Introduction
In today's fast-paced world, many people find themselves stuck in jobs they don't love, simply because they need the steady paycheck. The fear of letting go of financial security often keeps us from pursuing our dreams and living a life that aligns with our values. However, the COVID-19 pandemic has sparked a global reevaluation of careers and lifestyles, with many people realizing that their intense jobs leave little time for relationships, hobbies, and self-discovery.
In "The Great Money Reset," financial expert Jill Schlesinger offers a roadmap for those looking to make big, risky changes in their lives without sacrificing financial stability. This book is a guide to help you take the leap towards your dream life, focusing on what truly matters – things like family, community, and freedom from debt.
The Importance of High-Level Financial Planning
Making a sustainable change in your life requires careful planning and preparation. Before embarking on your Great Money Reset journey, it's crucial to analyze five key areas of your finances, which Schlesinger calls the "Fabulous Five":
Income and Assets: Calculate all your income sources and assets to understand what resources you have available. Consider which assets are liquid, as having cash reserves can help you navigate unexpected difficulties or smooth transitions after leaving a job with great benefits.
Debts and Liabilities: Tally all your debts and liabilities. It's important to balance paying down debt with maintaining liquidity. For example, it might not be wise to pay off your mortgage if doing so would drain your cash reserves.
Housing Costs: Review your housing expenses and consider whether downsizing could free up cash. If you own a second home or can move to a more modest living situation, streamlining your housing can provide significant financial flexibility.
Monthly Spending: Create a realistic estimate of your monthly expenses. Don't underestimate future needs. Analyze your current spending habits and determine if you can realistically make cuts.
Financial Obligations to Others: Factor in any financial responsibilities you have to others, such as college tuition for children or care for aging parents. Consider how the people in your life might need your support over the coming years and how much you'd like to commit to helping them.
Once you've assessed these areas, create realistic best-case, middling, and worst-case scenarios for your life after the planned change. Identify backup plans, such as starting a new career if early retirement doesn't work out, or moving to a more affordable location if your dream destination proves too expensive.
Consider making incremental steps rather than dramatic moves. For example, try a trial period at a new job or in a new location before fully committing. Taking the time to thoroughly assess your finances will give you confidence in your ability to make a successful change – or it may show that you need to modify your plans.
Remember, you may not need an extreme reset; smaller tweaks could work just as well. The key is to act deliberately and limit your risks. If you've run the numbers and everything adds up, then you have permission to make the leap!
Curbing Consumption to Bring Dreams Within Reach
If your financial stocktaking reveals that you're not quite ready to chase your dreams, don't give up hope. There's one powerful tool at your disposal that can help you feel more financially empowered, regardless of your salary or retirement savings: spending less.
To make major life changes successfully, take control of your spending and consume less. Examine your current habits and cut unnecessary costs. The pandemic may have already prompted you to rethink and reduce consumption – if so, you're ahead of the game. Now, try to stick to your new, more measured lifestyle.
When transitioning to a more frugal lifestyle, don't go too hard too soon. Instead, run short experiments, like living for a period on reduced income, to test your ability to cut back. You may find you need less than you think to be happy. Alternatively, you might discover you need a little more than anticipated – in that case, be flexible about finding income streams, such as part-time or freelance work, to give you that extra wiggle room.
To maximize future options, keep your spending in check consistently over time. You can't always slash enough at the last minute to fund a major change. Controlling your spending allows you to direct more resources toward goals like retirement, education, or career transitions. With discipline, many people can fund their dreams without depleting their savings.
Negotiating Your Way to a Better Role Without Quitting
Not everyone's Great Money Reset involves quitting their job entirely. If you enjoy your work but feel something is missing – perhaps you want more money to fund hobbies or crave more responsibility and recognition – you can negotiate for positive changes without leaving your current position.
Schlesinger introduces the "BULLY" method for negotiating with your boss:
- B: Begin by clarifying your Big Ask, whether it's a higher salary, more flexible hours, or the opportunity to work remotely.
- U: Understand the framework of your ask. Paint a clear picture of how your Big Ask would affect your boss and team, both positively and negatively. Also, consider the scenario where your request is denied and you quit – what revenue, skills, or connections would you take with you?
