Every year in high school, we’d have one marking period where we got pulled out of gym class for “Health.” My junior year, “health” was something called Life Skills. We were given a budget sheet, a “paycheck,” and a checkbook and had to create a budget and learn to balance the checkbook. Way easier done with Monopoly money than our actual money! Unfortunately for all of us, debit cards (and credit cards) were on the rise, and that checkbook balancing skill was soon to become obsolete.
Something that comes up over and over again both in my work life with clients and in my personal life with friends and family? Nobody ever taught us how to budget! We live in a world of instant gratification (hello, Amazon!) and the highest level of keeping up with the Joneses in history thanks to social media. Where our parents only had catalogues and Better Homes & Gardens to compare themselves to, we now have an onslaught of influencers and edited social media feeds to compete with – and the impact often lies in our budgets just as much as in our self esteem.
I often hear “I’ll never be able to buy a house.” Upon further exploration, it clarifies to “I’ll never be able to buy a NICE house,” and eventually “I’ll never be able to buy a house like THEIR house.” I once heard a story of a woman who would have to leave work in the middle of the day after perusing blogs on her lunch break and would spend the rest of the day crying in bed because she would never have what the bloggers have. Comparison of self to others is a thief of joy – and a thief of money right out of your pocket if you’re not careful!
So what does financial wellness actually look like? It doesn’t necessarily mean having the big fancy house and the fancy car and the designer bags – unless that’s what you authentically want. Personally, I think having a gigantic house sounds like a whole lot of vacuuming and dusting – and that doesn’t fit my lifestyle! Ask yourself – are my visions of success authentically mine? Do these fit with my personality and goals, and will I be truly happy once I have them? If the answer is no, it’s time to re-evaluate! The truth is, sometimes we have to give up some things to prioritize others. For me, the priority has and always will be travel (although the past two years has put a bit of a damper on that one!) – so that means I make sacrifices in other areas. We decide what feels the most important to us and what goes further down on the priority list. One “sacrifice” I’ve made is buying books – I’m an avid reader, and I love diving into a good book – but I was spending TONS of money every month feeding my habit. I learned about Kindle First Reads (a free book every month for Amazon Prime members!), I have a list of books that my friends and family can peruse if they’re looking for a gift for me, and I have a library card. It sounds like a small change, but it made a big difference! I also canceled cable a few years ago, and I’ve never looked back. What are your priorities, and what do you see as the expendable portions of your budget?
First, get an idea of what your spending looks like each month. There are many ways to do this – you can keep track of your receipts, make a log of what you spend, or use a tracking app such as Mint to categorize your spending at the end of a month (or perhaps at the end of a few months so that you can recognize any patterns or anomalies!). Then, split your spending into “wants” and “needs.” Our needs are non negotiables – food, utilities, any loans you might have. Wants might be things like the aforementioned cable bill or book addiction, takeout/eating out, clothing/shoes (though sometimes these can also be needs!), nail appointments, etc.
Second, evaluate whether you’re meeting the goals you’re setting for yourself. If you’re finding yourself stretched beyond your means or struggling to put money in savings, what comes next? Sometimes, we are able to bargain down on the needs column – we can use coupons on groceries or buy store brand items instead of name brand, we can refinance loans for lower interest rates or longer terms. On our wants, are there any things that we can do without? Small changes can make big differences – there are apps that will scan your spending to find subscriptions you may have forgotten about. I once had a friend who had three – THREE! – gym memberships on recurring payment on her credit card that she had forgotten about. And she wasn’t attending any of them! Canceling those memberships saved her almost $50 per month. What subscriptions do you have on your phone that you’ve forgotten about? What are your top priority wants? For me, those top priority wants include my Discovery+ subscription (for endless 90 Day Fiance marathons), my weekly in studio yoga class, and budgeting for nights out (or in) with friends. Things that went in the trash included that gym membership I wasn’t using, cable TV, and buying books.
Third, notice what other barriers might be getting in the way of your goal achievement. Seemingly insurmountable debt? A low credit score? Feeling overwhelmed? Breaking things down into categories can be a great next step – use the Financial Wellness Wheel to see how you’re doing in each of the important categories listed (low debt, living within your means, retirement savings, credit score, insurance coverage, financial goals, budgeting, and emergency savings). Rank your current level of satisfaction, and then see where you could benefit from some improvement. Checking and monitoring your credit is easy and free – you can get a free report from all three of the major credit monitoring companies once per year, and many banks/credit card companies provide monthly score updates along with tips on how to improve.
If your goals seem overwhelming, try out the Backwards Planning worksheet attached to today’s blog to break them down into smaller goals! Make a list of all the steps from today to goal achievement – what steps can you take on today? One excellent example of breaking things into small pieces comes in the form of a student loan story. A friend of mine and her husband were faced with a HUGE student loan bill after their post graduate programs. It seemed insurmountable – especially when they thought about the interest accruing every day. Not to be deterred, my friend printed out an 8x10” print of an empty mason jar and slowly filled it with 157 marble sized circles. She wrote numbers in each circle – 1K, 2K, 3K .. and so on and so forth until each marble had a number on it. Every time they paid off a thousand dollars, she colored in the marbles. Watching the jar “fill up” over the years started gaining momentum – sometimes it goes quickly (a raise, a bonus) and sometimes more slowly (a blown tire, a sick kid), but every so often I get a photo of the jar in my texts with the message “Look at the jar!!!” There’s a sense of mastery and accomplishment and a light at the end of the tunnel. What kind of visual motivation might you use to help you feel like your goals are achievable?
Finances can get overwhelming – a marking period in high school certainly didn’t prepare me for the financial intricacies of adulthood, and it’s likely that this blog won’t fully prepare you, either! There are a wealth (see what I did there?) of other resources out there – listen to some podcasts, read some books, speak with a financial advisor! Most importantly, remember that avoidance doesn’t fix problems – if you want to make improvements, start by taking a good look at the current situation and move forward from there.
What small first step can you take today?
