How to Easily Crush Your Goals With a Budget
Oftentimes when people hear the word budget, they curl up inside as they start to imagine all the fun things they won’t be able to do anymore. I’m here to stand up for the budget! But when done correctly, a budget does the exact opposite, it helps curate your dream life.
So let’s dream a little. If money wasn’t a factor, what would your life look like? Would you move to the beach? Go back to school? Upgrade your car? Whatever you want to achieve in life, here’s how you can utilize a budget to help you achieve real results.
Set SMART Goals
If anything is true, it’s that you can’t get somewhere if you don’t know where you are going, the same goes for your goals! This may not be the first time you are hearing about SMART goals but if it is, you want your goal to meet the following criteria:
Specific - make your goals specific.
Measurable - define how you’ll know if you are making progress.
Attainable - make it something that’s actually attainable.
Relevant - align with your values and long-term objectives.
Time-based - be clear and realistic on your end-date.
When you create goals, you’ll want to calculate how much it will cost. Whether you’re paying off debt or running a marathon, your goal will require a set amount of money. Set some time aside to ensure you’ll be able to reflect on your goals without interruptions. Bonus points if you get cozy with your favorite beverage as you dream.
Adjust Categories to Save for Targets
Once we have our SMART goals, it’s important to look at your budget to financially account for this new goal. If you are thinking to yourself, ‘what budget?’ then don’t sweat! Simply look at all of your planned money going out of your accounts (in the form of bills, household expenses and cost of living) compared to your income.
If you have a plan to run a marathon this year and you want to start going to the gym, you’ll want to save for your membership, a new pair of shoes and miscellaneous expenses as you test out different energy gels or performance enhancers.
If you don’t have a wellness category in your budget, be sure to add it to account for your new goal. If you do already have a wellness category, you may need to increase the amount you’re saving each month.
Saving small amounts of money over a period of time is called a sinking fund.
Adjust as Needed
As we start saving for new items (or take on a new expense) it’s important to look at our budget as a whole to see if your income allows for this change. If you have extra money in your paycheck it’s easy to allocate these funds to go towards your goal. If you don’t have extra money you might need to adjust your budget by reducing spending in other areas.
You never want to be spending more than you bring in each month, that is how we accrue debt. Be sure to follow a zero-based budget to ensure every dollar is accounted for while avoiding excessive spending.
Start Saving Early
The best time to start saving for something is today! A clear example that I think a lot of us can relate to is saving for Christmas. If you start saving in January you’ll have a full year to reach your target versus sacrificing your entire paycheck in November and December.
Outlining your goals early will allow you to save with less stress as it will require less of your paycheck each month.
Automate
There are plenty of tools to help you automatically save and transfer money. I personally love YNAB (You Need A Budget) to keep track of my monthly savings goals. Otherwise setting up an automatic transfer at your bank into a savings account will help you stick to your goals.
Pro tip, be sure to have a tracker to know how much of your savings account balance is earmarked for each goal. As a transfer happens, increase the amount funded for each goal in your tracker.
A Real Example
Here’s an actual screenshot of a portion of my budget within YNAB. Below are goals that we have committed to saving for at the beginning of the year, each with a financial target and date we need the money by. By using sinking funds we are able to take off some of the stress of life being so darn expensive while also ensuring we reach our goals.
There are plenty of other sinking funds in other parts of our budget that include paying for my MBA in cash, completing house projects or saving for pet expenses. The number of categories you have will depend on how specific you want to be.
5 Things I Spent Money on While Getting Out of Debt
Deciding to pay off your debt is a personal decision with a path that is as unique as you are. There are no formulas that will get you the same results within the same timeframe as any one else and that’s ok.
If you have chosen to pay off your debt you may decide to be gazelle intense as some personalities might suggest, or you may choose a lifestyle that will allow you to stick to a long-term plan.
Whichever route you take, here are five things I still did while paying off debt and looking back, I don’t regret any of it!
Life Milestones
There comes a time in our lives when it seems that everyone we know is either getting married or having a baby. Watching close friends and family tackle these new phases of their life was something I wouldn’t have missed for the world.
Participating in bridal showers, bachelorette parties, wedding showers, weddings, baby showers, sprinkles, etc. is something that took considerable financial resources. If avoided, I could have been debt free months earlier than my actual debt free date, but for what?
At what expense was I willing to become debt free while missing out on these large life milestones? This was not one of them.
Travel
While excessive traveling wasn’t in question, it was a no-brainer for Derek and I to participate in trips that we both considered important. This often looked like visiting friends for big birthday celebrations, weddings that were out of state or long weekends up north to enjoy the woods.
Whatever the event, we made it happen within a budget that was predetermined while weighing all of our options to ensure the trip was affordable, while allowing us to stay on track to pay off our debt.
Happy Hour
One of my favorite pre-pandemic rituals was happy hour at the local watering hole with co-workers or close friends to unwind from the day.
To keep costs low, I was always willing to pick the location to ensure a good happy hour menu with plenty of snacks and beverages at a discount.
I think back fondly on those days as a moment in time I got to connect with friends on a micro level, which can never be replaced by virtual happy hours.
Good Groceries
Good food has always been important to me and as a pescatarian, eating grilled chicken with veggies isn’t an option for my weekly meal prep as some influencers might suggest. A healthy diet including a lot of fresh fruits, vegetables, nuts and seafood ensures I care for my body as much as I want to care for my checking account.
Our co-op membership was also supported while we were becoming debt free and something we valued as a couple.
Weekend Fun
Whether there is a local art fair, music at the park or a new beer release at a brewery, it was always important we had money each weekend to get out and enjoy time off of work.
Sometimes the lines blurred as we were spending weekends traveling, chasing the latest food craze or meeting up for Sunday Funday but that’s where we were flexible. As long as we were making our monthly extra debt payment we were able to choose how we spent our time and the money that was left after our fixed expenses.
The more we spent the more shifts I’d usually pick up waitressing but it truly was a work hard play hard time in my life. And I don’t regret a single moment of it.
Don’t feel guilty for spending while you are paying off debt. Society might try to tell you you’re cheap or stingy but only you get to say what stays and what goes. Afterall, personal finance is just that, personal.
5 Questions to Ask Yourself Before Making Big Personal Finance Decisions
Spending money is something we all do basically everyday. Oftentimes we don’t even think twice about it. We are trained to swipe a card and make the monthly payment, we have become numb and disconnected from our money.
