5 TIPS TO HEALTHIER MONEY HABITS
Trying to find words for this season we are going through is hard. This unexpected pandemic has flipped the wedding industry, along with many others, on its head leaving business owners filled with stress, anxiety, and open calendars for the time being. I am on this rollercoaster with you. I have had my ups and my downs, and trying to be productive during this crazy time has been the thing I have struggled with the most. It hasn’t been easy, and to be truthful, I think this season will end and we will see some great moments of creativity come out of these isolated times, but it might be a long time before we do.
As I was trying to pull together my thoughts and words for this season I was reflecting on what I could offer fellow creatives during this time. Luckily it has been amazing to witness the outpouring of advice and support from creatives and small businesses to help each other. However there was one topic that I haven’t come across much in my scrolling but I think is vitally important but is uncomfortable to talk about. That topic is money. Not how to make money during this time, lots of posts have covered that, but honest conversations about money, spending habits, and ways to cut our current budgets in this time of great uncertainty. Right now, our futures are very unknown and with all our sessions being canceled/rescheduled, I know I have had bouts of panic thinking about what my income is going to be for this coming year. I never expected to enjoy budgeting & spreadsheets, but it is something that over the past few years I have found to bring me lots of peace and a little joy and I am hoping I can take away a smidge of your panic with some helpful tips. I want to talk about where our money goes, what expenditures are necessary, what are some things we need to let go of, and how to set up goals and systems for the future. I know everyone’s relationship with money and their overall journey is different (and frankly most people hate talking about it), but I am hoping with these tips below -- and the small blessing of a little extra time this pandemic has given us -- you will start feeling more confident in your finances and being able to save a little more every day.
1 START TRACKING YOUR MONEY
This is the most basic, but the most life-changing thing that will ever happen to your money habits. I feel like people either do this half-ass or have literally never heard of this. And I get how intimidating this process can be, BUT you really need to think of it as being a necessity in adult life. Just like how you pay car insurance, go to the grocery store and pay your taxes, it needs to become part of your weekly routine. ‘Why is this step so important?’ you might ask -- well simply because so many people have NO IDEA where their money is going. It sounds crazy, but it is true. When my husband and I first sat down to do this step we realized in a single month we were spending $300 on groceries AND $300 on going out to eat and we didn’t even realize we were spending anywhere close to that amount on food. In order to have healthier money habits, you need to know where your money is going. Knowledge really is power and this is the first step to getting there.
This process won't be easy and it honestly might be painful at first, realizing how much money you spend going out every week, or how many subscriptions you forgot about, can make you feel bad about yourself and the choices you’ve made. But once you get this information and have the full knowledge of your spending habits, you can do something about it. If it just stays this unknown topic, how do you ever expect it to change? Still not convinced? Well let’s think about the big picture here, once you have enough data from tracking your money, think of how you can prepare financially for each month, each season, and honestly each year. Our years might not be exactly the same from year to year, but we have things that never change -- like loved one’s birthdays, or holidays, or when our gym charges a random fee every year because they can -- but what if those things no longer surprised us, but were part of our plan all along.
So how to get started on tracking your money? I’d recommend getting your bank account or credit card statement out from the past 3 months and label each expenditure for what it was for, and start combining things into categories. For example: Groceries, Out with Friends, Car Stuff, Subscriptions, etc. There are a lot of great tools out there that can help you track your money. The main one I use is Mint, which is a FREE program that will automatically sync with your bank and credit card to categorize your spending, color code it, and put it into graphs. As a creative person this presentation of data really helps but use whatever tool works for you. The goal of all this is to understand where your money is going to get a clear picture!
2 UNDERSTAND YOUR PRIORITY PURCHASES
Understanding the priority of things you purchase is an important step in having healthier money habits. So what are “Priority Purchases”? Everyone’s priorities in life are different, but what I am referring to here are the ones at the core. The things that you and your family need to survive. When I first learned about these things from Dave Ramsey’s Financial Peace University, it really put things into perspective because of all the things that weren’t on this list. My Netflix subscription wasn’t there, my weekly Starbucks drink wasn’t there, my online shopping cart wasn’t there, and so on. And this is where things start to get uncomfortable because there are so many things in our lives that we spend money on that are not essential. Now stay with me, I can feel you start to cringe, I am not here to tell you that you need to feel bad about the things you spend your money on. That is not the point of this tip! The point of this tip is to figure out what things need to be a priority so that we can ensure that in any month, regardless of the turmoil around us, we can ensure those pieces are taken care of. I want this to be a source of relief from financial worry and not to make you feel worse about your habits. It takes dedication and sacrifice, but if you work at it now, it can save you from so much panic and anxiety later. And it may come to light that in order to ensure these Priorities can be met, that cuts in other areas of your spending habits may need to happen.
Priority Purchases are:
Shelter & Utilities
Food
Basic Clothing
Transportation
Essential Health Needs ( prescriptions, or medical items/visits)
If you feel confident of being able to take care of these 5 things every month then we can start adding some wants on top of these needs. If any part of this list is questionable then we need to really take a hard look at what we can cut.
