In the previous posts, I have covered the first two steps of my four step financial improvement process – from financial uncertainty to financial happiness.

I use this simple 4 step process with all my clients and have achieved great results.

This 4 step process was born out of my own immigration and finance journey, and then to transform my entire life, goals and ambitions. You can read about it here:

To get back to the topic of this blog, today I am going to introduce a method of managing the financial flow in your life. Finances in your life are not static numbers, unlike what most people think about wealth.

Net worth is important but the most important part is how is your financial flow?

For example, a muscular body may be less important than what kind of healthy habits you have in your daily life. The latter is more beneficial in the long run to prevent health related diseases and costs.

Similarly developing a financial flow that is easy to maintain is very important for your financial well being over a very long time.

Let’s get to the five steps of this system called CARLA –

Cap, Automate, Remind, Learn and Archive.

Cap – Capping the expenses

One of the first disciplines of money management is to live below your means.

Everything starts from here – your net worth, your savings, investments, financial goals.

In another blog post, I had introduced the financial flow in terms of an IDEA.

Income, Debt, Expense, Asset.

This is the typical money flow in everyone’s life. You earn, pay debt (could be taxes or mortgage too), spend, and save some for assets.

Think about it, if I ask you to increase flow to your assets, what can you control immediately?

• Increasing your income may take some time, months or even years.
• Decreasing your debt may also take some time, unless you can pay off right now.

Decreasing your expenses is in your hands, today and every day.

I am not asking you to squeeze your lifestyle, but just create a reasonable estimate of your true expenses (by cutting down the extraneous costs).

Once you have this in your financial plan, you are setup in a much better way.

Automate – Let the software do it for you

Budgets are important – as told by most financial gurus. Yet, 70% of people who start a budget cannot sustain it for more than 3 months.

This is because most people dread budgets as writing down your expenses everyday, constraining yourself and family to spend less and a lot of financial scarcity mindset.

Actually, budgets are not trackers but financial plans. Think of how a government creates a budget at the start of a fiscal year. Do you see them tracking their daily expenditure in Mint or a spreadsheet? Someone may be doing it for expense reporting, reimbursement purposes etc. but largely what the general public hears is the spending plan.

Similarly, you need to plan your paycheck. Use the number you arrived at from the Cap stage to set aside this money into another checking/savings account to pay your bills and expenses by end of the month.

It is this account that you can track for different spending categories if you like.

Most banks also provide a rudimentary tracker by auto-grouping your expenses.

Then you can automate your financial goals so that they make progress consistently.

Remind – a stitch in time saves nine

Did you ever feel terrible because you missed an important deadline at work?

Did you ever beat yourself up for losing an opportunity because you did not take action?

All of these are common in our busy lives. There are hundred things to do in your to-do list, and time is limited.

I do not have to ramble about time management and the importance of doing things when they are due.

It is not only important, but rather critical to take financial actions at the right time.

I am not asking you to be reckless and invest randomly just to take action, but rather be more intentional and systematic about tracking your finances.

A simple way is to use Google Calendar and setup a Personal Finance Calendar.

You can keep your financial dates (insurance premiums due, estimated tax payment date, reinvest dividends into other investments, file tax returns, sell an investment etc.) in this calendar and include this in the overall view.

Also none of these events take up your daily schedule, maybe an hour or so over the weekend is all that you need. I have monthly reminders on separate weekends for Investments, Taxes, Insurance and Budget. This keeps me on top of my finances and helps me take the next steps on time.

Another important tool is to use the Gmail’s snooze feature.

A lot of your financial data, actions and dates are coming through email. If an email requires me to take action in the next few weeks or months, I let the email snooze and schedule it on a weekend close to the deadline (or when I want to revisit that).

Learn – Financial education has the best returns

I cannot emphasize this more. Financial education is the most neglected yet the most important muscle or skill you can develop.

It changes your life in many ways. As you read and learn more, you will manage your finances better. This starts to have a snowball effect since managed and planned finances let you do the things you love to do more, take big risks in your career, sleep with peace at night, and dream bigger.

Developing a habit of regularly reading financial books, blogs (like this one), listening to good quality YouTube channels, attending webinars and thinking about applying some of the strategies (do not apply without understanding what is good for you) in your own financial life is very rewarding.

I do a webinar on financial topics every other Friday. If you are interested, you can register at the link below.

https://start-your-finances-right.ck.page/webinars

It’s an easy way to spend one hour of quality time learning from my experience and the curated content that I create. If you are a video person, then you can subscribe to:

https://www.youtube.com/@TheTortoiseFinance

Archive – What you keep is what you have

What I have seen from my clients is that almost everyone’s financial life is a lot scattered these days.

We have hundreds of documents, events, emails, contracts and statements that are stored in various places. Some of them are as below.

• Your bank’s website.
• Your CPA’s portal.
• Your email folders or simply Inbox.
• Some site that you registered.
• Your real estate agent or lender.
• Your computer and hard drives.
• Cloud servers like Google Drive, Evernote or Dropbox.

This step is simply to take stock of the different parts of your financial life and organize in the same manner using folders or tags – local or cloud.

For example, you can have the following hierarchy in every place where financial documents may lie. This makes it easier to sync and find documents when needed.

• Banking
• Taxes
• Investments
• Insurance
• Real Estate

Under each, you may have sub-folders for example, Banking can have different banks, Investments have stocks, bonds, cash, Real estate can have a folder for each property.

Conclusion

So that is the financial flow in five steps. If you set it up correctly, it will not take more than 30 mins per week to keep tab of your financial life.

This system has given me immense power and flexibility in designing my dream life.

I have helped clients go from disorganized to financially happy by using these steps.

If you or someone you know need help organizing their finances, I can be reached at:

Email – info@startyourfinancesright.com

Money for happiness is my mission.