Five-Minute Financial Snapshot
Now that you have reviewed the scoring overview in the prior blog and gathered the information you need to figure out where you land in each category, we will go through the Financial Snapshot matrix to help you figure out where you land. From there, we will determine the actionable steps you will need to take.
Step 1: Plan to Spend
To review, each of these categories have their own purpose in the financial snapshot. The first one has to do with budget, which I believe is the most important. Your plan to spend enables you to invest, give, and be able to be involved in the things that matter to you. When it comes to budgeting, it\’s important to look at your income and your expenses. We will look at whether you have a budget and to what extent you\’re operating within it.
I believe having a budget is pivotal for you to be able to build margin into your life, and this is why we went through a three-part series looking at the 80/20 rule, the 50/30/20 rule, and the zero-based budget approach. These three approaches allow you to ensure that you\’re working and living within your means but that you\’re finding a budget that works for you and your lifestyle.
As we jump into this today, it\’s going to be essential for you to look at yourself from an objective standpoint, taking the emotion out of the picture, and looking at how good you are at not only living within your means but living on a budget. Doing so will help you build your finances out so that they are working for you to accomplish your financial goals. Once you identify the specific approach that you want to use for your budget, you\’ll be able to maximize your income and minimize the expenses that don\’t add direct value to you so that you can build margin into your life.
The purpose of this is to encourage you to operate within a construct. There\’s freedom within boundaries, and if you define those boundaries, you\’re going to be able to maximize your income while minimizing your expenses to be those things that truly do bring value to you.
Let\’s take a look at what it would need to look like to operate in each one of these categories in regards to budgeting.
Financial Snapshot Matrix
| Snapshot | Excellent | Very Good | Good | Fair | Poor | Insufficient |
| Plan to Spend | Zero-based budget approach | 50/30/20 Rule | 80/20 Rule | Living with means | Bank or CC balance | No awareness |
A: Excellent: Operate within a written budget and assign each dollar to a category to ensure you are hitting your financial goals with retirement, savings, and debt management. This would include tracking wealth, living within your means, and prioritizing what matters most to you.
B: Very Good: Operate within a written budget utilizing a 50/30/20 rule, ensuring that you are paying yourself first in the form of savings, covering the needs that you have, and planning for those aspects that you desire. This also would mean that you are living within your means and prioritizing what matters most to you.
C: Good: Operate within a written budget utilizing an 80/20 rule that ensures that, at a minimum, you are paying yourself first and living within your means.
D: Fair: You would be living within your means at a minimum, although you may not have a written budget to do so.
E: Poor: You would not have a written budget or means to track where your money is going. The awareness around your financial picture comes down to checking your bank account or credit card balances.
F: Insufficient: You would have no awareness of how much you are spending or what your net worth is.
Now that we\’ve taken a look at what operating in each of these categories would look like, determine which column aligns best with how you manage your personal finances. Don\’t be ashamed of where you are. Acknowledging where you are is the first step towards getting better. If you are aware of where you\’re at, then at least it allows you to make the decisions you need to make to progress with your personal finances.
