Hi friends! Our new Money Journal is here!
I am not a financial planner, although we work with one we love (and I’m happy to recommend her). I am not a skilled accountant or bookkeeper. In fact tasks like that give me a headache. But what I am, is a working mom, wife and reformed shopping addict who has no debt (not even business – this is why quantities are often limited as our inventory is tied closely with cash flow) other than our mortgage (which we are working to pay off 20+ years early). So I’m not an expert but I can share with you what worked for us – how I paid off $45,000 in undergraduate & graduate school loans when the kids were little – spoiler – worked 2+ jobs and sold all. the. things on ebay & craigslist. How we have monthly family budget meetings (yes, even the kids are involved in these). And how we prioritize travel as a family over STUFF.
The only way to financial health and financial freedom is to commit to a spending and savings plan that aligns with your core values. A huge percentage of people say that money is a major cause of stress in their lives, in their relationships, and in their inability to achieve their goals.
By creating a spending plan/budget, you can make informed decisions about how you spend your money and what it will cost you, literally and figuratively. It’s the first step toward meeting your financial goals and experiencing financial freedom. Freedom doesn’t have to mean “debt-free,” but it does mean freedom to make informed, deliberate choices about your money.
So here are some things you can start to do to gear up for the new year in a financially fit way.
- Pull images, words, quotes for your wealth vision board that you can put into your money journal when you get it.
- Clean out your wallet – organize it – cut up, freeze or hide CC’s if you have CC debt, organize coupons, etc. If you are going to wisely use a credit card, use one that gets you something (points, cash back, etc.) This is my favorite one that gets 2% back that we use for all of our trips.
- Make a list of all of your debts. ALL of them. You would not believe the number of people who tell me they have student loan debt or credit card debt and when I ask how much, they have no idea. Denial will get you nowhere. So get real. List them out – either lowest to highest (Dave Ramsey recommends starting with paying off the smallest debt first to generate momentum – if that works for you great). I tend to recommend going after whatever debt you are paying the highest interest rate on.
- Pull together all of your monthly (mortgage/rent, utilities, phone, etc) & annual (things like property tax or homeowners insurance) bills. All of it. Subscriptions, cable/tv, netflix, kindle, etc. Highlight needs vs. wants. What could be cut in order to help you reach your financial goals?
- Add up your monthly income (this is easier if you have a job with a fixed income – if you are a small business owner or self-employed) I’d recommend an average monthly income over the past 12 months (I tend to error on the lower side to be on the safe side).
- Start an emergency fund (if you don’t already have one). Take on some extra hours or sell some stuff in your house. $1000 minimum to start but ideally 6 months of living expenses so when shit hits the fan you are prepared (so many people experienced the need for an emergency fund this past year due to Covid).
- Think about what your vision & goals are for this year and the next 10 years – what do you want to do and how much $ will they take (some goals obviously don’t cost money – they take time and effort but others take money, time & effort).
- Set specific financial goals. Now that you understand your present situation a little better, let’s take a look at the future. List out your financial goals for the year. If you have any debt to pay off, consider making a colorful chart you can hang on the front of the fridge, like this one.
- An example of a daily financial goal would be don’t buy coffee or lunch out today – pack it from home.
- An example of a weekly financial goal would be to stick to your grocery budget & meal plan.
- An example of a monthly financial goal would be a no-spend month or eat out of the pantry/no eating out month or earn an extra $___ to pay an extra $___ toward a debt goal.
- An example of a yearly goal would be to pay off the Chase credit card $____ and save $1,500 for a family vacation by working extra hours and selling stuff around the house.
- Brainstorm a list of ways to save or earn extra $ this year.
- Organize all of your financial documents in file folders or a three ring binder.
- Go borrow some books from the library. Some of my favorite money books are listed below.
- Schedule out a morning to have a family budget meeting. Talk about your goals and what changes will need to be made to make them happen.
- Plan for and schedule in a minimum of 1-3 no-spend months in the upcoming year (a.k.a. no frivolous spending)
- Commit to tracking all of your purchases over the next 30 days. It’s truly eye-opening.
- Creating a budget alone won’t help you reach your financial goals. Sticking to it takes commitment and focus. When we choose to spend less on ________, we choose to have more for __________. This is a great family statement on your financial goals.
Tip: Add these important tasks to your list of things to do this year (I say this not to overwhelm you, but so you have a handle on the other important things when it comes to planning for your financial future). Make a list in the back of your planner to tackle as you have time this year.
- Review your insurance policies (can you save money by going with a different carrier or negotiating your current rates?).
- Ensure you have adequate life insurance (this is especially important if you have children).
- Create a Will (and make a note of guardianship wishes if you have young children at home).
- One of the other things I’ve done is put together an IMPORTANT INFO BINDER that’s in our safe (it has copies of social security #s, passports, mortgages, life insurance policies, important contact info, etc…) – basically everything that our children’s guardians would need to take care of the kids and everything to take care of our estate should something happen to both of us. I know it seems morbid to talk about, but life happens and it’s best to be prepared. It’s the kindest, most selfless, burdenless thing you can do should something ever happen to you.
- Consider seeking out an experienced financial adviser to manage your investments.
Dave Ramsey’s book Total Money Makeover is a must-read in my opinion. Here are some budgeting forms and tips from him as well. A lot of churches offer his Financial Peace University courses throughout the year, too.
My favorite personal finance Instagram accounts to follow:
- Mindful Money Coaches
- Dave Ramsey
- Ramit Sethi
- Her Well Spent Life
- Family Finance Mom
- The Budgetnista
- Your Favorite Money Coach
Books: (Try to get at your local bookstore or borrow from your library if you can)
- Debt-Free Living by Anna Newell Jones
- Total Money Makeover by Dave Ramsey
- Your Money or Your Life by Vicki Robin and Joe Dominguez
- Smart Couples Finish Rich by David Bach
- I Will Teach You To Be Rich by Ramit Sethi
If you have shopping/overspending/overconsumption issues I recommend the following books:
What are some of your favorite money tips? Share in the comments section.