Sing it with me: “Money money money….money”. Remember the theme song of The Apprentice? Well, this is real life and how you manage your money is not a competition.
Money doesn’t just pay the bills, it can also create a future for you and your family. It’s a tool for smart choices and fixing bad ones. How you operate your finances can create a path of stability, and over the past year, we’ve all seen anything but.
Money management can be quite exciting. Why? You’re in control, that’s why. You make the decisions of what becomes of those hard-earned dollars. These are good decisions that will increase the health of your wealth.
Get on a Budget
If you never budgeted before, congrats? Perhaps you have so much money in your checking account, your spending doesn’t matter. OR, and I’m guessing this may be the more realistic scenario: you aren’t really sure how to budget, you’re scared to know how much money is actually in your account, or rather not in your account, and you don’t have the time. Did I hit the nail on the head? Thought so.
Erase your fears about budgeting and gain a whole new perspective. Instead of putting all your attention on the actual methods to organize and design your budget, focus on the value it will deliver.
The Consumer Financial Protection Bureau (cfpb), suggests a few steps to getting started. Ask yourself some important questions:
- Where does your money come from?
- What are all the avenues that bring in money, i.e. income, rental properties, alimony, etc?
- Where does your money go?
- What are you spending your money on, i.e. bills, clothing, education, food, etc?
- What are the bills you’re responsible for?
- How do you align what’s due with what’s coming in?
- It’s time to create your budget.
- You have all the data you need.
Let Your Budget Do the Work
These are questions you may have never asked yourself before but need to be answered. Once you create your budget, use it to help you decrease your spending, identify bad financial habits, avoid fresh debt, and of course, build up that piggy bank for the future.
You have all this information, which is the key to understanding what’s working and what’s clearly not. Instead of standing in line at the supermarket praying your charges get approved, know your charges will go through. If you spend and worry about it later, you’ll create debt, which impacts your credit history and limits yourself when it comes to future life-altering purchases.
There’s a sense of empowerment that comes along with organized finances because you’re in command instead of your money in the driver’s seat.
Pay Your Debt
Let’s not sugarcoat it. Debt, of any kind, sucks. You end up a slave to interest charges, whether the origin is student bills or spending more than you have. It’s a terrible feeling and one that holds you back from all the smart options available for that money.
Picture this. There’s an amazing pair of very expensive jeans on sale that you must have. The price, while still expensive, is discounted and it would be a tragedy not to take advantage of this rare opportunity. Plus, it makes your butt look amazing, which is the most important thing. You buy the jeans, get the credit card bill a short while later, realize you’re unable to pay it all in full, and wait a bit until more money comes in. Guess what? That discount you were so pumped about? Add the finance charges and the late fees you accrued and you pretty much ended up paying full price for those jeans. Not a smart financial move as the whole purpose of the sale was defeated.
Save, Save, Save
It’s really hard to save money, especially when you’re in debt. Once you’ve solved that issue, buy a new piggy bank. You can spread your savings from college tuition, paying off your car, travel, and investing. If you’re not in debt, that great news. You should have a nice chunk of savings put away. If you’re not in debt, however, you haven’t been saving, it’s never too late to start.
What’s cool is no matter your age and stage, you can invest your savings. If you have no idea what you’re doing, it’s okay. There are people who can help you. Financial advisors will assess your risk tolerance and build a portfolio to help you get the highest possible return with the lowest amount of risk by mitigating fees and taxes.
Embrace the Change
Knowing you’re making a shift in the way you manage your finances is really quite thrilling. There’s an air of self-confidence and strength that comes with educating and implementing your own financial plan.
There might be more restrictions on the lifestyle you once thought was marvelous, yet nothing compares with financial freedom and being in control of your future. It would be so easy to go back and be reckless with your money, but it’s not a smart or healthy way to live. Do you want your butt to look good or be able to buy a house one day? If you manage your finances properly, perhaps you’ll have both in the near future.
A dollar is going to look different as your process shifts. Before it was a piece of paper that represented a small amount of money. Now, while it’s still a piece of paper that represents one dollar, it also holds the meaning of structure, maturity, success, goals, and responsibility. Congratulations! You’re financially fabulous.
While a bit of mystery is exciting, not taking the time to know and grow your wealth, or lack of, is unattractive. You’re fully capable of educating yourself, developing a plan, sticking to it, and making a shift in your financial life.
I don’t mean to sound like an infomercial, more than I already have, but you already have the tools for success. For a limited time only, make your money work for you. (Insert chuckle here.) Formulate a budget, focus on existing debt, save, and enjoy the ride…of course in your incredible jeans.
Here’s to the Wellness of Your Wallet!