Budgeting For The Big Spender with a Not-So-Big Wallet
Getting into the "money mindset" can be quite difficult when money is always leaving your account. With grown-up bills and spending habits, handling money, let alone saving it, tends to be an after-thought. Take it from a chronic spender like me, overcoming bad money habits is a skill - a skill that I have not learned to master.
Along the way, I've picked up some tips from several financial resources and found a way to happily blend them with my big spending habits. For anyone who loves to spend but doesn't have the funds to back it, get your pen and notebook out. We are about to get rich...in $knowledge$.
1. Mindset Over Matter
The first thing you need to get right is your mindset. Money can seem very tangible, but the ideas behind bringing abundance to it are very intangible.
Personally, although my bank account isn't busting at the seams, I like to think I have a very good relationship with money. I think of it as something that is beneficial, helpful, and resourceful but isn't 100% necessary.
I know it sounds crazy, but for me, money is a means to an end and not the end. The more you think about it, the more it rules your life. It shouldn't rule your life, but add to it. Find your peace, happiness, and joy in what life has to offer, and money won't become this frustrating thing that forces you to behave, act, and do things you may not want to do.
After understanding that money isn't everything, you can start to believe that it is possible for you to build on yours. Taking out the desperation and need for more money turns into a life-long skill and not a "get rich quick scheme". If you've ever heard of the law of attraction, this is where that comes into play. The law of attraction is the ability to attract into our lives whatever we are focusing on. Don't be shy to want good things for yourself, anything is possible if you believe it!
2. Budgeting 101
After getting in the right mindset, you have to understand where you are at, and where you want to be. Dave Ramsey lays it out perfectly in his book Total Money Makeover where he allows the reader to be real with the habits and mindsets that hold them back when budgeting. Many of us deny we need help, try to live up to this false wealthy lifestyle we don't have, and refuse to be proactive about purchases and very expensive life emergencies.
So what do you do? Start with budgeting. What are your monthly expenses? What is your typical income? Have you accounted for taxes and retirement? We aren't trying to interrogate you, but you can answer all of this with an all-inclusive budget sheet. To get really specific, you can add "estimated" and "actual" columns in your excel sheet to see what you truly spend at the end of the month.
Good budgeting follows the 50/30/20 rule which states that 50% of your money is dedicated to needs, 30% is for wants, and 20% is for financial goals. For me, the "wants" and "needs" definitely get skewed so it's nice to have these explicitly laid out before I decide I "need" these new Gucci slides.
Be realistic with yourself, and budget for who you actually are. You can start small now and work to the big saver and small spender you strive to be.
I know I'll want to travel twice a month and occasionally want some random items from Amazon, but accounting and planning for that are better than impulsively buying and scrambling to recover the expenses. Budgeting can be overwhelming, but luckily we live in a world of the internet, which allows sharing and an abundance of information. We've got some different, FREE, templates to help.
3. Saving & Investing
Getting your money under control is one thing, but making it grow is another. This can seem like the most intimidating step if you aren't in the finance world and have no idea where to start. But, you don't have to be on Wall Street or be a Forex trader to invest your money.
Use your budget to pay off debts and control monthly expenses. Once you get that down, you can think about making the money you save stay, and compound. You'll first want to establish some sort of savings account, we suggest a $1,000 minimum to start for any unexpected life experiences.
Next, if time allows, try to create a side hustle. Diversifying your portfolio allows you to make fixed (typically hourly or salary wage jobs) and passive (investments, rental properties, etc.) incomes. Passive income allows you to make money, not limited to a set rate by the hour. This makes it grow a lot faster, past an hourly income. Many investing apps and sites like Acorns, Fidelity, Stash, and Robinhood have made it easy to invest leftover money and let it build.
4. Monitoring & Adjusting
Last, but very not least, is monitoring and adjusting your money strategy. For me, this looks like a weekly budget review, and for others, this may mean a quarterly review. Whether it's for personal or business, keeping track of your money is important.
It may seem tedious, but managing your expenses every so often can help eliminate excessive spending, check for any new or incorrect subscription charges, and let you know what money goals are realistic or not. Tracking your income can show you where there are opportunities to build and what income you should keep going forward.
If you're overwhelmed, that is completely normal. Just know it is possible and small steps can get you closer to your goal rather than not starting at all. What if you can have your money right AND be able to have an accounted for shopping spree at the end of the month?
Have any personal tips for a healthy money mindset and budgeting? Let us know in the comments below!
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