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Tag Archives: Millionaire

Money: 10 things every woman should know

imageRecently a new college grad asked me if I had any advice on “getting rich”.

First thought, getting rich, seriously?  What does “rich” even mean anymore?

Second thought, getting rich has never been a goal of mine.  My goal has been to be financially secure enough that I can make life choices based on my values.

Then I thought, there are many things wise women have shared with me that changed my view of money and forever changed my life for the better.  So I will change the question and answer…

What should every woman know about money:

1. Money is a tool (it is not inherently good or bad).

2. Know yourself and make choices based on your values.

3. Every loan or credit card purchase has to be paid back, ensure you only borrow for investments in your future (useful degree, affordable house, etc. not  clothing-vacations-cars).

4. Live below your means (starting out this might even mean roommates, a bike instead of car, used furniture, learning to cook cheaply).

5. Let others pay the retail price (ebay, consignment, craigslist are your friends, even today my designer wardrobe is mostly ebay.  I will not pay $500 for my DVF dresses when I can buy them with no sign of wear on Ebay for $100).

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6. Save first.  From my first paycheck out of school I maxed my 401k contribution.  I also set up direct deposit for my savings (which is how I bought my first house at 22).  The trick is, if you never see the money, you can’t spend it.  My budget (house payment, car choice, entertainment budget) is based on the post-savings income.

7. Don’t waste money on taxes.  Max your401k, look into a Roth IRA, Flex Spending Account (FSA), donate items and keep the receipt.

8. Read the fine print. If something seems too good to be true, it probably is, always read the fine print before signing something with a financial component.

9. Don’t procrastinate.  Too often procrastination costs us money.  Read the fine print, know the deadlines and take action well ahead of time (to allow for errors and delays).  Keeping one calendar and to-do list helps.

10. Don’t rely on someone else to meet your financial goals.  You need to know your financial picture whether on your own, married, or with billionaire parents.   There is no knight in shining armor to rush in and save you financially.        Knowing what is happening with your finances and making decisions puts you in position to use money as tool and not be caught surprised down the road.

So none of my advice is flashy or ground-breaking.  It doesn’t have to be, money is in reality pretty simple and I love simple.

 

Budget, once again (Part III) Self-Employment

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As soon as the jars were filled our budget drastically changed. What is the saying? Want to see God laugh, tell him your plans? Hubby received an offer that allows us to manifest a major lifestyle change. He will be self-employed, have greater flexibility and time with our family. So, how on earth does one budget with the variable income of self-employment?

After some research, the best way for us to budget a variable income is to set a realistic budget based on the known income and a reasonable expectation for the variable income. Then build in safe guards, re-evaluation periods and a plan for windfalls.

1. Safe Guards: Determine an amount we are comfortable using from our savings to maintain our budget for the first three months.

  • As checks come in, pay back savings first.
  • Keep reserves in the account to float future months.
  • Remember every day that his pay will be irregular. Don’t stress. Breathe and plan.

2. Re-evaluation Period: Check in at the end of the first, second, and third month.

  • Assess how realistic the budget has been and reallocate any money left over.
  • Discuss short term savings (upcoming expenses, desired purchases, etc.). Build these items into the budget and windfall plan.
  • After the first 3 months, switch to quarterly check-ins.

3. Windfalls: Any amount over the budget x 4 months should be distributed according to our “windfall plan”.

  • 50% to debt repayment (we took on low-interest debt for the home purchase and remodel).
  • 25% to the short term saving categories (vacation,snowblower,  furniture).
  • 25% to the cash jars for a bit of float.

This will be interesting to watch develop. I have a feeling the hardest part will be the psychological test of not knowing when the next check will come in, how much we will bring in a year, etc. That said, there is no great reward without risk. There is the real chance that our family will have more time together, more adventures and bring in the same amount (or more!) of money a year.

Talk back, are you self-employed or thinking about becoming? Do you budget? What is the hardest part of being self-employed? What do you wish someone had told you?

