If you read this post you know that August 2018 is budgeting month for me. For most of my adult life, my financial choices have gone like this:
- Get paycheck
- Save money for monthly bills.
- All else is spending money.
And that was it. Notice the lack of savings in there? Yeah, my dad noticed that too and tried to convince me to start a Roth…thing… and I still have it? Yeah, I do. As well as a 401K and another retirement fund from my current job. So like, I have this savings thing in the bag, right?
I’ve been pretty fortunate in my life to not have had any major injuries. No broken bones, no surgeries, nothing. The worst that has happened to me is when I had to get some stitches in my foot from stepping on some glass while playing in the sprinklers. Oh, and almost chopping off the tip of my pinky finger with a paper cutter. Had to get stitches then too.
And I’ve got pretty good health benefits from my employer and I eat well so yeah, nothing major.
But I’ve been incredibly stupid about my financial health. I have no saving guys. None.
What if (and this could very well happen) I’m driving home and a drunk driver slams into the side of my Jeep and I’m in the hospital for a month and can’t work?
What if (and this could happen) my house catches on fire and I lose all of my possessions? Insurance will only cover a certain amount.
What if (and this is definitely going to happen) the Jeep craps out on me and I have to buy a new car immediately? I don’t want to take out a giant loan.
On the lighter side of things, what if I’m traveling and want to relax and have some money to spend? I can’t just use my credit card.
Apparently it isn’t too uncommon for people of my generation to not have very much in savings. Or at least only have around $1000 or so.
So I sat down and got serious about this. In that post I linked above I left you some PDFs that I’ve been using for budgeting. If you’re interested in getting your finances under control (which is what I’ve been doing this month) here are the steps I took:
- Stop. Spending. Money. Just stop. Take one of your days off and just don’t spend any money. Try to do that for two days in a row. Then three. I’ve found that spending money is a giant stone that gets rolling and then is very difficult to stop. Don’t surf Amazon, don’t go to the mall, don’t go to Target and definitely don’t go to Ulta. You’re sobering up from your spending spree. Something that helped me while I was in this step was to go through my credit card statements and figure out where I had spent money in the last month. Really consider why you purchased things and whether or not you’re still happy with that purchase. If you absolutely must go out during this step, just leave your credit card at home. You can’t use it if you don’t have it. (Be mindful that a lot of you have your credit cards set up on your Apple watches and phones. If that’s going to be a temptation, deactivate that.)
- Figure out a way to visualize your money. For me, the graph with my income and output really helps me see how much money I’m spending every month. For this step you need to be completely honest with yourself. Don’t try to hide the fact that you keep buying $50 worth of gummy bears every month. Who are you trying to lie to? No one cares about your gummy bears. It’s just affecting you. During this step, face up to your debt as well. I am in the fortunate position where I don’t have any college debt, car debt or much credit card debt. My only major debt is my house and since it’s accruing equity I don’t feel bad about it, plus I have to have a place to live and owning is cheaper than renting here. But some of you all might have $10,000 worth of debt. I don’t know! It sucks! Yeah! I get that! Just take a deep breath and figure out what you have coming in, and where money is going out. Just get that sorted out.
- Get your expenses toned down so that you are spending less than you are earning. I cannot emphasize this enough. You absolutely should not be living beyond your means. If you earn $40,000 a year and you spend $41,000 a year, you will be in debt. I’ll link some YouTube videos below that talk about how you can cut costs and save more money. Consider where you’re spending and ask yourself if you really, really need that subscription/product/thing. Hint: You probably don’t! You probably have enough clothes already. You can get free books from the library. You probably don’t need every new DVD that comes out. You definitely don’t need more shoes. This is the hardest part. I feel like a lot of people get this rush when they go buy something or when something comes in the mail. It’s new! And it feels so good for some reason. But trust me. It will feel a whole lot better if the day comes that you or your partner isn’t able to work but you have enough savings to see yourself through. That DVD collection isn’t going to matter then.
