You might say, “hey, what about The Secret or the universe will provide…” but I say, “hey, be practical”! Unless you are a sadhu living in a cave, who has given up all things worldly, you have financial obligations. In Book One of the Yoga Sutras, Master Patanjali tells us, “vritti sarupyam itaratra,” when we are not in a state of yoga, we identify with our thoughts. These thoughts of financial worries can be overcome by applying techniques from the yoga practice – presence, awareness, focus – to your financial life and things will fall into place.
When reviewing someone’s financial situation, the first thing I do is a cash flow statement. I don’t just do the math in my head; I use a pencil and paper or an Excel spreadsheet. From there I can make a plan. And so can you.
Create a Cash Flow Statement
A cash flow statement shows you what you earn and what you spend your money on. Add up all of your sources of income in one column. In the next column, list everything you spend it on. This includes rent, mortgage payments, food, entertainment, clothing, Starbucks, magazines, online shopping, charitable donations, savings, paying off credit cards, whatever, you name it. If it is a challenge to recall how you are spending your money, keep track of every dollar you spend every day for a week. It will become crystal clear.
Next, add up both columns and subtract what goes out from what comes in. Voila! Now you know; it is there for you in black and white! You either have a surplus, you are breaking even, or you are running at a deficit. Whatever the answer is, now you know and you can adjust your spending from there.
Make A Plan
- If you have a surplus, congratulations! Here is your plan: pay yourself first. Take some, or all, of your surplus, and move it into a savings account or a retirement account. Set it up to go automatically. *
- If you are breaking even, look for ways to ease up on your spending and give yourself some breathing room. *
- If you running at a deficit, which means you are supporting your lifestyle with credit cards, make an immediate decision to stop the madness. Cut up your credit cards, set a plan to pay them off, and start living within your means.
*If you have a surplus or you are breaking even, but this includes paying off credit card debt, you need to rethink your plan. It is good to have money in a savings account for an emergency, but essentially that money is cancelled out by any debt you have. Cut up the cards and get aggressive about paying off the debt.Financial planning is a process that empowers you to own your financial life. As my teacher, AG Mohan says, “Freedom is in your own hands. It is up to you to develop the peace.” Set goals for yourself, make a plan, implement that plan, and revisit it often. Just like your yoga practice!