It’s all about a mindset. Honestly, you’ve got to completely shift your thinking and determine what’s important in your life! The way I shifted my mindset is by listening to a plethora of podcasts and reading personal finance books. Knowledge is power. I didn’t even know I would ever be in to personal finance, and well, here I am.
To begin, I would start by tracking your spending, especially if you already know you are living outside of your means. (Spending more than you bring home). This can easily be done on a piece of paper, excel, or your notes app on your phone. I don’t promote any specific way or app because I’ve never personally used them and I don’t budget specifically for each category, like food & entertainment. But I’ve heard good things about Mint and YNAB (You Need A Budget). At the beginning it’s nice to know where the money goes so you can quickly determine what you can cut down on or eliminate all together. It will be helpful to go through the past several months of bank statements to really determine where your money is going. Don’t forget about yearly payments like car insurance or Amazon Prime.
Do you spend too much on food? Is it late nights out at the bars? Are you shopping too much to keep up with the latest fast fashion craze?
Once you determine where your money goes, forgive yourself. This is important. There will likely be some numbers in there that shock you, such as how much GNO (Girls Night Out) really costs over the month.
Things that I noticed when I got more serious about budgeting and saving is I spent my Friday’s off work at the salon getting a pedicure, or shopping for a new outfit. Easily a $100+ spent just to kill time while by husband was at work. I had recently moved to New Orleans and I loved all the new stores I was surrounded by. Honestly, most of those clothes I bought are in a donation pile already. I was buying the fast fashion that goes out of style quickly. My goal now is to shop intentionally, buy the basics that will last awhile. But this goal takes time. I now don’t shop just to shop.
Once you determine where your money goes, figure out what you can let go of, such as music subscriptions, shopping, eating out, the gym membership you’ve been telling yourself for months you will back into. Even the little things can add up. The one I’m currently toggling with is Spotify. I love that have access to every song and can make my own channels but is it worth $120 a year. That reminds me, I should turn it on right now!
After you can figure out what can be cut, instantly move that now extra money into savings each month! (I’m saying this assuming it was spent with money you make, not money spent over your take home pay). Let’s say you cut your gym membership that cost $100/month because you simply weren’t using it. You now have an additional $100/month to save for your future self. Immediately move it to savings or retirement each month. Leaving it in checking will likely be spent somewhere else. That right there is $1200 to easily cover your holiday shopping and then some! A no to something is a yes to something else! That something else being your future self!
Say you don’t have $100 to cut, say the only extra is your $10 Spotify subscription, that’s still money that can be saved! Every little bit counts. I’m serious about that. If you’re not ready to dive all the in, start small. This is a process. Once you start seeing you have complete control over your money, it almost becomes a mind game of seeing how much you can save!
When pay day rolls around every two weeks, monthly, or even weekly, determine what bills and responsibilities you have until the next pay day, take care of those and then IMMEDIATELY PAY YOURSELF FIRST! By that I mean, instantly move your extra money into a savings or retirement account. Again, leaving it in checking, trust me, it will get spent somehow someway. Once it’s in a savings or retirement account, you have already made up your mind it is not to be touched. See how the mind is shifting already! Whatever is left after your bills and paying yourself, is yours to spend as you’d like! Whether that be coffees, drinks out, or fancy dinners.
Just because you are on a budget, does not mean you have to give up all nice things you enjoy! We most certainly have not given up Starbucks or nights out! Ubereats and Starbucks has made a killing off of us, but that’s okay. It’s money we have elected to spend after we have saved. Would I like it if we cut down more on food? Absolutely! But like I said, this is a process.
Simply just start somewhere! I promise it becomes fun once you determine YOU are in control. Watching my personal savings account grow each pay period has been wild. Pay day became even more fun when I can see my savings goals be reached!
“The best time to plant a tree was 20 years ago. The second best time is now.” Chinese Proverb
This quote has always stood out to me as it’s easy to be hard on yourself about your spending and/or savings habits. It’s easy to compare yourself to others and see that they are “ahead” of you. Like my husband, his retirement accounts are way more financially secure than mine are. After seeing his, I wish I would have saved more for retirement at a younger age, but there’s nothing I can do about that other than change what I do now. So I shall forgive myself and move forward with the knowledge I have now!
So I ask that you take the next few days, maybe with a glass of wine, and break down where on earth that money of yours is going, and budget already!