Hey Everyone, today we are going to be talking about finances. While I am not a financial guru, I am just a typical run of the mill mom, finances is a part of everyone’s life and it can really make or break your life. While finances can be a very individual topic, I still believe it is essentially to discuss for our wellbeing. It’s extremely applicable to the life we want to live for ourselves. What kind of life do you want to live? It honestly boils down to money. Money gets a bad rep sometimes because we don’t want money to take away from what we value or what’s most important in our lives, like people or our relationship with a higher being. However, we do need money to pay for things for our own survival. How much or how little is truly dependent upon the lifestyle you are comfortable with. So let’s get started shall we..
The Level 10 Budget
Creating a level 10 with your finances boils down to one thing, your budget. Your budget is your plan of action. The one and only thing you need to follow and stick to with consistency. So my first and biggest tip to get your finances in order is to create a budget. Making a list of yearly, monthly, and weekly expenses is key. Then updating it weekly, monthly, and yearly is my second tip. Without analyzing how you’ve done you won’t know how to make improvements. The best budget app that I tell everyone to use is the Everydollar app. I don’t do the subscription plan but that of course that would be totally up to you. I also created a monthly review sheet for my husband and I like to sit down once a month to review. Have I used is consistently yet? No, of course not but that’s why I say that consistency is so important. I know how to live a level 10 life but that doesn’t always mean I will be level 10 in every area. Remember that finances are just like everything in life, it takes planning, practicing with the plan, and following up to revise it.
Because finances have been on of our areas for needed growth and improvement, I’ll tell you how debt truly began for us. Probably within the first week of college, guess who was in the main lobby where we get our mail? Yep, it was a credit card recruiter. They know who to get. No credit, no problem. Don’t worry, you NEED a credit card to build your credit right? Well of course I fell for it. Now I wasn’t some big spender or anything and I was working, paying for my car, insurance, food, and just got my first cell phone if that doesn’t age me I don’t know what will. Anyway, I didn’t realize I was going into debt. But I thin the things that caused it the most would be getting that card and slowly adding more than I could pay off, student loans, which ha I’m still paying but I also added two more degrees, then buying cars and owing more than what they were worth before either wrecking them or having to get a new one. But alas, all these things didn’t result in me being homeless and left with nothing, I was able to find my way and learn from mistakes. That’s why reviewing your budget is so important and making decisions with purposeful thought. It took many years to get into debt and many years to mostly get out of it. It’s almost like one of those never needing battles and it comes super easy for some and less easy for others.
Investing Like a Pro
So if I was going to go back in time, and make one decision differently and if I had had someone I knew, trusted and respected their opinion to tell me about investment. I likely would have done something totally different with my life and with my finances. However, my husband and I, the late learners we were, did eventually decide hey, we probably should be investing in some things. He took business classes in college so I tried letting him take the reigns on this one. We started investments in Roth IRA, Deferred Comp through our work, and college savings funds for our kids. While we don’t invest like financial pros, a little will go a long way and he’s looking at being able to retire from his job at 48 and I will retire from mine at 47. Now retirement for us won’t be completely stopping work but we are hopeful it can slow us down and we can choose more wisely what we’d like to do with our time. What investment advise would you give? Who is someone you know or how would you find that person to help guide you?
So remember how I said, I’d make different investments early on, we’ll retirement before 50 is great but have your heard of other people doing it, in their 30’s! That’s right! If I had heard of Mr Money Mustache at a younger age, I might have just figured out the secret to never having to work again. Making money for 10 years and then living on all of through investments and savings so I could be with my kids full time as they grow up and traveling the world, which are MY biggest passions. If your haven’t ever checked out Mr. Money Mustache Blog, that’s where you should begin. Remember how I said it takes planning, very few will start right out of high school with these techniques and you will make sacrifices but in the end, could you imagine what you would do if money wasn’t something you had to worry about getting up and earning everyday? And they say money doesn’t buy happiness.. maybe not always but in this case, it just might.
