Alright y’all thanks so much for some of your sweet words about my last post! When I hear that you relate it reminds me why I wanted to start sharing all this stuff in the first place. Anyways, I am so excited to be writing this next one because it’s everything i’ve learned thus far in life on finances. So this would be my biggest lessons and habits I have implemented or started to.
Let’s dive in:
1. Pay YOU first. In the book Smart Women Finish Rich by David Bach, his biggest tip is to pay yourself first before anyone else. After all this is your hard earned money and you should keep a portion of this for savings. General rule of thumb 15-20% is ideal, but if you have to start small then some is better than none. I am currently putting 5% away each pay cycle and as I increase my finances and decrease my debt I will work my way up to 20%. I currently use the app Qapital to take that percentage out of every direct deposit from work. This way I don’t see this account and am not even tempted to touch it. By doing this it’s also a lot harder to move my money and those impulsive shopping habits stay at bay a lot easier. The fact that it’s not convenient to just transfer money since it takes a few days to arrive to my account really makes me not want to do it even when i’m feeling like a big spender lol. Once I get my goal amount saved up i’m going to invest it to a CD account which stands for certificate of deposit. I will explained more on this later though!
2. If you want to pay debt down faster get a financial counselor and consolidate your debt. My credit took a minor hit when I did this, but having 1 payment for all my cards and loans is kind of amazing. It helps me budget better and I also got a little break on my interest rates for doing this type of program. I wasn’t sure about this at first but this was honestly one of the best things I could have done. It is a free service. For reference I went through InCharge debt solutions and the counselor I was paired with was awesome. He helped me build a budget based off of expenses I had and understand what building a budget meant. I used to build a budget based off this is what I made in a month, this is bills, this is how much I can spend for fun. That’s kind of how I did it and it totally worked butttt when I learned through my counselor he asked me how much do you spend on dental, your optometrist, doctor’s bills yearly + other yearly expenses like haircut, nail salon, fitness, and lifestyle type of stuff. I realized wow I did not think if I just put away x amount a month for medical expenses and what not then when those annual appointments come up, I have the money for that already versus scrambling to pay for the expense since it was not in my monthly spending. This was a big aha moment because I have never been taught this mindset and it’s truly been a game changer to how I started to think of budgeting.
3. The snowball effect! If you guys haven’t heard of this it’s something else you can do to pay debt down faster. I would have done this but since I joined the program I am only doing that and paying extra to certain cards when I can. Anyways, I wanted to make sure I shared it just in case you wanted to try instead. Basically you have two options: take your biggest debt to pay down and pay the most you can in a month that is over the minimum to pay it faster, and then only do the minimum on all your other debts. Once you have that paid down take that amount of money + the minimum for your next card and pay that down. This way you have a large sum to pay things down faster with each amount after you pay one debt off. You can also do the opposite and pay the lowest debt to be paid down and pay that first and work your way up. The goal is the one with the highest APR or balance is what you should focus on paying first so you don’t accrue a lot of interest. This has been huge for a lot of others and I totally see why. If I hadn’t done the program this would definitely be how I do it.
4. Investments!! Reading the book Smart Woman Finish Rich has taught me so much I have barely gotten half way through it so i’m sure I will write another post on what else I learn, BUT investing is key to your future and letting your money work for you. I always had this mindset that I can invest when I make more. Truth be told start sooner rather than later because you give your money the chance to grow the most. The ones I want to focus on that for most people are the best way to do it is a CD (certificate of deposit accounts), stocks, and bonds. So they say the younger you are the more risk we have to play here so stocks could be the best bang for your buck, but it’s truly a gamble because it just depends on the market. So really do your research here. Personally I am not much of a gambler so I won’t be using this method anytime soon lol. Bonds are great because the idea behind these is you buy into this investment typically from a company and the company in turn pays you in interest for this. Then CD’s which are accounts that accrue interest at a rate and depending on how you do this your interest can be higher. Either way your money just grows with any of these and of course their are risks with stocks or bonds, so you will have to choose on your own, do your research and decide what works for you. CD’s are the easiest and safest, but your earnings aren’t as high as the other two could be. Regardless dipping your toes to any of these is a good idea!! I personally am starting with a CD account and investing my money that way for now and let it grow. The amount you can get back in this is really awesome just by saving it up. Also my advice is know that waiting to make a certain income doesn’t matter because how much you make is not the point when it comes to investing in your future. There are people who make minimum wage and still save up millions from investments because they allowed their money to work for them. That’s the key. Do your research and see what will work for you and start sooner. Don’t let your paycheck determine your worth in the long run. I promise it will pay off and the mindset around this is everything!! Trust me I have been a work in progress for awhile now, it’s okay :)
5. Start small with whatever your goal is. I know I sometimes get down on myself about how I have been so stupid or irresponsible with my money and get in this really negative mindset on it. Like I said in my last post, money things can make you feel less than when you are struggling and just can’t seem to get out of it. Stress is no joke but slow down, breathe, and start small. Your small changes now can make a big difference later. Look at your reality and make your adjustments accordingly. Right now these are mine- save 5% of my budget, set a spending limit on “fun” and I hold myself accountable. I got a venmo card which I load for my monthly budget of “fun” so for going out to eat, or buying myself that random coffee/matcha/treat, shopping and once that money is out that is it. I am finding a balance of saving and enjoying my money that I work hard for, but also getting my debt and bills paid. It’s all important and finding your groove will totally depend on your lifestyle, but prioritize your debts so you can enjoy your money more and be realistic! This was and is the hardest part. I want a certain lifestyle but I need to also live within the budget of my reality which is not what I was doing and sometimes still don’t to be honest. However I am aware and making changes slowly but surely. I know I will make the money to support the lifestyle I want fully and won’t stress as much. You can too!!
I hope this was helpful! Please let me know what you liked and what you might want to see more of or wish I would have talked about. I want to share everything I learn and will continue these types of post with each new thing I add to my tool box. Thanks for reading.