Budget, once again (Part II)

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There is a show I enjoy watching, Til Debt Do Us Part. Gail Vaz Oxlade is the financial expert who swoops in to teach knucklehead couples what they are doing wrong with their money.  She is smart, to the point and no nonsense.  Her slogan is “Money isn’t rocket science”.  It isn’t.  Money is easy. It is merely an object.  You either spend more than you make and have debt or make more than you spend and are saving. 

The tricky thing about money is deciding how you want to use it to live the life you want (see manifestation board for more on this first step).  After she makes a budget for/with the couples, she always cuts up the credit cards and brings out glass jars and cash for each budget category.  Seeing the cash in each category seems to make the money real and rare is the couple who doesn’t have money left over in the jars at the end of each month.

So I made a new budget.  This time around I made two bid changes.  First, the budget isn’t off of one income (we still have two toddlers in childcare and a newly remodeled home) but tighter than it has been the last three years.   Second, I am using Gail’s jars and cash system.  Something about seeing the cash really motivates me to save!

Life Imagined Budget in 4 easy steps:

  1. Create a  Manifestation Board
  2. Get real about your financial picture (I provided a fillable budget form below):
    1.  Print the last two months of bank statements.
    2. Write down all debt balances, minimum payments and interest rates
    3. Average the last two months of spending into the categories.
  3. Create a plan for the future
    1. Determine how much in variable spending you want in each category
    2. Set some short (1 month to a year) and long term goals (big picture- like retirement)
    3. Revisit the categories above to ensure the allocation is supporting your dreams/goals
  4. Get started
    1. Print the name of a category on each glass jar
    2. Withdraw cash for the jars (I find it best to budget weekly)
    3. Fill each jar with the cash assigned
    4. When the money is gone, the spending is done until the next week
    5. Any amount leftover, determine how to distribute:

a)  Keep in the jar for the next week

b)  Move to a debt repayment, or savings goal

The fillable budget below can be customized.  I have prefilled some values as examples.

Let me know how the budget spreadsheet works for you!  Any additional ideas?

lifeimaginedbudget – Copy

Budget, once again (Part I)

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After yet another day of deliveries arriving at our house (USPS, UPS, and FedEx all with at least two packages).  I began to wonder, how do you decide when enough is enough?

We have a list of things we would like to buy.  For the house, our hobbies, our family, vacations, events, etc.  Who doesn’t?  Since we had reached our big financial goal, what was stopping us?

In my early 20s the hubby and I began life planning (see money manifestation board).  We dreamed and discussed how we wanted to live our lives (how many kids, how and where to raise them, where we want to travel etc.).  So we developed a budget.  A pretty serious budget.  We sent directly to savings one of our salaries (we make about the same amount).  Our budget wasn’t austere but it gave us a framework for determining what was important to us and using our money to achieve those things.  Essentially, it made it simple to know when to say no to spending. 

Three years ago, that budget meant that we had saved enough to enact our first huge lifestyle change.  We welcomed our first child, moved across country to a small mountain town, I began to work from home (still fulltime) and hubby left his secure, salaried employment to start his own company.

As if that wasn’t enough change, the next two years brought the arrival our last child, hubby was hired by another salaried employer, and we bought and remodeled our forever home.  Somewhere in the midst of this change, we stopped using a budget.

So back to the deliveries…

As the deliveries came in the door I felt frustration. Sure, we reached a big financial goal. What is more important is we are not yet where we want to be to make the next lifestyle changes.   There are only so many hours in a lifetime.  There are many interests we both have that we want to pursue.   These deliveries (inexpensive items but everything adds up) were taking away from the present we want to be living.  While we have the dream manifestation board, we had lost the tool that is essential for making those dreams reality.  And so, it is time to yet again create a budget.

Talk back, do you have a budget?  What are your feelings about living on a budget?  Do you think one can ever have enough money to not find a budget helpful?

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