In order to reach our goals, we need to be sure we aren’t setting ourselves back. Big decisions often take time and it’s important to weigh your options to help you make less-bad choices with your money.
To help in making important personal finance decisions, here are five questions to ask yourself before making those big decisions.
Do I understand what I’m signing up for?
There are things we do on a daily basis that have a major impact on our finances, and we don’t even take time to think about the downstream effects. Whether we are taking on new debt, refinancing a loan, deferring a payment or carrying over a credit card balance, our monthly cash flow is affected.
Luckily, it’s not always affected negatively but it’s important to understand what each of these items mean to your bottom line. Before you sign up for anything, research which questions you should ask and what you should know before going into the deal to ensure you are prepared and not caught off guard if something comes up.
Why does this have to happen now?
We often find ourselves in a pickle financially because we made a quick decision in the moment that we thought would be a great idea (The Hangover anyone?). Well I hate to break it to you but your future self is usually less that impressed with these spur of the moment choices.
If you’re buying a new car, is it because your old one literally needs a new engine or is Tesla’s new model blowing your mind? Are you house hunting because you are now sharing a bedroom with your kids or because you got a raise at work and could use the extra space?
Understanding why this is happening right now will help you decide if it has to happen right now or if it can wait. If it can wait, this allows you to save a bit of money to prepare and take less of a hit to your checking account.
What would I do with this money if I didn’t spend it here?
Let’s go back to that car loan example. If I were to venmo you $246 each month, would you spend it on a car loan or would it be going towards something else? If you immediately start thinking about that beach vacation, a new patio set, hockey equipment or anything else besides the car, you might not need the car.
Start thinking about debt and expenses as opportunities to spend money on something that makes you happier or your life easier. This will allow you to stress less about, “can I afford this payment?” and dream about “what could I be doing instead”?
Am I trying to make someone else happy?
Your life should consist of only the things that bring you the greatest joy, and nothing else! I often like to purge things in my house as I feel the clutter building up. I then start to wonder, why did I even buy this in the first place? The answer is usually because I found the thing at a thrift shop and it was too cheap to pass up or I was at a friend's house and saw the thing and had to have it myself.
When we are alone with our thoughts we are truly able to imagine our dream life without the influence and clutter of other people’s opinions. What are you buying to look a certain way? Are you spending your time on things that are based on loneliness, missing out, the latest trend or what you “should” be doing? If so, it’s time to let that go!
Does this align with my larger goals?
At the end of the day, we only have so much money to work with. The only goal for that money is to allow us to live a happy and healthy life, with those we love most and in a place that speaks to our soul. That’s it.
When we waste money on things that don’t bring joy or we spend it chasing something that we no longer want, we are throwing away precious resources that could help us live that best life.
It’s important to know what your version of “best life” looks like and map out how to get there. Focus your savings and align your spending on reaching those goals, you’ll be happier because of it.
4 Apps You Need to Get Out of Debt
There’s an app for that! There is seriously an app for almost anything, even an app called I am Bread where you are a slice of bread and your entire mission of the game is to become toast.
Even if you are feeling the stress of ‘I have too many apps’ there are always a few that should make the cut. These apps are designed to help keep your spending in alignment with what makes you happy, pay off debt and live your #bestlife.
Here are the four apps you need in your life to keep your bank account fat and happy!
App to Budget
It’s no secret that I am a huge fan of You Need A Budget (YNAB). I have personally used this app for a few years now and it’s my lifesaver as I try to stay on budget and reach my large savings goals. Be sure when you choose an app you pick something that doesn’t just track your spending, you want to be sure it aligns with your budget and the amount of money you assign to each category within your budget.
Pro tip, some apps don’t make you pull money from other categories when you overspend. If you have a budgeting app and use it regularly, this might be why you are still feeling broke and stressed with your money.
Check out other apps that you might want to check out.
App to Track Debt
When you are getting out of debt, it’s important you have one place to track all of your individual debt balances, interest rates, payment due dates and extra payments made. Apps like Debt Payoff Planner can help you achieve debt freedom quickly as you get organized, play around with payment options and stay motivated to achieve your goals.
Here’s a full list, be sure to check each app to be sure it includes features that are important to you.
App to Split Expenses
Picture this, you're going on vacation with a friend and you're sharing a room. You pick up the room charge but your friend promises to pay for the car rental. You take turns paying for dinner but who's really keeping track, right?
Hear me when I say, you are not cheap when you keep track of expenses while you are trying to get your finances organized. Never.
Apps like Splitwise can take the guesswork out of who pays for what and who owes who. Do you have that cheap friend that always gets out of paying? Even better!
Once I introduced this app to my friends on our first trip, it became a no-brainer and I’ve used it ever since.
App to Get Paid
You’ve done the work to get your budget in order, you’re making progress on your debt and you are finally going on a trip with friends, life is great!
This sounds obvious but, have an easy way for people that owe you money to pay you. Don’t let someone else mess up the system you worked hard to build. Don’t trust they will pay you when they get cash later or they will cover your next concert ticket, you don’t have time for that and your debt is charging you interest by the day.
I use Venmo or PayPal but use what your friends use and use something that doesn’t charge you a fee, here’s a full list of options.
8 Money Routines From People Who Are Great At Building Wealth
Someone once told me “rich people follow a budget” and I still think about that phrase today. We often think that we have to manage our money when things are going bad or when we have to get back on our feet, but that’s simply not the case. Here are eight routines that rich people follow to continue to build wealth (and that you can use to get out of debt).
Follow A Personalized Budget
Personal finances are just that, personal! Don’t download a budget template or trust that you can use the one your friend had success with. A family of four spends more on groceries than a single person. Rent in the city costs more than living in BFE. Your bar tab in your twenties is very different than in your forties. You get my point, create a budget that fits your lifestyle and allows you to reach your goals while taking into account your income.
Live Below Your Means
Debt is simply spending more money than you make and we want to avoid that at all costs! Be sure to know what your monthly and annual take-home pay is and live within that number. If you can’t afford to #liveyourbestlife then either increase your income or decrease spending in areas that don’t truly make you happy.