- L: Lose your ego. Even if you don't love your boss, a bit of flattery can smooth the way for your Big Ask.
- L: Leave time to practice. Run through your pitch a few times to build confidence.
- Y: Don't Yuck it up. Avoid making threats, being aggressive, or burning bridges. Even if your Big Ask is rejected, "no" doesn't have to mean "no forever" – unless you really mess things up with your boss.
Remember that a Big Ask doesn't need to be a one-time thing. Even if the market changes, keep advocating for yourself by making both big asks and smaller ongoing requests. Negotiating a better deal can empower you to make positive changes without necessarily quitting your job, facilitating major "Great Money Resets" in your life and creating opportunities for career transitions or improved work-life balance.
Leveraging Your Home for Financial Freedom
Homeownership can be a powerful tool for creating financial flexibility in your life. Selling or downsizing your home can provide the cash injection needed to fund major Great Money Resets. The key is to manage your real estate portfolio thoughtfully and let logic – not emotion – dictate decisions around when, if, and why you sell.
Selling a home can be emotionally challenging, especially if it's where your children grew up or where you've made countless memories. It's important to acknowledge these feelings, but don't let them interfere with making a smart financial decision. Remember that letting go of a cherished property may be painful in the short term but can lead to long-term happiness and financial freedom.
You don't need to have everything perfectly aligned before selling your home. In fact, waiting for ideal conditions can cause you to miss out on the best deals. When the market is hot, selling even without a clear plan can capture opportunity. You can bank the proceeds to pay off debt, save, and explore options. Remaining flexible preserves future choices.
For some homeowners, selling their property is a move that funds their dream future. For others, it might be necessary to get out of pressing current difficulties. Selling your home can be the Great Money Reset that frees you from mounting debt by allowing you to access your equity. While this should be a last resort, leveraging your equity can be an escape hatch that leads to a more financially authentic way of life.
Though emotionally difficult, a real estate sale often facilitates major positive changes. However, it's crucial to move thoughtfully – not based on fear or others' advice. Let your dreams and values drive the decision.
Designing Your Own Dream Job
Many people work in conventional roles while dreaming of turning their hobbies or ideas into side hustles – and eventually into their main source of income. This transition is entirely possible, but the key is to design your dream job with financial sustainability in mind.
Chaotic times, like the pandemic, can spur entrepreneurialism, providing an impetus to start a business or side hustle aligned with your passions. When starting out, it's wise to go slowly – begin with a side hustle while keeping your day job. This allows you to test ideas without excessive risk. Think of this phase as a Great Gradual Reset. Growing your business incrementally allows you to experiment, troubleshoot, and grow without the constant fear of bankruptcy.
For those who have already grown a side hustle into a thriving business, the next Great Reset might involve selling the business. While it's tempting to hold out for the highest possible price, consider what you could do with the proceeds of a sale that's on the table right now, rather than waiting for a hypothetical higher value in the future.
If your business faces unexpected struggles, you might feel caught between selling and continuing to push forward until forced to close. However, there's always a third option: tap into your resilience and get creative. Look for ways to evolve your offerings to meet changing market needs rather than shuttering. Analyzing where you're failing to connect with customers can help you find a new niche, and identifying unmet client needs can set you on the path to creating new offerings.
Starting or transforming a business creates opportunities for positive change. Move boldly but deliberately – don't jeopardize your stability. Let prudent entrepreneurialism fuel your Great Reset.
Crafting a Long-Term Great Money Reset
Even if you don't anticipate needing a Great Money Reset in the near future, it's wise to start planning for one now. Unexpected events – like sudden changes at work or health scares – can prompt a desire for significant life changes. By preparing in advance, you won't be scrambling to figure out a reset at the last minute.
Ideally, you should start your financial planning five to 10 years ahead of a potential career or life change. Project your future spending needs and use that projection to set a savings target. Within your planning, make sure to prepare for worst-case scenarios by getting wills, life insurance, and disability insurance. While you hope you won't need to use these safeguards, not having them in place is a significant risk to your family's well-being.
Take time to prepare emotionally, not just financially. Big changes only take root when they come from within, after introspection. Don't feel pressured to make everything happen at once – that's a recipe for overwhelm and burnout. Instead, scaffold your reset by making small incremental shifts in your life and thought patterns over time. Slowly but surely, these little shifts will create new neural pathways that support bigger changes.
