Key Takeaways
1. Assess your current financial position before making big changes
Run through the numbers, and you, too, might find that those dreams of making a change are more realistic than you think.
Conduct a comprehensive financial analysis. Start by calculating your current income, assets, and liabilities. Consider your housing situation, spending habits, and any outstanding obligations to others. This analysis will help you understand your financial starting point and identify areas for improvement.
Create multiple future scenarios. Develop best-case, middling, and worst-case scenarios for your planned changes. Consider how each scenario would affect your finances over the next three years and beyond. This exercise will help you anticipate potential challenges and opportunities.
Consider incremental steps. If a full-blown money reset isn't feasible, explore smaller changes that could still move you toward your goals. These might include:
- Making a lateral move within your industry
- Negotiating different work arrangements in your current job
- Taking a shorter sabbatical instead of quitting outright
- Pursuing part-time education while continuing to work
2. Curb consumption to unlock financial freedom
The not-so-hidden secret to achieving your dreams is: spend less.
Examine your spending rules. Analyze the unspoken rules that guide your consumption habits. Ask yourself:
- What do you really need in life, and what do you only think you need?
- Do you ever feel guilty, insecure, or anxious about purchases?
- Are you making impulsive purchases? When and why?
- How are relationship dynamics influencing your spending?
Experiment with spending changes. Try making significant adjustments to your spending habits for a set period. This will help you determine which changes are sustainable and which might be too extreme. Remember, the goal is to find a balance that allows you to save more without feeling deprived.
Cultivate a savings mindset. Develop habits that prioritize saving over spending. This might include:
- Automating savings contributions
- Waiting 24-48 hours before making non-essential purchases
- Finding free or low-cost alternatives for entertainment and hobbies
- Regularly reviewing and canceling unnecessary subscriptions or services
3. Negotiate better work arrangements in a shifting job market
If you don't ask, you don't get.
Understand your value and options. Research the job market for your skills and experience. Understand what other employers are offering and what unique value you bring to your current role. This knowledge will give you confidence in negotiations.
Prepare a comprehensive pitch. Use the BULLY framework to structure your negotiation:
- Button up your Big Ask: Clarify exactly what you want
- Understand the full picture: Research your company's situation and your boss's perspective
- Lose the ego (sort of): Be confident but not arrogant
- Leave time to practice the conversation
- Don't Yuck it Up: Remain professional, even if things don't go your way
Consider all aspects of compensation. Look beyond salary to negotiate for:
- Flexible work arrangements
- Additional vacation time
- Professional development opportunities
- Better health benefits or retirement contributions
- Performance bonuses or equity options
4. Invest wisely for both present opportunities and future security
Invest in you—you can't afford not to.
Stick with passive investing for long-term growth. Despite market volatility, index funds remain a smart choice for building wealth over time. They offer diversification and lower fees compared to actively managed funds.
Allow for some calculated risks. Consider allocating a small portion (e.g., 5%) of your portfolio to higher-risk investments like cryptocurrency or start-ups. This gives you the opportunity to benefit from potential high returns without jeopardizing your overall financial security.
Maintain a balanced portfolio. Keep a mix of stocks and bonds appropriate for your age and risk tolerance. This helps buffer against market volatility and reduces the likelihood of making emotional investment decisions during downturns.
Key investment considerations:
- Limit company stock to no more than 10% of your portfolio
- Don't raid retirement accounts to pay off low-interest debt
- Adjust your investment risk based on your specific needs and goals, not just your age
5. Leverage tax strategies to fund your life transition
The IRS can be your friend during a Great Money Reset.
Optimize your tax brackets. If you anticipate a temporary drop in income due to your life changes, consider strategies to lock in your future tax liability at a lower rate. This might include:
- Converting traditional IRA funds to a Roth IRA
- Realizing capital gains strategically
- Front-loading charitable donations
Explore business-related tax benefits. If you're considering self-employment or starting a business, investigate potential tax advantages such as:
- Home office deductions
- Retirement plans for the self-employed (e.g., SEP-IRA, solo 401(k))
- Writing off business-related expenses
Maximize charitable giving strategies. Consider tax-efficient giving methods like:
- Donating appreciated stock to avoid capital gains taxes
- Bunching donations in high-income years
- Opening a donor-advised fund
- Making qualified charitable distributions from IRAs if you're over 70½
6. Strategically buy, sell, or evolve your real estate holdings
Equity equals choice, but you have to do what Pam and Tom did and move decisively while you have the chance.
Reassess your housing needs. Consider whether your current living situation aligns with your future goals. Be open to unconventional options, such as:
- Downsizing to free up equity
- Renting instead of owning
- Exploring alternative locations that offer a lower cost of living
Time your real estate moves strategically. While it's difficult to perfectly time the market, consider selling when:
- Local real estate prices are high
- You have significant equity built up
- Your life circumstances have changed (e.g., empty nest, job relocation)
Be cautious about conventional wisdom. Question common real estate "rules" that may no longer apply, such as:
- Always buying a fixer-upper
- Never selling in a down market
- Automatically choosing to buy over rent
7. Start, sell, or pivot a business to align with your goals
Don't let a good crisis go to waste!