Create a Savings Plan Around Retirement Goals
Don’t just sign up for the 5% savings rate with your 401k administrator. Use calculators to figure out how much money you will need at retirement and work backwards to determine how much that translates to in monthly contributions today. Our retirement goals look different, you may be on a FI/RE plan or you may want enough to travel the world in a jet. Whatever your plan, know how much that life will cost you.
Pay Off All High-Interest Debt
Not all debt is bad, but all high interest debt is! Any easy rule of thumb is to look at debt with interest rates above 5% and pay it off as quickly as possible. Be sure to use the debt snowball or debt avalanche method to make progress and stay on track.
Utilize Apps and Software
There’s an app for that! Make managing your money easy. Try apps like Debt Payoff Planner to keep track of your debt, You Need A Budget (YNAB) to track your net worth and follow a budget or Splitwise to track group vacation expenses. You’ll immediately notice your stress going down as you gain clarity around your money.
Pay Credit Card Balances In Full Each Month
Never carry a balance on your credit card, that’s when interest charges kick in and you’ll be paying money just to swipe your card. If you already have a balance it probably qualifies as high-interest debt should be paid off as soon as possible. Otherwise, if you swipe and pay in full each month, you’re one of the few gaining the rewards without paying a penny!
Learn How To Be Frugal (Not Cheap)
When you see store-brand groceries in my cabinets, it’s not because I’m cheap, it’s because I know it’s the exact same as those more expensive brands. The same goes for my jeans that aren’t $100 a pair, it’s because I’d rather sip on fancy old fashioned bevvys than to spend my money on clothing. Since we all care about different things, learn where you can spend less without sacrificing what you care about most.
Make More Money
Can I get an amen! When we make more money we have more choices and life becomes a little bit easier. We still have to manage that money and we still need to keep an eye on our spending but if you can continue to ask yourself, how can I make more money, more things will start to fall into place. If you don’t have time for a side-hustle you can seek a promotion at work or change employers all together.
If You Don’t Like Budgeting, Try This!
I get it, not everyone is as obsessed with budgeting as I might seem to be and that’s ok! If you are one of those people that would rather pick up dog poop around the neighborhood instead of sitting down to figure out your monthly budget, I have a solution for you.
Say hello to the “One-Number” approach to budgeting. You might have heard about it online when searching for budgeting alternatives, I like this article on The Street if you want to dig in a little deeper.
What the one-number approach does is it tells you how much you get to spend in any given week without going into debt, knowing that your living expenses and savings are being taken care of.
I recommend this approach to people that get stressed out by calculating the details that might be involved in a budget.
To calculate your one-number, follow these six steps and start spending without the stress!
Start with your monthly take-home pay
How much money do you bring home after taxes? This is the pot of gold that you’ll start with to determine how much you can spend weekly, stress free.
Subtract fixed spending
Next subtract your monthly bills. This will include your rent or mortgage, phone bill, subscriptions like Netflix or your car payment. These areas should include everything that comes out of your accounts on a monthly basis.
Subtract non-monthly expenses
Now we dive into the items that aren’t paid for on a monthly basis. This might include your 6-month car insurance premiums, annual subscriptions like Amazon Prime, vacation money or more expensive holidays like Christmas. It’s important to figure out how much you spend in each of these areas and divide that number by 12 to calculate how much you need per month; you’ll subtract your monthly amount in this step.
Subtract how much will go towards your future
Now we are getting into areas of savings. By subtracting your monthly savings you can ensure that money is being set aside for the future or a rainy day. This will include how much you want to save for investing into your 401k, an emergency fund or paying off extra debt.
Calculate your flexible spending money
The amount of money that you are left with after step four is how much flexible spending money you have to spend guilt-free each month. This money can be used for anything that wasn’t already included above.
Calculate weekly spending limit - Divide by 4.3
Did you know that there are 4.3 weeks on average each month? When we divide our monthly spending number above by 4.3 we get the amount that we can spend each week.
There you have it, the one-number approach. Remember this number, jot it down in your note app or create a list of transactions on the fridge to keep it top of mind. Maybe you’ll find joy in living each week by one-number instead of keeping track of multiple categories within a traditional budget.
Ready to stay motivated? Join the Ditch Debt & Live Rich community on Facebook for access to private trainings with support from others that have similar financial goals.
How Paying Off Debt Allows Me to Say Yes More
Debt comes in all shapes and sizes and it’s so normal we don’t even see how it affects our daily lives. When we choose to look at debt as something that consumes our monthly incomes, we can start to see how we ended up as a paycheck to paycheck nation. By paying off debt I have more flexibility in my income to say yes to things that make me happier, and you can too!
We have to reframe our thinking around debt
We all know debt isn’t necessarily a good thing and we are taught to try to avoid it, but do we actually avoid it? Maybe you take out loans for college because you can’t foot the bill with cash (who can) or your car is about to take the turn for the worst and you need an upgrade. It’s so normal to have payments in this country, I often don’t think we understand what we are actually signing up for.
When we think about ‘avoiding debt’ I don’t want you to just think of keeping your credit card balance as low as possible. I want you to think about anything that will require a payment in the future, even if it is 0% interest.
Payments can be a means to getting something that we want or need, but do we understand how these payments really affect our everyday lives?
Debt payments hold your income hostage
A ‘no big deal’ $200/month payment might not seem like a lot when you are signing up for it but I want you to think about it this way. If someone offered to send you a $200 check every month for the next three years, would that make you happy? What would you do with that money? How would it change your life?
When we think about debt as ‘is this something I can afford right now’ we are missing out on asking ourselves ‘how would this extra money per month change my life?’
When asking clients this same question, I often hear they would travel more, take a lower paying job that they have a passion for or build up their savings for early retirement.
The opportunity cost of debt is not being able to go after the things that truly matter to you, because you frankly can’t afford to!
Having more income means you have more flexibility
My partner Derek was recently approached by his company to take a job in the Pacific Northwest and to be honest, if we would have had debt there is no way we would have been able to make it work.
We said heck yes! without knowing if I was going to be able to keep my job. We said yes knowing that I was going to lose all of my side hustles which added a lot of income to our house each year. But we said yes because we knew that if we had to we could live off one income for a period of time and still be ok.
Maybe making a move halfway across the country isn’t what you would do with flexibility in your income but would you keep your same job? Would you buy a larger house? Would you finally upgrade your car that has been on its last leg for three years now?
