This 4th of July, I am ending the weekend celebrating the awesome super power of financial freedom. There are seasons in life that require us to invest in unexpected expenses, yet 90% of our life is predictable and when you learn how to make your money work for you, you get to live life like no one else.
I spent a couple hours today reviewing every item I have spent money on through the first six months of the year. Yes—every single item. The tool I use for this is Mint.com. You can categorize your spending and create rules relatively easy. Then, it groups your spending into categories where you can start to analyze trends. You can also use other softwares such as quickbooks (which is Tray's go-to) or other apps—the point is to use tools that make it easy for you.
At a glance, my personal care + health and fitness categories are the largest areas of spending when combined. These categories cover my mental and physical health. In the food and dining category, I spend 75% on groceries, which covers all meals for our family each week. This is an easy category to cut spending. When you eat out, you spend 5-7x as much on food than you would by eating at home. Plus, controlling what you eat, controls your physical health. There are steady budgets each month in gas, pets, donations, etc. But the easy ones to cut back on are shopping, dining, personal care and even on groceries.
When you look back at your spending, you start to identify areas that you know you can do better at. And, the truth is, you cannot get better without knowing where you've been. This is true for mental health—by shedding light on your dark thoughts you realize they don't own you any more. In your spiritual health—the power of forgiveness is looking back, letting go and healing. For your body—I always recommend making a list of your current eating habits and fitness regimen before starting anything new. This way you know what you can cut out and what to add in. This same habit of discipline, when applied to all areas of your health, gives you a glance into your life trends. When you look back at your spending, you are able to objectively evaluate where you want to put your dollars moving forward. (Pro tip: do not bring emotions into finance.)
You must first understand, there is no shame in looking back at your spending. You will see things and think "why the heck did I spend so much on Amazon." But the reality is there are no take backs, the money is already gone. What you do gain from this exercise though is the ability to use "hindsight" to fuel your freedom.
Top 3 tips to increasing your financial health
1. Evaluate
Learn to look back at your spending every quarter. If you have great discipline, you will start to do this monthly. Whether you're an independent woman or have joint checking, the more you look at what you spend money on, the easier it is to identify what you don't need moving forward. If you are married, it's amazing to do this together. Finances tend to be the number one source of stress in a relationship and more times than not, uncertainty around where money is going and how it's being spent leads to stress. Being honest about your spending habits allows you to start a new list of the key areas you can cut spending for the month ahead. (Pro tip: men love women who understand money. Even if you're not the one making it, learn how to make it work for your family and you're man will be 😍 for you.)
2. Stop overspending on Amazon, instagram and blogs
In app purchases are wildly convenient, yet they add up very quickly. Don't get me wrong, I love those quick, little amazon elves that bring me packages the next day. What I don't love is paying for it every month on my credit card. It's easy to overspend on instagram ads and your favorite bloggers fashion tips. Instead, change this habit into a good one like going through your closet and donating all clothes you haven't worn in a year.
3. Set goals for each month
Identify three categories that you know you can spend less in. Then, give yourself a target spending goal. If you need extra discipline, go to the envelope method. Get cash out every time you get paid. Set aside a specific amount per category in individually labeled envelopes. If there is no more money in the "restaurant" envelope after a week, you have to wait to eat out again until you get paid next. (Pro tip: This single habit helped me save enough to buy a house on my own at 25.)
Most people avoid the topic of financial health. Not you. Not anymore. Your financial health is the catalyst for all others. It allows you the freedom or discipline to get ahead in your family, relationships, body, travel, and more. Make your money work for you this month. You will absolutely LOVE the freedom you feel at the end when your savings grows, your debt shrinks and you feel so powerful instead of wasteful. Whether you have your first job, are thriving in your career, are a stay-at-home mom with no paycheck, looking forward to retirement or anyone in between, there is great freedom in understanding your financial health.
THE SEASON OF OVERSPENDING IS OVER. #SAVING IS IN!
In health,
xxox,
BBuds