Remember, your Great Money Reset isn't fundamentally about money – it's about rethinking your life. Money provides you with the means to do that. Life is short, so don't let fear hold you back. With prudent planning and self-reflection, you can turn even an unexpected reset into a wonderful opportunity.
Practical Steps for Your Great Money Reset
Start with a thorough financial assessment: Use the Fabulous Five framework to get a clear picture of your current financial situation.
Create multiple scenarios: Develop best-case, middling, and worst-case scenarios for your planned changes. This will help you prepare for various outcomes.
Experiment with reduced spending: Try living on a tighter budget for a set period to see if you can comfortably make necessary cuts.
Negotiate before quitting: If you're unhappy at work, try negotiating for better conditions using the BULLY method before deciding to leave.
Consider your housing options: Evaluate whether downsizing or selling your home could provide the financial flexibility you need for your reset.
Start small with entrepreneurship: If you want to start a business, begin as a side hustle while maintaining your current job.
Plan for the long-term: Start financial planning for potential resets 5-10 years in advance.
Prepare for worst-case scenarios: Get necessary insurance and legal documents in order to protect yourself and your family.
Make incremental changes: Instead of dramatic moves, try making small shifts over time to support bigger changes.
Stay flexible: Be prepared to adjust your plans as circumstances change.
Overcoming Common Obstacles
Fear of financial insecurity: Address this by thoroughly analyzing your finances and creating backup plans.
Emotional attachment to current lifestyle: Acknowledge your feelings, but don't let them prevent you from making smart financial decisions.
Lack of clear direction: Take time for self-reflection to clarify your values and goals.
Pressure from others: Remember that your reset should be driven by your own dreams and values, not others' expectations.
Overwhelm from big changes: Break down your reset into smaller, manageable steps.
Unexpected setbacks: Stay resilient and look for creative solutions when faced with challenges.
Impatience for results: Remember that sustainable change often takes time. Be patient with the process.
Difficulty cutting expenses: Start with small reductions and gradually increase your frugality over time.
Fear of failure: Reframe failure as a learning opportunity and part of the journey.
Lack of support: Seek out like-minded individuals or communities who understand and support your goals.
The Mindset for a Successful Great Money Reset
Embrace flexibility: Be open to adjusting your plans as circumstances change.
Cultivate resilience: Develop the ability to bounce back from setbacks and learn from challenges.
Practice patience: Understand that meaningful change takes time and effort.
Maintain curiosity: Stay open to new ideas and opportunities that may arise during your reset.
Foster creativity: Look for innovative solutions to obstacles you encounter.
Prioritize self-reflection: Regularly check in with yourself to ensure your actions align with your values and goals.
Develop a growth mindset: View challenges as opportunities for learning and personal development.
Practice gratitude: Appreciate the progress you make, no matter how small.
Embrace calculated risk: Be willing to step out of your comfort zone, but do so thoughtfully.
Maintain a long-term perspective: Keep your ultimate goals in mind, even when facing short-term difficulties.
Conclusion
"The Great Money Reset" by Jill Schlesinger offers a comprehensive guide to reimagining your financial life in a way that aligns with your deepest values and aspirations. By combining practical financial advice with strategies for personal growth and change, Schlesinger provides a roadmap for those seeking to make significant life changes without sacrificing financial security.
The key takeaways from the book include:
- Thorough financial planning is crucial before making any major life changes.
- Controlling spending and consumption is a powerful tool for creating financial flexibility.
- Negotiation can often improve your current work situation without the need to quit.
- Real estate can be leveraged to fund significant life changes, but decisions should be made logically, not emotionally.
- Entrepreneurship can be a path to your dream job, but it's wise to start small and grow incrementally.
- Long-term planning and preparation are essential for successful life resets.
- Emotional and psychological preparation is just as important as financial planning.
Remember, your Great Money Reset isn't just about finances – it's about creating a life that truly reflects who you are and what you value. With careful planning, a willingness to adapt, and the courage to take calculated risks, you can achieve your dream life without sacrificing financial security. The journey may be challenging at times, but the reward of living an authentic, fulfilling life is well worth the effort.