Staying on budget to maintain happiness
While not having debt made the decision to move that much easier, it also wouldn’t be possible without staying on some sort of a budget. I know I lose a lot of people here but hear me out. When we overspend we go into debt. When we go into debt we bring those monthly payments back into our lives. Sticking to a budget allows us to afford our monthly expenses, save for irregular or unplanned items and reach our long term goals.
So here’s some homework for you. Add up all of your monthly payments, and yes ‘good debt’ counts such as your car, that couch you just financed or your student loans (you can exclude your mortgage).
How much money are you sending to debt each month? How would your life change if you were able to keep that money? What would you say yes to if you got to keep more of your paycheck each month?
If you are up for an exercise that goes a little deeper into this work, I encourage you to download my free 90-Day Expense Tracker tool to see just where you’re sending your money each month. It’s really eye opening and helps you highlight areas you can reduce your spending as you are starting out.
Remember that one tiny change or step forward can lead to big things! Let me know how it goes and as always, email me with questions or when you want to celebrate your wins!
Date Night Idea: Budgets and Beers
Creating fun and easy routines that make managing your money something you look forward to.
Budgets and Beers is a quarterly date night that Derek and I have that we look forward to just as much as the Minnesota State Fair. I know that sounds crazy, but it has become our time to update our net worth, track progress towards goals and dream about what we want for our future, all while having beers! Our path to getting better with finances didn’t start here, we were far from it. Money shouldn’t be a source of fear or anger and this is how you can make it just a little better than yesterday.
In the Beginning, It Can Be Overwhelming
When I graduated from college and started making a real salary, I thought simply paying my bills while having extra money to go on vacation was properly managing my money. I lived this way for years but didn’t seem to be making any progress on my student loan debt and my savings account was barely a thing. What have I been doing wrong this whole time? How come my finances didn’t seem to be getting better as I was getting older and making more money?
Before I stumbled upon Dave Ramsey, I didn’t know where to begin and my finances were a source of stress. Do I need to invest more? Is saving for a home more important than paying off student loans? How does my car payment fit into things? I was what he would have called “Dave-ish” because I didn’t follow his rules, but it was the push that I needed to get started. As I started to dig into the scary stuff, things became clearer and I was no longer feeling the burden of the unknown with my money.
Clarifying goals is truly step one in determining what path you should take and for me, it was paying off my student loans. Others that I speak with are saving for a baby or trying to upgrade a car. Take some time to think about what your initial priorities are so that you can make room to save for them to actually make them happen.
Simplify Personal Finances
The moment I decided paying off my student loans would be priority number one, everything became a little more clear. I was no longer worried about how to do everything at once because I gave myself permission not to. I only invested up to my employer match, I paid minimums on my car payment and I didn’t stress about the low balance in my savings account or my lack of a house fund.
I used a simple calculator to determine how much I needed to pay each month to become debt free by a certain date. As I toggled between higher and lower extra monthly payments, I could actually settle on a payment that I could afford that would get me to debt freedom sooner than I initially expected.
This extra payment number allowed me to focus on just one thing. I could spend money wherever and however I wanted but I had to make this extra payment every single month.
Make Tasks a Part of Your Routine
By following a simple budget each month, which included plenty of vacations and restaurants, we were guaranteed to be debt free by our target date. Weekly we would track our spending and if we ever overspent, which happened a lot I must say, we would just move money from another category to balance things out. We never touched the extra debt payment category. A budget helped me stay on track in the day-to-day and quarterly “Budgets and Beers” date nights kept us motivated!
Each quarter Derek and I would sit down to talk about how we did that past quarter, along with updating our debt totals and net worth. By adding this automatic date night to the calendar, we held each other accountable to making those monthly payments and it became something that we actually looked forward to. Previously I was floundering hoping that I was doing something right, and now I was actually seeing the progress.
Something to Look Forward To
You feel a sense of relief when something becomes routine. You are no longer trying to force something and it becomes your new way of life. Budgeting wasn’t easy right away, I actually hated it. But once I saw how it was helping me stay on track to reaching my goals, I knew it was worth all the headache. Seeing our debt totals decrease and our net worth inching towards a positive number gave us the motivation to keep going.
Now I can honestly say I love budgeting (and it’s totally ok if you aren’t there yet). I love our quarterly date nights and I love that all of the perceived sacrifice is working towards a plan that gets us to a life where we can travel more, have flexibility in work and simply live in the present.
Whether it’s a weekly chat with your partner, monthly budgeting sessions as you're figuring things out or quarterly updates towards goals, what can you be doing to make your money just a little easier to manage? Unfortunately personal finance isn’t something taught to us so we have to take it upon ourselves to be the experts. Setting up these systems might seem scary but once you get started you will be relieved that you took the leap!
Is It Too Early to Bring Up Holiday Hangovers?
This week marks six months until Christmas! While we’re newly into a maskless Minnesota summer I wanted to bring it up because I am sure it’s the last thing on your mind. Now hear me out, saving for Christmas doesn’t have to be a daunting task and this is the one holiday related activity that you won’t be called out on for starting too soon (we see you Target with your decorations in September). I’m here to show you that you can actually enjoy the holidays without January credit card guilt and I’ve even included a free tool below if you appreciate a good spreadsheet!
Christmas Is Expensive
The holidays are an expensive time of year and if you don’t have any money set aside for it, I am sure you feel the stress of your paycheck being gone before you even get it. Holiday parties, gifts for friends, family and even co-workers, all that extra booze, it adds up! According to Deloitte, in 2019 American households spent an average of $1,496 on Christmas. Even more staggering, 22% of Americans believe their spending will cause them to go into debt.
Christmas happens the same day each year, yet we are constantly running in circles trying to start saving for Christmas in November while we are still stuck paying down holiday debt in March. By saving a little bit of money year round, we can avoid debt and ensure holidays are reserved for what truly makes us happy; spiked eggnog and holiday parties!
Calculating How Much You Need to Save Each Month
When trying to determine how much you should save for Christmas, let’s first figure out what you normally spend money on. Write out a list of all things Christmas related; wrapping paper, extra tape or bows, extra groceries, gifts for your immediate family, gifts for friends and extended family, home decorations, travel, etc.
Set a spending amount for each category that is backed by some research. By that I mean look at old statements or look online to see how much items cost that you are including in your budget. For example, if you normally host a party, think of how much you might spend on food and alcohol to get an accurate estimate.