Start small and test your ideas. Begin with a side hustle to validate your business concept and build skills without risking your financial stability. This approach allows you to:
- Learn about your target market
- Refine your product or service offering
- Build a customer base gradually
Consider selling at the right time. If you own a business, be open to selling when:
- The market for your business is strong
- You've taken the company as far as you can
- A sale would provide life-changing financial security
Evolve your business to meet changing needs. If your current business model is struggling, explore ways to pivot or adapt, such as:
- Identifying new customer needs or market trends
- Leveraging existing skills and resources in new ways
- Forming strategic partnerships to expand capabilities
8. Invest in education and skills that truly advance your career
Think critically about how education will benefit you, what it will cost, and how else you might reach your goals.
Identify specific career benefits. Before pursuing additional education, clarify:
- The exact skills, knowledge, or credentials you hope to gain
- How these will concretely benefit your career (e.g., higher salary, new job opportunities)
- Whether the potential benefits justify the time and financial investment
Explore funding options carefully. Consider how you'll pay for education without compromising your long-term financial health. Options might include:
- Employer tuition assistance programs
- Scholarships or grants specific to your field or background
- Part-time study while continuing to work
Investigate alternatives to traditional degrees. Look into options that may provide similar benefits at a lower cost or time commitment, such as:
- Professional certifications
- Coding bootcamps or other intensive short-term programs
- Online courses or MOOCs (Massive Open Online Courses)
- On-the-job training or internal company programs
9. Navigate family dynamics during financial transitions
Don't give up on your dream just because a family member doesn't get it. You know best what's right for you.
Seek advice thoughtfully. When consulting family members about your plans:
- Consider their potential biases and motivations
- Be clear about what kind of input you're seeking (e.g., brainstorming vs. validating a decision)
- Remember that you're the one who must live with the consequences of your choices
Handle financial assistance carefully. If accepting money from family:
- Clearly document whether it's a gift or a loan
- Specify repayment terms if applicable
- Discuss and agree upon any expectations attached to the assistance
Communicate your plans effectively. When sharing your decisions with family:
- Explain your reasoning and the thought you've put into the decision
- Be prepared to address their concerns
- Stand firm in your choices while remaining respectful of their perspectives
10. Plan for long-term financial resilience and worst-case scenarios
You'd darn well better contemplate the end of your life and create an estate plan as part of your Great Money Reset.
Build financial independence gradually. Embrace the FINE (Financial Independence, New Endeavor) approach:
- Save aggressively in the years leading up to your planned transition
- Consider lifestyle changes that will lower your expenses long-term
- Build up non-retirement savings to provide flexibility during your transition
Prepare for potential setbacks. Address worst-case scenarios by:
- Updating your will and other estate planning documents
- Securing appropriate life and disability insurance
- Ensuring you have adequate health insurance coverage, especially if leaving an employer-sponsored plan
Balance present enjoyment with future security. While saving for the future is crucial, remember to:
- Allocate some resources to current experiences and personal growth
- Regularly reassess your goals and adjust your plan as needed
- Find a sustainable balance between frugality and quality of life
Last updated:
FAQ
What's "The Great Money Reset" by Jill Schlesinger about?
- Overview: "The Great Money Reset" by Jill Schlesinger is a guide for individuals contemplating or undertaking significant life or career changes, offering financial advice to help them achieve their goals.
- Focus on Change: The book addresses the common desire to make proactive changes in life, such as career shifts, relocations, or lifestyle adjustments, and provides strategies to turn these desires into reality.
- Real-Life Examples: Schlesinger uses real-life stories, like that of Melissa, who reevaluated her career during the COVID-19 pandemic, to illustrate how financial planning can facilitate major life transitions.
- Practical Advice: The book offers practical financial advice, including how to assess current finances, manage spending, and leverage investments to support life changes.
Why should I read "The Great Money Reset"?
- Empowerment: The book empowers readers to take control of their financial lives and make meaningful changes that align with their personal values and goals.
- Actionable Strategies: It provides actionable strategies for financial planning, helping readers to navigate transitions with confidence and security.
- Inspiration: Through real-life examples, the book inspires readers to overcome inertia and fear, encouraging them to pursue their dreams.
- Comprehensive Guidance: Schlesinger covers a wide range of financial topics, from budgeting and investing to tax strategies and real estate decisions, making it a comprehensive resource for anyone considering a major life change.
What are the key takeaways of "The Great Money Reset"?
- Financial Assessment: Before making a big change, thoroughly assess your current financial situation, including income, assets, debts, and obligations.
- Spending Habits: Reevaluate and potentially curb your spending habits to align with your new life goals and ensure financial stability.
- Investment Strategy: Maintain a balanced investment strategy, even during volatile times, and consider the role of risk in your financial planning.
- Tax Opportunities: Use the tax code to your advantage, especially during transitions, to minimize liabilities and maximize savings.
