1. Get honest about where you are.

It’s human nature to avoid pain. But denying a problem will only make it worse. Imagine the damage you would do if you were in denial that you had a broken leg, and you continued to limp along. While most Americans would take care of a broken leg, statistics show that more than one-third of Americans purposely avoid thinking about their damaged financial lives. Until we get honest with ourselves, we are unlikely to do what we need to do to improve our financial health. Among other things, it is important for you to know the following.

• your credit score
• how much you owe and to whom
• how much you have in savings
• how much you have in retirement accounts
• where your retirement accounts are held and what they are invested in

Take Dr. Brad’s research-based Financial Health Test for a quick measure of your current financial health.

2. Know where you want to be.

Changing habits can be tough. To stay motivated, we need to keep our eyes on the prize. What would a healthy financial life do for you? How would it make you feel? What would you have? Where would you go? Take time to identify your goals around vocation, education, retirement, travel, health and family. Where do you want to be in five years? What do you want your life to look like in 10 years? The more specific you can be in identifying what you want, the more energy and inspiration you will unleash to do what it takes to get there.

3. Beware of your thoughts.

Are you an overspender? Do you neglect saving for the future? If you answered “yes” to both questions, you are an average American. Perhaps that helps explain why 80% of Americans say that money is the No. 1 source of stress in their lives. To change bad habits, it is often essential to first identify the beliefs that underlie them. All our financial behaviors – even the most destructive ones – make perfect sense when we understand our beliefs about money. These beliefs, called money scripts, are typically outside our conscious awareness. But they drive all our financial behaviors. Some problematic money scripts include: “More money or more things will make me happier,” “I can never have what I want, so I might as well get what I can when I can.” When we base our financial lives on these erroneous or incomplete beliefs, we set ourselves up for failure.

4. Forgive yourself.

Our feelings and beliefs about money don’t develop in a vacuum. We come about them honestly; that is to say, we are taught them. Or we arrive at them as we try to make sense of confusing situations. As children, we are prone to making incomplete conclusions. For example, if our family is rich and unhappy, we may conclude that it is the money that led to our unhappiness, when the discontentment could be better explained by other issues. As adults, we rarely return to our past, identify our money scripts, examine them or change them in a systematic way. As a result, their control over our financial lives can be insidious. So regardless of your current financial situation, have compassion for yourself. Most likely, your behavior toward money is a result of where you came from. The good news is you can always change.

5. Commit to change (if you are ready).

Let’s face it. Change takes time, energy and effort. To commit to change, we must first be convinced it is important enough for us to do so. If you want to examine whether or not change is right for you, write down the pros and cons of changing. What are the pros of staying right where you are, such as continuing to buy what you want, travel or not have to think about finances (at least for a while)? What are the cons of continuing to do what you are doing, such as continued financial stress, spiraling debt, marital problems, bad credit or bankruptcy? You will commit to change only when your list of benefits to change significantly outweighs your list of reasons to stay right where you are. Even if you are not ready to transform your financial life, it might be good for you to consider taking Step 6 anyway. When you are ready to commit to improving your financial health, you are well on your way.

6. Apply some “financial first aid.”

Before you dive into the details of transforming your financial life, engage in some “financial first aid.” In health care, first aid is meant to prevent further harm and promote recovery. For a person who is bleeding, first aid may involve applying pressure to the wound. Instead of losing blood, overspenders bleed money, and much of it borrowed. In such a case, financial first aid involves putting a stop to the overspending. For those struggling with overspending, first aid often includes halting the use of credit cards. Consider leaving the credit cards behind and shopping with cash to help avoid impulse buying. While it might seem like a small action, it can be a giant leap toward future financial health. Studies show we spend 30% less when we pay with cash. So take action now to stop the bleeding.

7. Make a plan.

To stay on top of our finances, we need a plan for spending, saving and making charitable donations. A spending plan is essential, one that allows for meeting financial obligations and needs while allowing for saving and giving. Such a plan may include reducing spending in some areas while setting aside more money in other areas. Once a plan is in place, systems for tracking it are needed. Many find some of the more popular checking and budgeting software helpful. Many chose to save 10-30% of their income for retirement. Many set up direct deposits each month from their checking accounts to their Individual Retirement Accounts (IRAs) to ensure they pay themselves first.

8. Take action.

After taking an honest look at your financial life, committing to change and setting up a plan, it is time to take action. It takes about 30 days of practice before a new behavior can become an established habit. With a plan in place, you can begin tracking your spending, finding ways to save money and spending money on the things that matter most. Living a life of financial integrity, one in which your behaviors match your values and goals, feels good. Being conscious and purposeful about our spending can help us appreciate and enjoy life more.

9. Expect challenges.

It is important to know that relapse can happen in any change process. Relapse means slipping back into old habits. For most important changes, relapse is common and should be expected. The important thing is to not beat yourself up about it. Rather, get yourself back on track as soon as possible. See bumps along the way as learning experiences that can shed light on what you might need to change in your plan or where you may need extra help.

10. Ask for help.

The journey to financial health is just that, a journey. It is not an event. Understand that there will be setbacks along the way. If you find yourself repeating mistakes or having trouble following through on your plan, seek the help of a qualified helping professional. Depending on your situation, you might find it valuable to work with a financial planner, financial therapist, accountant or tax professional.