3 COMPLETE AN INTENTIONAL INVENTORY SWEEP
This tip is exactly like spring cleaning your house except for your finances. This is the time to really take a good look at what you are buying and decide whether it is worth keeping or not. In the land of subscriptions that we live in -- it is so easy to forget what we are actually subscribed to and how we spend so much more money to make things a little more convenient. It may be a little embarrassing to see some of the stuff you are still paying for and haven’t used, but go through all those expenditures anyway. What we are looking for is to see what things are needed and useful and what fluff we can say goodbye to in order to save money. This process will look very different for every person, and especially in the midst of an epidemic, but it is a necessary step.
So what do you need to do? Hopefully you already have your expenditures for the past couple of months categorized and you have your list of Priority Purchases ready to go. If not that’s ok, but it may just take you a bit longer to get everything together. Go through your list of expenditures and start by pulling out all of the times you spent money on those Priority Purchases. These we’re not going to mess with because you have deemed them essential, set them aside. Now the rest of your purchases need to be evaluated to see if they should be kept, suspended, or fully removed from your budget moving forward. While going through these expenditures take note of whether these are one-time purchases (out to eat, amazon, etc) or if they are recurring charges (subscriptions, gym memberships, etc).
For the recurring charges, you will need to figure out whether this is something worth continuing to pay for or not. Do you really need 5 movie streaming services, or could you narrow it down to 1 or 2. Whether you use Marie Kondo’s method, a pros and cons list, or just go with your gut you need to figure out which ones you would like to keep and which ones you would like to get rid of. It’s not fun, just like eating healthier or getting in a workout routine you have to deny yourself some things you really like. But what really helped us through this process was knowing that you aren’t saying goodbye to things you enjoy forever and setting goals that we were excited to meet.
4 SET ACHIEVABLE GOALS AND WORTHY BOUNDARIES
Alright so the last tip was a little tough. This one though is the fun part! This is where you get to dream, plan, and get your finances working the way you want. It’s time to set some boundaries and goals!
For setting goals, try to think of something that you really want and are willing to sacrifice for. For this reason, I recommend setting BIG goals but it doesn’t have to be gigantic just make it something that you are dedicated to achieving. These goals are going to look different for everyone but to give you some idea of the goals my husband and I had/have here are a few:
Get Debt Free
Have 6 months salary in savings
Have a healthy travel fund
For those who don’t know me very well, I’m a bit of an extreme person in that when I decide to do something I tend to go all-in, which explains these giant goals we set. Don’t be intimidated though, your goals are your own and they are allowed to change! The big thing is to set a goal and then work to achieve it. I think a perfect goal to start on right now is creating an emergency fund. With a current pandemic going on, something like would be super helpful as we dive into the unknown. Dave Ramsey recommends $1000 Emergency Fund, to get you started. If you are feeling unsure about your income right now, this is the perfect goal to try and reach to help calm some nerves.
In other everyday life spending, to help yourself achieve your goals, you have to set boundaries. My recommendation is to start with something you really struggle with when it comes to money. If you have a habit of buying lots of clothes, or things for your home, make a dedicated budget for those items, but only allow yourself to pay in cash. That way every time you pay for something, you are reminded that money is actually leaving your wallet. It will help you stop shopping online, and make you put extra effort to go to a store. And when your monthly cash for that specific category is gone, then you know you will have to wait till next month or paycheck until you can refill it. I know this might sound crazy, but being at home right now might be exactly what you need to spend less going out and get your finances in check -- somewhat of a sliver lining, right? You don’t have to jump all at once, but take baby steps.
5 AUTOMATE YOUR ONLINE FINANCES
Like anything in the modern age we want to automate our money habits to ensure they happen even without us knowing. It’s time to use your bank’s online tools to help you! I can’t get too much into the weeds on this topic as every online portal is different but the long and short of it is you want to set up multiple places at your bank to keep money. If your money is in a single account it is very tempting to see the full amount and think ‘wow I have $X! I can buy that thing I wanted”. The goal of moving your money into other accounts is to ensure that you have the money in your checking account for every day essential purchases while all of your goals are also being contributed to. If you only have one account I strongly recommend setting up at least one other but preferably several. These additional accounts should be used to compliment the goals you have for your money. For example, if you want to travel more, then create an account with your bank that is your “travel fund”. Then you can set it up so that on a set time schedule you can automatically move money from your checking (where most people get their paychecks deposited to) to this travel fund. It doesn’t matter if it's a lot or a little, that automatic transfer will begin to add up. The best part is that you probably won't even notice the money moving from your checking account to these other accounts but the result after several months of this practice is so rewarding.
There you go! Five tips to start changing your money habits now. Understand this is a process, have grace on yourself, and don’t give up. It is just like anything, it will take a mindset of dedication and persistence, but the results will be way worth it.
Also, know that I did not come up with all of these ideas on my own, but have been on my own money journey for a while, and I thought sharing it with you was important. I have attached some resources below that I have found very helpful in my debt-free journey, as well as my personal and business one. There is so much FREE information out there you guys, so make sure you take advantage of it while you can.
RESOURCES
ONLINE RESOURCES
READING MATERIAL
PODCAST
For the Love with Jen Haymaker
Rise by Rachel Hollis
Goal Digger Podcast
YOUTUBE