Once you get totals for each category in your mini Christmas budget, add up all the totals to get your grand total that you plan to spend on Christmas. To determine how much money you should start saving, divide that grand total number by six since we have six months until Christmas. This is the amount you should start saving each month to have Christmas fully funded without worrying about holiday debt.
Here’s a free tool, no email necessary, to get started on your holiday budget! Be sure to save a copy to your drive first to get started.
Make Sure Your Savings Aligns With Your Budget
After you do the hard work in determining how much you need to save per month to leave Christmas debt free, look at your current finances and ask yourself, can I afford to put this money aside each month?
If the answer is yes, great job, you did it, now you just have to automate the transfer to make it even easier! If the answer is no, go back and look at your mini Christmas budget. Are there some extra items in there that you can eliminate or reduce your spending on? If not, is there temporary work that you can pickup between now and then to give your income a boost?
By saving for Christmas before the holidays come around, you are allowing yourself to fully dive into boozy happy hours with coworkers and exploring the latest ice sculptures with friends and family without the holiday stress of “can we afford this?”
Every penny you save now is one less penny you are paying interest on later. Let’s bring back the most wonderful time of the year as a time that’s truly full of joy and peace.
How Your Spending Can Help Guide Future Habits With Money
We’ve all been there, too much month at the end of the money or you make too much money to be this broke!
It’s not a fun place to be and when you’re feeling that stressed with money, you can’t possibly see a way out.
What if I told you that if you looked at your current spending habits, you’d probably be able to tweak a few things to relieve your money stress? Of course there are always the situations when you simply don’t make enough money (you’ll have to increase your income or lower your monthly expenses) but I’m talking to those of you that have a decent income but it never seems to be enough.
This is where tracking our spending comes into play and it’s a total game changer! When we see where our money actually goes, versus where we think it goes, we are able to do a better job with our everyday spending. Do we want to continue spending the way we have been or do we want our money to be going towards something else like a vacation, season tickets at the local theater or a larger Christmas fund?
So how do you go about tracking your money so that you can make changes to actually be able to afford the things you love most in life? Here is a free 90-Day Expense Tracker that you can use to get started. Use bank statements, both checking and credit cards, Venmo history and whatever other accounts you spend money out of to fill in this spreadsheet to get your monthly averages. These averages will tell you how much money you spend in any category on average.
Since money isn’t an infinite resource, it helps to see how spending in one area will decrease the amount you have available to spend in another. This is when we can ask what’s more important, this new pair of jeans or another day at a resort?
When you compare those totals to your monthly income you can start to ask yourself, can I afford to keep spending this much money in certain categories or is this the reason that I run out of money each month?
Use your monthly averages to outline a budget and don’t forget to include your goals like that vacation you have been wanting to go on. If the totals in each category are more than you make in a month, you will have to reduce your spending in some areas.
By aligning our planned spending with our income, we can ensure we reach our goals and continue to do what matters most in life, without going into debt. But the trick is to get started. Start with the 90-Day Expense Tracker to see where your money is going and decide, is this the path I want to stay on or do I have other plans for myself?
Budgeting Made Easy By Following These Simple Steps
When you think of budgeting, I want you to think about a 5-minute task while you’re relaxing. Maybe you’re having a beer with your spouse after a long day or you’re cozied up in bed about to dig into a great book.
That is what budgeting can look like when you have a system in place and goals that you are working towards. You are no longer stressing about a bill that’s due or working the math to figure out when you get paid next before you can go grocery shopping.
These are the tasks that I do on a regular basis to ensure my budgeting system is working for me versus the other way around.
Weekly I categorize my spending and readjust areas I overspent in. When I overspend, I look at categories that have a little extra money that I can pull from so I am not negative in any area of my budget.
Monthly I create a new budget based on what I have going on that month. Whether it’s a graduation party or date night to a baseball game, I set money aside to make sure I don’t have to put these expenses on a credit card to pay later.
Quarterly I update totals for my net worth and (if you have any) debt balances. Seeing these balances change each quarter will keep you motivated to continue to build wealth and pay off debt.
Annually I plan for the year ahead and readjust categories in the budget for what’s to come. Whether it’s a vacation or big house project, I add the category and start saving.
By putting a little effort into creating a system, you are ensuring that you reach your goals while reducing the effort that you have to put in on a regular basis.
So what does budgeting actually look like? After I make a purchase I categorize the transaction. Sometimes I do this while standing in line at the checkout or while I am pumping gas, other times it’s a few days later when I get a minute to login to my budgeting app.
If I overspent in a category, which will happen more as you start out with budgeting, I move money from another category to cover the overspending. So maybe I had $100 to spend on groceries but I spent $115, I’ll move $15 in my app from a category that will be ok without the $15, sometimes it’s Vacation or Extra Fun Stuff, it really depends on what’s going on at the time.
I continue categorizing my transactions all month and as money comes in, I put that money into categories for spending later. And once a new month hits, I make sure all the categories make sense and I continue where I left off.
So that’s it! If this seems like a lot, I promise it will reduce so much stress and uncertainty you have around your money. It will become a routine that you don’t give much thought to, like grocery shopping or mowing the lawn.
What systems can you put into place to make budgeting take less than five minutes each week?
You Should Start Saving for Vacation Now (and Here’s How)
In case you haven’t heard, the world is opening up and we are about to be released into the wild and it’s every man for himself!
Calculating the cost of flying or a good old fashioned road trip isn’t the only expense when we take a trip. In order to do everything you want during vacation, it’s important to save up some money to pay down the inevitable increased credit card bill.
Creating a vacation budget can look a few different ways depending on what you are doing, but it isn't hard! Let’s use a real example of me going to Utah for a friend’s wedding in the fall. I am creating a budget to know exactly how much I should start saving each month so that money doesn’t stop me from celebrating and having the absolute best time.
Here are the 5 areas to help you create a detailed budget that ensures you get to go on a vacation that allows you to enjoy it to the fullest!
Transportation - Decide how you will get there. For this wedding I priced out our two options, flying and a road trip. Since the flights and a rental car for a week wasn’t cheap we opted for driving but that’s not always the cheaper route.
Lodging - So many options to choose from such as hotels, AirBNBs or staying with friends. Choose your preferences and research pricing for each night you are away.
Food - This is a big one and I always like to overestimate. How much will you be spending on breakfast, lunch, dinner or snacks?
