When we were kids, my siblings and I each had a plastic bank with separate sections for saving, spending and tithing. My parents laid out a system of allowance each month, and such was my concept of money management. Even when venturing out on my own the three-section system still applied, though admittedly has become a tad more complicated.
Whether you're a fan or not, money makes the world go 'round. We think about it likely every day; it contributes to our method of future planning, impacts relationships, and unfortunately is a great source of stress and anxiety for many. I'd be lying if I said money worries have never been a personal concern of mine. However, regardless of your situation today, there are ways to get a grip on your finances and find peace and contentment when it comes to money matters.
I'm excited to collaborate on this topic with my best friend and Certified Public Accountant, Alyssa Kinney. To give you some background- she landed a great job right out of college as a CPA with a big 4 accounting firm and currently works as a management analyst at a non-profit organization. I'm grateful she's the financial guru of our duo and for the insight and words of advice she's shared with me over the years. While this is not in any way an exhaustive resource on managing finances, she does offer some key tips and words of advice that hopefully speak to you whatever the state of your money matters today.
Let's Talk Debt
An inevitable occurrence for most of us, debt can sometimes seem unavoidable. If you find yourself with what feels like a mountain of debt right now, there is hope! You're certainly not alone and countless others have, through wise financial decisions and some sacrifice, found the light at the end of the tunnel.
Alyssa says:
Debt can be viewed as a burden OR as a useful tool to build wealth. For example, both your education and buying a home most of the time requires taking on debt. Your education can provide a long-term income once you earn your certification or degree. Your home fulfills a necessity of shelter while also builds equity and can often be sold for a profit.
Life is Better with a Budget
Budget is a cringeworthy word with a negative connotation, but while it might imply limitations and restriction of freedom, in the personal finance realm it's really designed to GIVE you more freedom. Regardless of the amount of income you're bringing in, it grants better awareness, organization, and insight into our spending habits.
Alyssa says:
A monthly analysis of your income and expenses will show you how cash flows in and out of your bank account and if those additional expenses can be directly tied to your goals. There are applications available that can help with this automatically such as Mint, where you can add your bank account and credit card information in one place, and you can organize and categorize the details which update in real time.
Having a budget is especially important in a marriage. Financial issues and disagreements are the #2 cause for divorce. One of the more helpful things my husband and I have tried to implement is allocate a portion of the budget for us each to have an "allowance" every month. This has granted us each more freedom to spend the extra cash on things we want to without quarrel or questioning. He can safety purchase more power tools while I stock up on holiday throw pillows and know we're not taking a slice out of the cash fund for something else in the budget.
Planning for the Future
Enjoying the fruits of our labor requires, well...the labor. It may take some sacrifice now as you think ahead and prepare for predictable life events, like college for kiddos, retirement, etc. But like Dave Ramsey famously quoted, "If you will live like no one else, later you can live like no one else."
There's a fine line between allowing money matters to take root in anxiety and fear and utilizing it to enhance life, care for ourselves, and give to others. We're called to be good stewards of what we have. Recognizing our resources as actual gifts shifts perspective to allow us to live with wise appreciation, unclenched fists that surrender control and eagerly look for opportunities to be used as a blessing to others. This, like so many other things, fosters true joy and is yet another component of learning to live well.
A few resources to learn more...
Schwab.com offers free tools and resources regarding retirement and investment. Check it out here.
If you're into podcasts and looking to get into the real estate game, check out biggerpockets.com for resources and connections to a great network of real estate investors available to answer your questions. The book Short Term Rental, Long-Term Wealth by Avery Carl is a short and sweet guide on this subject.
For personal budgeting/analysis, you can sign up for the Mint mobile app for free which will allow you to track income and expenses in real time. For more info, visit this link.