Financial fitness tips so you can be prepared for anything life throws your way.Read More
Money is tempting. It’s easy to blow your next paycheck on shopping with your girls, a fancy dinner, that shiny watch you’ve had your eye on, or a brand-new phone even though you really don’t need it. But, it’s also important to think about your savings, emergency fund, and retirement. The last thing you want is to be entering your golden years realizing you only have enough money to get you through a few years. Instead, take a proactive approach with these five safe money habits for getting your finances in shape.
1. Automatically Transfer Money into Savings
This habit is an easy one. All you have to do is go to your bank account and set up auto-transfer and set a specific amount you’d like transferred each week. So, if you have a goal to save $1,500 in the next 5 months, auto transfer $75 each week. The best part about this is that it’s automatic, so you won’t have to remember to set aside money or be tempted to not transfer money at all. With auto-transfer, you’ll be able to save money so you can afford your next vacation, that luxury car, or increase your retirement fund.
2. Stay Alert
There are hundreds of scams floating around on the internet, through phones, and even through the mail. Do you really think a Nigerian prince is going to transfer $6.5 million in your bank account to keep safe from the Nigerian government and give you 30 percent for helping him out? We sure hope not. Or, did you get a fake IRS letter scam that asks for your personal information such as your bank account number and Social Security Number? Ignore it.
Government agencies will never contact you by email, so if you receive one, report it immediately. Nor will the IRS ever ask for information like your bank account number. If it looks suspicious, it probably is, so always stay alert.
3. Make a Budget
Creating a budget when planning a big purchase will ensure you prioritize your spending. Whether your goal is to get out of debt or to go on a family vacation, creating a budget will ensure you don’t spend frivolously on unnecessary items. There are numerous budgeting apps on the market that sets aside money for you, track bills, and looks at your transactions. Creating a budget will allow you to plan out your financial future by determining which months you may be strapped for cash, and which months you’ll have a little extra spending money.
4. Don’t Spend Where You Don’t Have To
This tip is hard, even for us, but not spending money where you don’t have to can save you hundreds, even thousands of dollars a year. Maybe try brewing coffee at home instead of heading to Starbucks and spending $5 on a triple, venti, half-sweet, non-fat, caramel macchiato with an extra shot and two pumps of syrup. Or, instead of going out to lunch every day at work, bring a lunchbox and pack your own meal.
Trying to cut back spending in every area of your life can make you feel deprived. Instead, focus on one single area that you know you spend extra on and try cutting back. So, if you’re all about hitting the clubs up on the weekend, try offsetting your weekend spending by either having a few drinks at home before you go out to save on overpriced drinks, or meal prep to cut back on dinner costs.
5. Make a List of Purchases You Need
As we all know, it’s never a good idea to go to the grocery store on an empty stomach. Doing so will cause us to buy pretty much everything in sight. I’ve definitely been guilty of this!
Instead, make a grocery list so you know exactly what you need, and nothing else. Many stores work in a way to entice you to buy more product with strategically placed sales signs, aisles in the form a maze, and other sneaky tactics. By creating a shopping list, you’ll be able to track your purchases and control your spending so you can save more money.
Forming safe money habits isn’t as tough as it may seem. While it’s nice to treat ourselves to nice clothes, fancy dinners, and fun experiences, doing it on the regular can set you back financially. Instead, forming a budget, planning your purchases, staying aware of scams, and saving money, will set you up for a bright future.
About Money & Mimosas: Money & Mimosas was started as a passion project by Danetha, a former NFL cheerleader and CFO. After a brunch conversation with girlfriends, Danetha was inspired to launch a resource to learn how they could all enjoy life while being smart with their money. Because who doesn’t want to have their money and mimosas, too?
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Over the past couple of months, I have been on tour for my Future of Accounting podcast. I partnered with Avalara, a sales tax compliance technology, to host eleven shows in seven cities. The attendees are primarily financial professionals ranging from CPAs to bookkeepers to investment advisors. It has been a dream come true to be able to travel, share my ideas and message to large groups of people and connect with folks from various walks of life. It’s inspiring to hear the attendees stories of launching their own businesses and their success journeys.