Alcohol - If you like to consume adult beverages while you're away put some money aside, alcohol isn’t cheap! Estimate the number of happy hours you might have and how often.
Extras - Will you be going on any day trips? Do you like to buy souvenirs? Do you need spending money? I added a pass to the National Parks, a wedding gift and a little bit for souvenirs. Some trips this category is a lot of money while others I am spending more time with people versus doing things that cost money.
Once you have all the areas of spending let’s calculate how much money you need to start saving to get that much closer to living that #vacationlife. So far my budget is telling me that I need $972 (or $1,944 total but Derek and I split vacation expenses). If I am leaving in 5 months, I will need to save $194 a month before we leave.
If this number is realistic then great, you did it now you just have to save! Let’s say this number was too high, I would go back in and determine what areas of spending I can reduce. Easy ones for me are breakfast (I am good with coffee and a protein bar) and maybe I spend less on dinner a few nights of the week (notice I already cut dinner out one night since we will be at the wedding).
I can also increase my income. Maybe I pick up an extra shift, reduce my spending with my personal budget or sell a few things around the house to make some extra cash to help get more money.
The reason we do this extra work for a budget is so that we can curate the vacation that we want, not one that we can afford at the time. We don’t want to have guilt on our way home or regret going all together because we made irresponsible decisions.
So I ask you, what trip do you have coming up and how much money do you need to start saving to make it the best post-COVID trip ever?
4 Reasons You Aren't Budgeting and Why It's Hurting You
One of the main things that stopped me from budgeting was that I thought it was just something that was supposed to tell me no all the time. I thought that it would be the end to life as I knew it and that it was going to take a lot of time to manage.
The only thing right about my assumptions was that life would be completely different. But little did I know, it was about to get so much better! If I would have known that I would have started much sooner and if you’re not already budgeting, I’m here to show you why you should start one today.
When we become intentional with our spending we ensure that we get to do more of what we love most! We actually save for the vacations that we have been dreaming about for years. We might even save for a down payment on a new home or invest in ourselves by going back to school. No matter your goals, a budget helps get you there so much more quickly while remaining out of debt!
Here are four things you might be telling yourself that has stopped you from creating a budget. But don’t worry, personal finance is something we aren’t taught about so no wonder why we aren’t always good at it.
Budgeting just tells me want I can’t buy
A budget would only tell you no for a couple of reasons; 1) it’s not something that you said was important enough to start saving for it or 2) it costs more than you were planning to spend. When I help people create a budget, we are sure to include our goals, hobbies and things we love most in life. So you’re only telling yourself no to something that you once said wasn’t important. If things changed, let’s make room for it in the budget!
I am always overspending
When you overspend on your budget it might be because you didn’t estimate the correct amount for a certain category. Help yourself out by putting in a bit of effort to see how much money you need for each category, and the 90-Day Expense Tracker can help with this. You can also overspend if you aren’t checking in on your budget. Set five minutes aside a couple of times a week to see where you are at with your spending.
I don’t have enough money to budget
Believe or not, everyone no matter their income benefits from budgeting. It’s easy to think that you’ll start budgeting once you make “more money” but that day never seems to come. And in fact, we don’t magically become better with our finances because we make more money. No matter your income, get started with a zero-based budget to ensure every dollar you make is working to create your dream life.
I’m too afraid of what I’ll find
This is a real one and since it’s emotional it can take some time to overcome. One thing I would say is that nothing gets better as it is being ignored. We don’t just wake up with more in savings or less debt, we have to be intentional for these things to happen. So what do we do about it? We dig in, giving ourselves grace and we start working to improve our situation. It’s usually not as scary as we think it is and having the knowledge can help our situation change rather quickly!
So what can you do today to be just a little bit better? Maybe you look into your spending, clarify your goals or look into increasing your income. Whichever you choose, just choose one thing and get started. You won’t regret it!
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We Often Don’t Include the Most Important Things in Our Budgets
Before I started on the path to figure out my debt, I was completely in the dark about a budget. What is a budget for? Who needs a budget? What am I supposed to include in my budget? Once I have a budget, now what do I do?
I initially started with listing out all of my bills and the sort of obvious things, like groceries or restaurant spending. That made sense, right? I quickly hit a brick wall when I bought a present for a friend’s birthday, that didn’t fit into any of the categories I had listed.
So there it began. I would add categories to my budget as life happened, and I was missing a lot of things! I didn’t account for bachelorette parties, weddings, insurance premiums, attending Twins baseball games or annual events like the Minnesota State Fair.
How was I so far off? The idea of saving for these “smaller expenses” didn’t even cross my mind until they started adding up. One summer I remember being a bridesmaid in three weddings and attending 10 more, I was broke!
This is what got me looking at my calendar and creating space in my budget for the things that were already scheduled and I wanted to attend. I would quickly add up what I thought that event was going to cost to calculate how much I had to start saving with the time that I had left.
Sure spending $200 at the Minnesota State Fair wasn’t necessarily going to break the bank, I could pick up another shift at work and be fine. But when I started saving just $17 a month year around, that affected my finances so much less!
That is when buying all the beer at the fair and eating all the fried pickles, corn and donuts became really fun. Because it didn't matter if I also went out to eat that week, because I planned for this.
So I challenge you, take a look at your calendar and what can you start saving for right now? Make a list and figure out how much you should save a month. Here’s a free tool to get you started on all those categories you might be forgetting in your budget.
7 Questions to Ask Yourself to Be Better With Money
Reaching goals can be hard and it just doesn't happen by accident, we have to actually put in the work. So whether it’s running a marathon, eating healthier or getting that next promotion at work, a plan is laid out so we know, how am I going to get from A to Z? The same works with reaching financial goals or simply getting rid of stress around money.
For example, if you want to increase our savings for an emergency fund, you have to determine, how much money am I going to need? From there, how much can I afford to set aside each month? Then you have to set that money aside and actively not spend it unless it’s an emergency.
Below are 7 questions to ask yourself so you can stay on track with your goals and crush it with your finances.
What can I do to increase my income?
I am sure you know by now but the side hustle game is real! It has never been more important to have diversified income because a job is not forever. There are so many options today so get creative, try selling something you enjoy making, teach or consult in your area of expertise or pick up some dog-walking clients.
Can I afford to pay more towards debt? What would my budget look like without debt?