- Set up your budget. This was actually fun for me. I know, that’s weird. There are apps that will help you do this but I don’t use them due to the fact that they charge you (which I find ironic). Some people use envelopes and that’s whatever, if it works for you. Basically, you’re going to decide how much money you’re going to put where each month. So for example, as soon as I get paid, $600 goes straight into savings for bills. Immediately. That’s the first transaction I do. I save $1,200 a month for my mortgage, HOA, electric, cell phone, gas, Amazon Prime account, piano lessons and internet. I have a roommate that pitches in $600 a month (I’m a great landlord) to cover their side of the mortgage/HOA/electric/internet bill. That gives me $1,800 a month for just bills. I pay all of my bills on the 1st of the month. It’s an alert set up in my calendar. Every single bill gets paid on the 1st of every single month. That way I don’t have to ever worry about it. Bonus, $1,800 is more than I need for the bills so I actually have a little bit of savings there just in case the electric bill is sky high for some reason. For me, bills are a top priority. I want to keep my credit good so I make sure that my bills are paid on time every month. I would rather do this than eat steak for dinner. It’s a matter of prioritizing. After the $600 is transferred for bills, I’ve currently been paying $200 against my credit card debt. I accrued this debt from a series of impulse buys (which I don’t particularly regret). I bought a (refurbished) camera (no regrets), train tickets for me and my fiancé to go to New York in October (no regrets) and plane tickets to fly to London in October (no regrets). Oh, I also bought a couch (no regrets). Unfortunately, all of these were pricey items so I’m stuck in the mire of paying them off. But I’m not letting that bill sit there, I’m chipping away at it pretty steadily. I’m down to only owing ~$400. After I pay the credit card, I move $200 into a spending money account. I move $200 because I get paid bi-weekly and I give myself $100 a week to do whatever I want to with. Literally. I can blow it all in one go if I feel like it. I can buy movie tickets, go out to dinner, save it for something better, buy crap off Amazon, anything. That’s my whatever money. Then I give myself $150 for food for two weeks. (I eat Easy Mac and granola bars pretty much.) Anything after that ($600 + $200 + $200 + $150 = $1,150) goes into savings. Sometimes my paycheck is under $1,000 (yay shift work) but I always, always, always make sure my bills are paid. Period. And that’s how I divide up my money. It’s really not that bad, is it? Now I know some of you are probably appalled at the concept of only having $100 a week to spend but, remember, this is your budget. You can give yourself more if you’d like. Just be responsible.
- Stick with your budget. Give it a chance to work! If you use a bullet journal, it might be satisfying to make a savings spread so that you can keep track of how much money you’ve been able to save. For more visual people, maybe make a Pinterest board of things you’d like to do with your money. Write in your journal a list of things that you’d like to do once your finances are under control. Watch your credit score go up and, over time, you’ll start to feel the satisfaction that comes from having control over your spending. Plus the peace of mind that comes from not living paycheck to paycheck is really great.
Please know that I’m not some sort of finance expert. I have absolutely no accounting skills whatsoever. These are just some strategies that have worked really well for me. If you would like some additional resources for more ideas or to hear from people with more experience than me, here are a few links you can check out:
The people over at r/personalfinance are incredibly helpful. If you don’t use Reddit, at least go check out this sub and give it a good read through. They have some great write ups on debt reduction, savings, three month plans, investing, etc. If you really want to get your finances under control, go talk to these people.
I just came across Jordan Page on YouTube at the beginning of August. She’s really fun and easy to listen to, plus she’s been through some financial nightmares. This video made me fall in love with her and I highly suggest you watch it. She has a lot of other great videos on finances and budgeting as well.
And finally, this is the video about cutting costs that I mentioned earlier. In this video, the host walks you through all of the things she did (most of them pretty small!) to save more money. Some of them are great (cancel magazine subscriptions, stop eating out as much) and others are a little dubious to me (cut your own hair, stop giving gifts) but to each their own. (She still looks really cute so cutting her hair is actually working out for her.)
Thanks for reading, guys! I hope you found this post helpful for those of you trying to get your finances under control. I’ve found that the finance aspect of things really sort of controls a lot of my self-improvement goals. (That’s a whole different post.) Developing self-control in this area will allow you to control your money as opposed to your money controlling you.
Have a great week!