After I present, I try to stay in the city for another day to check out their culture and connect with the locals. Naturally, the best place to strike up a conversation is at the bar. Whether I’m at the Roaring Fork in Austin or the Aluel Cellars in Seattle, it’s inevitable that I’ll find someone to talk to…specifically about money and their relationship with it.
Take Katie* for instance. She sat down next to me at a fabulous bar in Seattle. I was sipping on a pineapple mimosa, naturally, while she ordered a Chardonnay. Her outfit was impeccable! Valentino pumps, a Marc Jacobs bag, a crisp white Karina Grimaldi jumpsuit and beautiful dangle earrings. Her nails were polished a light bubblegum pink and she rocked a ginormous (!) wedding ring. We exchanged smiles and started chatting.
She shared that she was originally from Walnut Creek, a posh neighborhood in the affluent Bay Area of California, and had relocated to Seattle to live with her then boyfriend, now husband. After talking about all the fun sites in Seattle, the conversation switched to our careers.
“I’m a blogger. I blog about money.” - I said.
Whenever I share that I’m a money blogger, the conversation goes one of two ways. Either it ends abruptly. Or, the other person is intrigued and wants to chat all things money.
Thankfully Katie fell into the latter group
She confided that she had been laid off from her job in tech a couple of weeks ago and was nervous about her finances. She had been the breadwinner for her family and they were planning on purchasing a home and starting a family soon. Since she had been working in the tech industry and had been earning around $170,000 per year, she had fallen into the habit of spending however much she wanted, whenever she needed. Giving little thought to budgeting or being mindful about her spending. And although her husband was very supportive, they had ample savings and her parents to fall back on, Katie was feeling extremely stressed, anxious and unsure of her future.
When I asked her how much the main household expenses were, she had no clue. Then I asked her what she wanted to do with her next step. She shared that a lot of her friends had suggested that she start her own consulting practice or some sort of business, but she had no idea how to get started. And she was concerned that she wasn’t in a financial position to take a leap of faith to start business.
“I’d love to do my own thing. I want to be independent, call the shots, choose who I work with and who I don’t, but I don’t even know where to start. And I’d want to have a nest egg built up before I take that risky leap.”
Katie is one of countless women I’ve met in this same position. Raised wealthy, very career driven and successful, with everything running smoothly in their life.
Until, an unexpected and unfortunate situation happens. And then they are confronted with the harsh reality that they do not have the skills or confidence they need to be financially independent.
Here’s the thing. While not everyone should start and run their own business full-time, relying solely on your job (or spouse) as the one source of income is more risky than starting a business. Especially when you don’t have the tools and confidence to pick up the pieces in the event that the company lays you off or downsizes.
Being financially independent is not a specific number and it does not mean that you are jet-setting to the Caribbean every weekend. Financial independence means that you are in control of your destiny, you have the ability to generate the income you need to live life exactly as you please.
It takes confidence and mad money skills to be financially independent. I told Katie that a great place to start would be to calculate how much she needed each month to live her life. Include nail and hair appointments, gym membership, happy hour, and the essentials like rent/mortgage, car payment, groceries, etc. Knowledge is power. And when you know your number, you can start to plan accordingly.
Aim to save three to six months of living expenses. Take the number you just calculated, times it by three and set a goal to have that saved by a certain date. Then, multiply that number by six and set a goal to have that saved by a later date. I am a huge fan of the high-yield savings account from Radius Bank. The bank is completely virtual and currently has one of the highest interest rates on the market.
Write down five to ten ways you could make an extra $1,000 this month. Could you sell clothes? Offer graphic design services on the side or do photography? If you practice making money when you don’t need to, you won’t feel blindsided if you find yourself in a situation when you have to make money.
Start jotting down positive affirmations about yourself in your journal and why you are resourceful, resilient and an INDEPENDENT WOMAN because...
The biggest key to being financially independent is nurturing your confidence and believing that you can take care of yourself.
To grade your financial independence, take our quiz “Are you financially independent?”.
*Name changed to protect identity
This post is in partnership with Radius Bank.