If you are making your monthly payments on debt I would push you to see how much extra you can afford each month, especially on high-interest debt. By making only the minimum payments we are paying more in interest and increasing our chances of disaster if something were to happen with our income. Best bet is to pay it off as quickly as possible. And for a bit of extra inspiration, take a look at a life without those monthly debt payments, what else could you be spending that money on? Más vacaciones por favor!
Am I saving enough today to fund my vision for retirement in the future?
How much are you saving per month and are you on track for retirement? The answer is different for everyone, it depends on how much money you would like to have for retirement and how long until you want to retire. Use this calculator to see what your balance will be at retirement. If you haven’t bumped up your contributions lately you might want to look into that, 15% of your paycheck is a good goal if you don’t have high interest debt. Bonus credit if you want to reach financial independence at an earlier age, use this FIRE calculator (FIRE stands for Financial Independence Retire Early) to see when you can reach this goal!
Is my emergency fund all set or how much do I need to get it funded?
Having an emergency fund to fall back on will relieve a lot of stress in case a pandemic happens, an expensive car repair is needed or your furnace breaks in the middle of winter. A good rule of thumb is to have 3-6 months worth of expenses saved up and set aside in an account that you have easy access to. Don’t include unnecessary spending while calculating this number, it should only include what you would need to get by, we aren’t going on vacation during an emergency.
What are two of your big goals and do you have a plan to get there?
In order to truly enjoy life, we have to be sure we are doing the things that make us happiest. Sure we have to go to work and pay bills but outside of that, on the weekends or in your spare time, what do you enjoy doing most? Maybe you want to save up for a camper or you want to buy a cabin up north. Whatever it is, are you setting money aside? Do you know how much it will cost? Have you created a vision board on Pinterest to stay motivated? Ok, the Pinterest part isn’t necessary but it sure can be fun!
What system am I following to stay on track with my spending?
Just like we have to be intentional to reach our goals, we need a system in place to help us get there. Do you have a budgeting app to watch your spending? Do you use the cash-envelope system for categories you tend to overspend in? Do you log everything in Excel and update the pivot charts to see your savings progress? Whatever method speaks to you, put in some solid effort and you’ll be amazed how easy it will become.
Is there anything holding me back from taking action?
If you aren’t able to get started on the above items, why? Are you too stressed to even start? Do you not have a supportive partner? Does your debt seem too high to even begin to dream about retiring? Whatever it is, take one little step forward. Choose one thing that you can start to work on and begin there. You’ll be amazed that with a little support, it’s not as scary as you might have imagined!
My Why & How a Budget Changed Everything
After I finished college, I did what a lot of broke 20-somethings do. I moved to the city, got a full-time job making very little money and made up for my inflated lifestyle with a waitressing gig five nights a week.
I had around $60,000 in student loan debt, a number so big that I couldn’t even comprehend it as a 22 year old. Combine that scary number with a society that tells you “student loan debt is good debt” and “debt is a part of life”, I had accepted my fate.
So instead of more efficiently managing my finances, I worked to enjoy life and put my debt on auto payments. For around eight years it was out of sight and out of mind. I tell you this because I think a lot of us feel this way, especially before we drink the debt-free-lifestyle kool aid. We don’t believe we have options! We believe debt is a fact of life and we don’t have a choice in the matter.
It wasn’t until my late 20’s that my monthly debt payments were becoming an issue. How was I supposed to buy a house or save for a wedding with this much debt? Let’s be honest, I wasn’t close to either of those things but I wanted to be ready once I was at that point in life.
I started talking about my money struggles with peers and I learned of an entire community of people paying off large amounts of debt, in relatively small amounts of time. These people were living my dream and I couldn’t believe it took me this long to find them!
I quickly tallied up my debt and there it was, the number that I had been avoiding for a long time, the amount between me and my new debt free life, $46,514.91.
I created a “budget”, at the time it was more like a list of bills, and I committed to a number that I thought I could afford to pay extra towards my debt each month.
I had a target date that I was going to be debt free but once I started to see progress, I cut the time in half. Not because I was making a ton of money but because I quickly realized how much money I was actually wasting a month. Going out to eat, new clothes, alcohol. All the things!
I was making progress and I was seeing first hand the impact of paying extra towards my debt! I also began playing around with a few debt-free calculators online and calculated the impact of every extra dollar that I paid. This became my motivation to bump up my payment to something bigger, while still manageable, and it allowed me to shed years off my debt free journey.
Each milestone was cause for celebration and motivated me to pay even more. Quickly my amount owed was $40,000, then $30,000 and eventually single digits and gone!
My budget evolved over time and became the source of my success, as cheesy as that sounds. I was able to prioritize the things I loved most, like going out to eat with friends or road trips with my partner and pup, while still paying down debt.
Some months I paid more and some less, but the goal was there and my mind was set that my future life was so much more important than this life I was living that was making me more broke.
Becoming debt free doesn’t happen by accident and it doesn’t happen overnight. I had to learn what a budget was and how to stick to one. If you can’t relate to the word budget, I was right there with you! I mostly wanted to know how much extra I could be sending towards my student loans and it just so happens a budget tells you that, who would have thought?
4 Ways I Practice Self Care, Without Blowing My Budget
The budget gets a bad rap. I get it, I was once there too but I am here to say that, it can work wonders when you put its powers to good use.
I often bring up budgeting, it’s just what I do, and people fall into one of two buckets on the subject, 99% of the time.
The first group says they budget. After a few questions, I find out all they actually do is have an idea on how much their bills cost and a number they shouldn’t go over on items like groceries.
The second group of people have never budgeted. They don’t have any interest in one because they don’t want to be told what they can’t spend their money on.
Now, don’t worry if you are one of these people. Most of us are doing the best we can with our finances considering we were never actually taught how to manage money.
But what if I told you that a budget allows you to go on vacation, ensures you get that new deck before summer and gives you permission to spend your money!
I tend to be on either extreme with spending money on myself. Either I went to Target to find a necklace but left spending $150 on who knows what or I don’t use my debit card for a full week.
In an attempt to balance my actions from one end of the spectrum to the other, I try to incorporate small gestures of care into my budget.
Here are four ways I treat myself without breaking the bank, or my budget.
