Money | Finally understand your finances
All finance planning depends on your context. Build that context in under one hour.
Money. Everybody wants it but nobody enjoys actually diving in and crunching the numbers. Today we’ll do just that. And since this will be a yearly post, take this as a yearly reminder to shine some light into your accounts.
This is not financial advice, this is some guys sharing tips they heard from some other guys and gals and AIs.
Understand your finances in under one hour
Review your cash flows
This used to be a drag to do, I tried a bunch of apps, most of their integrations were not great and they classified stuff wrong. Now we have AI. Give it a try: Export your account history, feed it into Claude, and ask it the following questions:
How much goes in? In most cases this is just your salary maybe investment income. In a financial partnership? Then do this analysis for your partnership.
Where does it go? Don’t focus on every cent. Most people spend most of their money on three things: Housing, transportation, food. What’s your spending on each of those categories? Any surprising outliers?
Build a habit: Doing this once a year is work, but just checking your cashflows every week takes two minutes. This allows you to find fraud, find recurring subscriptions, and get a feeling for what’s worth it and what isn’t.
A lot of us have subscriptions that renew monthly, or even yearly, and then we forget about them until a random £50 to £100 charge appears on our statement.
I use AI to scan my statements, spot recurring subscriptions, and calculate my current subscription burn rate. It is a simple way to get more awareness of where your money is going.
Cameron
Project your trends
Next, get a feeling for where this will develop towards. Focus on the timeframe that is right for you. Stable job and family? Project years and decades. Starting an AI startup? Plan for the next months. Again, Claude can help you figure it out.
What are you expecting to get? Will you stay in your job? Until when? Expecting an inheritance? How will your savings develop? Again, focus on the 80/20, make a few crude assumptions and feed them to Claude.
What are you planning to spend? Planning on getting a house? Care responsibilities? Big life events? What’s your “burn rate”?
Try a few scenarios: Predictions are hard, life will surprise you. Try a few different scenarios depending on your personal life and the macroeconomic trends around you.
I have this weekly review where I ask myself the question if I have any lingering feelings I am not checking in with. For the last few weeks that was financial anxiety. Now, while writing this article, I analyzed and projected my finances with Claude, took ten minutes, and that anxiety is gone. Not because I suddenly found money, but because I feel less in the dark about how long it’ll last me.
Christoph
Explore your beliefs
You can spend a lot of time crunching the numbers but that won’t help much if your decision making around money is driven by deep-rooted beliefs that work against you. Take a few minutes to start exploring those as part of your financial audit:
Explore your upbringing: What were the conversations at home about money? Were there any? What was ok and not ok to spend money on? Was there a feeling of scarcity or abundance?
Explore money scripts: Research has identified four unhealthy ones: Worship (“money solves everything”), Status (“net worth is self worth”), Avoidance (“money is the source of evil”), Vigilance (“question all purchases”). Check them here.
Start conversations: Money can be taboo but if you frame it right, having a conversation about it can be liberating. Start a conversation with your partner, friend, or parent. Consider a therapist if you scored high on money scripts.
Growing up, there wasn’t a lot of financial stability at home. Both of my parents were self-employed with fluctuating incomes. Somehow I took away from this a deep belief that “it always works out” but I could’ve just as well learned that I really want a stable government job.
Christoph
Give it a go
In the next weeks, we will explore how you can optimize your spending, investing, and other topics. You’ll be able to take most from those posts when you have a clear understanding of your status quo:
Block one hour in your calendar to feed your finances to Claude. Bet money on actually doing it.
Journal or grab a friend to reflect on your beliefs around money.
Discuss this in our community
Missing something? Add a comment and we’ll add it to next year’s version