Episode 1: Getting Practical with Your Money
#TheMoneyDiaries - a three part series about your money
I am endlessly fascinated by the inner workings of people’s lives: how they decorate their homes, what they drive, where they get their clothes, how they eat, and, obviously, how they deal with their money.
For some reason, we very much treat money and financial conversations like they are a big fucking secret and no one should talk about it.
In a way, I see this like alcohol consumption in the US vs. abroad. In the US, we forbid people from drinking until 21. There’s a huge taboo on it and so it’s no wonder that kids binge drink when they get to college (if not before), use alcohol to cope, and create other unhealthy relationships. Abroad, the approach to alcohol is just like any other drink - it’s around, it’s not taboo, and there are lower rates of dangerous alcohol use than in the US.
Talking about money - and getting super practical with it - is the number one way to reduce your anxiety around money and start making more of it - whether you are working on this from a personal and/or business side.
In this three part series on money, I’ll start there: getting practical, real life, and tangible.
I’ll answer a few questions on my thoughts on budgets, prioritizing expenses, and tackling debt. I’ll let you in on how I set up my own accounts, give you a downloadable, personal money tracking spreadsheet, and share real life examples of how I deal with my money.
DISCLAIMER TO END ALL DISCLAIMERS! This isn’t financial advice. I’m in no way qualified to give it, but I do have stories and experiences that may be helpful to you.
Let’s start with budgets - everyone’s FAVORITE topic. I was raised to SAVE money, to always spend cash, and never have debt (this will come into play in Episode 2: Triggers, Shame, and Guilt). My mom used the “envelope system” which basically means any time you get cash or money, you portion out what you want to go where. As kids we had a system: 10% savings, 10% charity (in our case then: church tithe), and 10% to something else (car).
Flash forward twenty some years - I use an electronic version of this method now to help me budget, feel abundant, and put my money where I want it to go so it’s working for me. Here’s how I do it.
Create a main yearly and monthly budget - I actually call this a Personal Money Tracker sheet. Feels less restrictive or punitive than budget. It allows me to see what money is coming in, what’s going out and make educated decisions.
Set aside time WEEKLY to look at all of my accounts, pay bills, check in on investments and savings accounts.
Use an electronic envelope system to automatically transfer money to different accounts so it grows without me thinking about it and I always have money in buckets when I need it.
Budget:
I need to thank my sister Hannah for this template, but I use it weekly now and love it.
Each week, I enter in my income, all my expenses and then CATEGORIZE it so I know where it’s going.
In December, I spent $166 on eating out - that’s just NOT where I want my money to be going (I give myself around $100), and using this method helps me track it. I didn’t beat myself up over it, but made a note to notice where my money was going.
So yes, I track all my spending: cash, credit, Venmo, etc. I look at it as data points on how I’m going to my goals.
Weekly review:
every week, I sit down. Log income, set aside 10% to charity, log expenses, write down what I spent on my credit card, pay bills, pay credit card, and categorize. I also look at my savings, see it grow, and check in on my investments.
Doing this every week, makes it NORMAL. It takes away the fear and panic that mat set in when you think about logging into your bank accounts - and trust me, I used to avoid this like the plague and thinking about money would send me into panic attacks.
Something that stuck with me, was when Katherine Zenika of Manifestation Babe said that as a way to get comfortable with money when she was in $25k debt, making less than $1k a month, she would have Money Mondays - get a good cup of coffee or a drink, put on fun music, light candles, and make it a thing to enjoy, not a thing to dread. Any way that you can start to make working with your money will help to peel away your layers of dread.
I also use this time to check in on my BUSINESS accounts. I review my bank account, my credit card account, and my credit card debt account. I want to know where I am all the time so I can make good decisions. NOTE - this isn’t my business bookkeeping time, that comes on a different day, but general awareness check in.
Electronic envelope system:
This is where I think money gets really fun.
From my main monthly budget, I also set up a yearly budget so that I know what monthly totals I want to aside in each category for.
Example: I typically get 4 haircuts a year - that comes out to about $340 a year (including tip), which means if I set aside $30 a month ($90 every quarter), then when it’s time to get my hair cut, I just pull $90 from that sub account without even worrying if I have money in my budget - I know I have it because I’ve set up my envelope system that way. So each month, $30 gets transferred to my grooming account (I can nick name them). $50 gets transferred to my pet account, $450 for health / wellness, $400 for emergency savings, $150 for travel. This way, in three months, I’ve got $450 set aside for travel. Want to spontaneously book a trip? Easy - that money is already there.
You can also always start really small in these accounts and work your way up $5, $20 or $50 at a time. Another way to do this is to think, I want $4,000 a year for travel. That means I need to save $335 a month.
I shared this method with a friend and they texted me: “I’m opening accounts left and right - this has totally changed the way I do finances and is so different than what I usually do.” I personally love this method - it lets me feel in control, work with what I have, while still actively saving or stashing aside money.
Okay - Qs:
Your thoughts on budgets?
I think I made it clear that I love budgets! I do like thinking of them as money trackers though - just change the name so it doesn’t feel restrictive.
How do you prioritize your expenses? what comes first? what comes last?
In my money tracking sheet, I list bills or set expenses first: rent, utilities, cell phone, internet, etc. Then I’ll do things like groceries, gas, savings, health insurance. Then I’ll list out more expendable income like: clothes, eating out, entertainment, etc. When I was in a really tight money phase, I would often cut those categories because I just didn’t have room for them.
So many schools of thought on tackling debt, cc, student loans, car, etc. where to begin?
Again, not financial advice, but I believe it’s important to systematically cut down on debt. I was fortunate that I received an inheritance that paid off the remainder of my student loans a few years ago, but before that, I was treating it like any other hard bill: I paid $400 a month on it (also fortunate to have two incomes) every month. I avoid credit card debt and pay off my charges every month. If I don’t have cash to pay for something, I don’t put it on my credit card. I say this as someone who has gone through TWO cycles of $15k in debt with a partner and know the anxiety that comes from that. I would rather save up the cash to buy something than put it on my credit card and back pay when I get the money.
Resources:
Rebelle Con: there is always a section on money because it’s IMPORTANT
Stash Wealth: https://www.stashwealth.com/
Debitize - https://www.nytimes.com/2017/07/19/business/how-to-make-your-credit-card-act-like-a-debit-card.htm
Most important: find a system and use what works for you. I am constantly making small adjustments to my money tracking sheets, or transfers, so that it works FOR me.
Downloads: