most people underestimate their expenditures and overestimate their income.

Take courage

You will need to be courageous and live in chaos as you wrestle with your story and figures. Start by developing factual financial statements. Refrain from making assumptions about your spending, especially regarding cash (if you still use cash). It is easy to “forget” the small expenditures, but these can mount up and leave you out by as much as 20% if you “forget” too much.

What matters now is what you do with the figures and the story. When you have accurate and truthful financial statements, look at the story they tell you. This is messy, but it is where the magic happens. Do not be defined by the past and the mistakes you have made. Instead, be defined by your financial wisdom and the story you want to create for your future self.

The future, not the past, will define you, so take possession of your figures and story and rewrite them with financial wisdom.

Photo attribution

Photo by Hannah Olinger on Unsplash

Audio link

https://audio.com/jeremy_deedes/financial-wisdom/

Taking it further

Use these templates to help you make a start. It will take a bit of work, but the outcome will be a sense of peace and calm from knowing where you stand. Even if it is bad, you can make informed decisions and draw up a plan to deal with the situation.

Family financial statements template: https://shrtm.nu/wAm

Family key ratios template: https://shrtm.nu/wAl

Related posts

How three steps can bring your financial power under control

8 financial ratios to tell which way the wind is blowing

https://wordsnotdeeds.co.uk/financial-calm/

ABOUT

I work with ambitious, family-oriented professionals transitioning to independent consultants to create a 3 to 5-year holistic plan so that they grow wealthy, make a difference and find meaning.

My clients are aged 35-50. They are in a long-term relationship with family and parents who are supportive but ageing. They wrestle with personal and financial responsibilities and dream of more control, wealth, time and purpose.

If this excites you, you are coachable, willing to change, and want to stop going around in circles, then find out more at jeremydeedes.com

Then, take your next step and explore your way forward with a Mapmaker, a one-off online coaching gig to help you decide your options, assess our compatibility, and determine whether we are the right fit. Mapmaker is excellent value, held in confidence and without further commitment.

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Your views are important, and your fellow readers would love to hear your opinion, so share your thoughts in the comments box below, and thank you for your time and generosity.