Doggy dates. If you have an active dog you know that the walks are endless and even a good run or bike ride isn’t always enough. Afternoon or early evening walks are an easy way for me to step away from the computer and enjoy the outside, no matter the weather. I will sometimes play a podcast or just be with my thoughts as I see this adventure through her eyes.
At-home facial with wine. Masks can be relatively cheap in the store or easily made at home. Whether it's during a bath, or while reading a good book, allow yourself this time to relax. You deserve it!
Try a new recipe. I like to play a fun game of ‘what can I make with the ingredients I already have at home’. I hate throwing groceries away so even if it tastes sub-par, it’s better than going in the trash. There are also apps or websites that you can type in items you have on hand and recipes can be generated for you.
Make a fancy afternoon beverage. I can become quickly useless around 3:00 PM if I had a bad night of sleep or hadn't left the house up until that point. Taking 15 minutes to make infused sparkling water or a matcha latte gives me just the boost I need to finish my day off strong while feeling a little fancy.
These are just a few small ways I insert joy in my life, but we are all different. Think about what you love, what makes you feel special and what can be a true treat during your day. Be sure to add these items in your budget and allow yourself to spend this money, self care is important.
Start Here if You Are Feeling Overwhelmed With Your Finances
I get it. Start budgeting! Pay off debt! Refinance your loans! Save for an emergency! Don’t forget about retirement!
We are constantly hearing messages on how we should be doing better and how to fix things. There are a ton of routes you can take while on your personal finance journey, so feeling overwhelmed is normal.
Instead of not starting because you feel paralyzed, let’s break a few of the important items down into manageable tasks.
Once you start to see progress, you will build up your confidence and motivation to continue on this journey.
I compare a financial journey a lot to our health and wellness journeys. You could start working out, eating better, drinking more water, or getting your steps in. They all are good things but you can’t do everything all the time, that is a recipe for burnout.
So, this is how you start. And remember, you take this one day at a time, if you are starting to feel overwhelmed, come back tomorrow. The key is to make small daily progress, tiny steps forward, that will add up to big improvements in your life.
Dream big. Get a clear mental picture of the reason you want to clean up your finances. Maybe it’s for your kids or so that you can go on a dream vacation without going into debt. Depending on your style, you can detail your dream out in a journal, Pinterest board or app on your phone.
Put a list together of all your accounts. Write out all your debts and assets. By seeing on paper how much debt you have, you will be able to get a better idea of how bad (or not so bad) your finances are.
Track your past spending. List out and categorize all your spending from the last 90-days to see where your money has been going. This will help you see if it’s going towards things that are important in your life.
Debt or savings. Decide what your main goal is so we can add it to the budget.
Create a budget. Use your past spending, and debt or savings goal, to create a budget that aligns your income with your spending. Don’t forget to include those larger annual expenses and break them up into monthly savings goals.
Follow the plan. Track your spending moving forward and try your best to stick to your budget. It won’t be perfect the first few months but you will get better each day, week and month.
Ready to dive in but want a bit of help? Schedule a free call today and let’s chat. This is an investment into your future, your future self will thank you.
How I Stick to a Budget Without FOMO
Something that I often hear from people is how limiting a budget can feel. If you consider setting a spending limit on items limiting then, maybe? But remember, you are the one that is setting those limits and we all have to have limits. Money is not unlimited so unless going into debt is a goal of yours, you have to know when to say no.
I am here to shout from the rooftop that I don’t see my budget as restricting. I see it as something that gives me permission to spend, and here’s why.
Your budget is like that best friend when you are at the mall that says, you need that shirt, get it! It is saying, hey, you set money aside for this specific thing, what are you waiting for?
When I help clients create their first budget, we start the process with creating a list of everything that brings them joy. Do you value spending time with family and friends? Do you like traveling? Do you always need the latest gadget? Is it your personal mission to try every brewery in Minnesota?
Whatever you find value in, you want to make sure you are incorporating spending for those areas! My budget always includes a category to save for the Twins home opener, the Minnesota State Fair and Black Friday. Non-negotiable. These are experiences that are affordable and have become a tradition with close friends.
Maybe in your previous life (pre-COVID) friends always do a last minute pricey brunch and you feel guilty when you go, and when you don’t. Start setting aside a small amount of money each week, or with each paycheck, so these events don’t break the bank.
We still have to say no to some things since our money isn’t infinite. But saying no to something you don’t value is a lot easier than saying no to something that you do.
Start today with writing out all the things that truly bring you joy, a little soul searching one might say. Figure out how much you can afford to spend on these items and make sure they are in the plan. And remember, no item is too small to start saving for. My car tabs are way less annoying when I save $5 a month versus $60 at the DMV, that’s a happy hour!
Living Paycheck to Paycheck? Do This to Get Ahead.
When you rely on your next paycheck to be able to pay bills, buy groceries or have drinks with friends, life is different. Life becomes less enjoyable.
What if your paycheck was something that became a side effect of work you loved? What if you started being intentional with that money to actually accomplish your biggest dreams?
Something shifted in my life when I decided to use my paycheck to accomplish my goals. I no longer looked at my account balance as money I had to spend. I looked at it as a lump sum of money that was broken down into smaller goals. Some of the money would be used to pay down debt, some was set aside in case of an emergency and some was for bills.
When I made this shift in my thinking, while being intentional, it no longer mattered when that money hit my checking account. I was no longer rich on the 1st of the month and broke by the 10th.
If getting ahead of your bills and not having to rely on your next paycheck to pay your immediate bills sounds like something you are craving in your life, I have good news for you. It’s easily within reach, you just need to make a few intentional shifts in your habits.
Sell anything around your house that you no longer need, use or want for some extra cash
Cancel any subscriptions you don’t use and ask yourself if you need all of the ones you do use
Cook at home and use everything in the fridge to avoid waste
Reduce your spending on everyday items by buying generic or in bulk while cutting your impulse and excessive purchases
Save any ‘bonus’ money such as stimulus checks, tax returns or gifts
Keep an eye on money you are giving out as gifts
Get a side hustle and find ways to increase your income
You don’t have to do all of these items, I would rather you do a few things really well than all of them poorly.
When I was getting out of debt, I focused on cooking at home, reducing my spending and increasing my income. By making more money and spending less, I was able to make larger payments to my debt each month without having to give up too much of my lifestyle.
Sure I had to get creative with my vacation time and say no to house projects. But by being intentional with my money, I was able to make real progress while still enjoying the things that made me happiest in life.