How does Jill Schlesinger suggest managing spending in "The Great Money Reset"?
- Examine Spending Rules: Identify and question the unspoken rules that guide your spending, such as perceived needs versus actual needs.
- Impulse Control: Be aware of impulsive purchases and the emotions driving them, such as stress or the desire for validation.
- Experiment with Changes: Test changes to your spending habits to see what adjustments are sustainable and beneficial for your financial goals.
- Focus on Value: Prioritize spending on what truly adds value to your life, rather than on societal or peer pressures.
What is the BULLY framework in "The Great Money Reset"?
- Button Up Your Big Ask: Clearly define what you want from your employer, whether it's a raise, flexible hours, or other benefits.
- Understand the Full Picture: Research your market value, your contributions to the company, and the company's ability to meet your requests.
- Lose the Ego: Approach negotiations with confidence but without arrogance, showing empathy for your boss's perspective.
- Leave Time to Practice: Rehearse your negotiation pitch to ensure clarity and confidence during the actual conversation.
How does "The Great Money Reset" address investment strategies?
- Passive Investing: Schlesinger advocates for passive or index investing as a reliable strategy, even in volatile markets.
- Risk Management: Maintain a diversified portfolio to buffer against market downturns and avoid over-concentration in any single asset, like company stock.
- Opportunities in Volatility: While sticking to proven strategies, consider allocating a small portion of your portfolio to high-risk, high-reward opportunities like crypto.
- Long-Term Focus: Emphasize long-term growth and stability over short-term gains, ensuring your investments align with your life goals.
What tax strategies does Jill Schlesinger recommend in "The Great Money Reset"?
- Roth IRA Conversions: Consider converting traditional IRAs to Roth IRAs during low-income years to lock in lower tax rates.
- Capital Gains Management: Strategically harvest capital gains during years of lower income to minimize tax liabilities.
- Charitable Giving: Utilize donor-advised funds and qualified charitable distributions to maximize tax benefits from charitable contributions.
- Home Office Deductions: If self-employed, take advantage of home office deductions and other business-related tax benefits.
How does "The Great Money Reset" suggest using real estate in a financial reset?
- Leveraging Equity: Use the equity in your home to fund major life changes, whether through selling or refinancing.
- Market Timing: Consider selling in a hot market to maximize returns, but be cautious of timing the market too precisely.
- Emotional Considerations: Address emotional attachments to your home and evaluate whether selling aligns with your long-term goals.
- Future Opportunities: Selling a home can open up future opportunities, such as downsizing or relocating to a more desirable location.
What role does education play in "The Great Money Reset"?
- Skill Identification: Clearly identify the skills or credentials you need to advance your career or transition to a new one.
- Cost-Benefit Analysis: Weigh the financial and opportunity costs of further education against the potential career benefits.
- Alternative Paths: Explore less costly educational options, such as certifications or employer-sponsored training, before committing to expensive degrees.
- Practical Application: Ensure that any educational investment directly supports your career goals and financial objectives.
How does "The Great Money Reset" address family dynamics during a financial reset?
- Communication: Clearly communicate your plans and financial situation to family members to manage expectations and gain support.
- Financial Help: Be cautious about accepting financial help from family, as it can complicate relationships and create unspoken obligations.
- Boundaries: Establish boundaries with family members who may not support your decisions, focusing on your own needs and goals.
- Conflict Resolution: Address conflicts with empathy and understanding, seeking solutions that respect both your needs and those of your family.
What are the best quotes from "The Great Money Reset" and what do they mean?
- "If you don’t ask, you don’t get." This emphasizes the importance of advocating for yourself, especially in job negotiations, to achieve your desired outcomes.
- "Life is short, and we all must take responsibility for our happiness right now." This quote underscores the urgency of aligning your financial life with your personal values and desires.
- "Cash is the salve to the dreaded 'what ifs'." It highlights the importance of liquidity in financial planning, providing a safety net for unforeseen circumstances.
- "Don’t be afraid to blow things up. But please, don’t do it if you don’t have to—or if you shouldn’t." This advises careful consideration before making drastic life changes, ensuring they are necessary and beneficial.
How can "The Great Money Reset" help me plan for future life changes?
- Long-Term Planning: Start planning five to ten years in advance for potential life changes, focusing on building financial resilience.
- Financial Inventory: Regularly assess your financial situation, including savings, investments, and potential future obligations.
- Emotional Readiness: Prepare emotionally for change by gradually adjusting your mindset and habits to align with your future goals.
- Flexibility and Adaptability: Stay open to new opportunities and be willing to adjust your plans as circumstances evolve.
Review Summary
Reviews of The Great Money Reset are mixed. Many praise its timely advice on reassessing finances post-pandemic and making big life changes. However, critics argue it caters mainly to high-income individuals, with examples featuring people earning $200k+ or with million-dollar assets. Some found it out of touch with average Americans' financial realities. Positive reviews highlight practical tips and relatable stories, while negative ones criticize its focus on the wealthy. Overall, readers appreciate the book's emphasis on aligning finances with personal values and dreams.
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