Build an Emergency Fund
One of my downfalls early was not having that emergency fund in place. We needed new tires for the car: credit card. We had a doctors bill that wasn’t covered: credit card. We had Christmas come up and need to buy gifts: credit card. Before you know it, all those unplanned or oops surprises that you should be planning for but didn’t can sneak up, quick. So one of the first things we decided to add in budgeting using the Everydollar app was adding to our emergency fund. Dave Ramsey recommends adding up to six months of your income in an emergency fund. This is really important if you live off contracts, self employed, or in job positions that can be easily laid off when the economy is shifting around. He recommends starting with a 1000 emergency fund and this is the one I would use to focus on those little items that may pop up, and then rebuild it as you can. Then work on the larger emergency fund for long term or even bigger cost like if something medically comes up and costs you a ton because even with insurance those costs can get way out of hand.
So what do you think is a good mantra for your finances? I like telling myself "I am frugal". When you choose your purchases wisely, you are able to have more money later on. Things to me are not as important as the people in my life or the experiences I want to have. So I try to put my money where I value the most. I decided around the time my second child was born that we had over spent and we needed to live more frugally and embrace a minimalist mindset. I didn’t buy a crib, I tried cloth diapers which ended up not working out for us, but I was determined to start living with less. I really got into tiny houses and so we sold our house, lived in a little one bedroom cabin for 8 or 9 months while we built a small house. We downsized from 5 bedrooms to three and 2600 square feet to 1800. While it wasn’t quite the downsize I wanted, it was a decision that I had to take others into that consideration. I’ve continuously been aware of our overconsumption as a society and while I’m not immune from wanting things, I do try to make it an intention to act with frugalness more and more consistently. What are some techniques you use?
In addition to trying to be more frugal, I decided the only other way to work on getting out of debt and also aiding us in retiring in our late 40s is to work on something that would create passive income even if it’s just eventually. Boy oh boy does that take courage. So passive income seems simple enough as it’s just creating something one time and allowing people to consume it over and over, like this blog for instance or music, or books, or digital products. So I got busy trying to create some of these things. I even have two courses I’ve created that can help with this. However nothing can be quite that simple because even if you make the most amazing thing and I think my stuff is pretty fantastic, it’s not going to sell without marketing. And that’s the tricky part that I’m obviously still in my learning process on. So if you want to make passive income, create something that people can purchase without it costing you, and then market the crap out of it. And when you find the solution to that, let me know. I mean, I think I have found it so I’ll let you know when it works for me.
Financial Raising for Kids
Of all the lessons I learned in life, the one in my financial life I wish I had known was: how to have learned it earlier. Finances were not talked about in my family. I had no idea how much things cost or how much my parents made or the bills and the cost of a family. I took personal finance in high school but one class isn’t going to make those ideas turn into habits. Do you remember what I said does? It’s a plan, a practice with that plan, and reviewing and revising the plan and doing that over and over with consistency. So why are we not also choosing to do this with our kids? Even if we don’t have the money to pay them allowance, we could use fake money or beans, coins, stickers, keeping the same concept. I’ve watched videos of this family who gives her kids money twice a year to shop for their own clothes and once a month or so to buy their hygiene products. Simple techniques that happen regularly overtime can help give our kids the idea on what things are worth and how to spend their money wisely. If you have kids, show them how finances are a part of their life, teach them consistently about how you manage money and allow them to practice it too.
While I mostly guide people into physical, mental and emotional wellness, financial wellness can be a part of that. When you can achieve comfort in knowing your survival and loved ones survival is taken care of, you increase your mental and emotional states too. Don’t forget how important this part of your life can be on your health. These three tips are the most important to find that balance and peace of mind. One: make the budget and stick to it. Two: build your emergency fund. And three: invest wisely making informed decisions through an expert.
Do you have any other financial tips? Share them in the comments.