Before I started blogging full time about a year ago, I worked as a bond trader for 10 years.
If there’s something I know a little bit about – it’s budgeting and finances. In December, Ashley and I had a pretty real talk about her finances and long term goals. Because we are business partners and best friends, I have the luxury of saying to her, “You can save X this coming year, I know you can… and here is how you’re going to do it.” When we first had the conversation, she looked at me and basically said, “How? That is crazy.”
Well my friends, we sat down… and within 10 minutes I showed her. She was shocked. Even with having a baby it would be easy.
The #1 problem people have with their finances is that they just don’t want to look. Society tells us – especially as women – that money is this yucky thing we’re not supposed to talk about. I disagree – 100%. I think there is SO much power in having your financial house in order. Knowledge is power, my friends, and all the knowledge you need to save more money this year is right there in your bank account and credit card statements.
I promise. You just have to be willing to look.
One caveat about this post… everyone’s financial situation is different. I get that. But no matter who you are… you should work toward having money set aside for a rainy day. You should feel comfortable in knowing exactly what your family’s monthly expenses are. You should feel like an earth shattering event could happen – and you would still feel financially in control. Having to get new tires, or having to take an unexpected visit to the ER, or having to buy a new computer, or having to make a renovation on your home should not EVER derail your life. We’re going to show you how this is possible and how easy it can be.
One last thing before we get started. And I say this with all the love in the world. I know – for a fact – that SO many women let their husbands take the reigns on their family finances. That is fine and well – and hey – it works for a lot of them. I also know a lot of women who were left in utter shock when the going got tough because “their husbands always handled it all”. You’ve seen it on the housewives. Anyone remember Lynn from the OC? Oh yeah. You’ve seen it in the news. You’ve probably even seen it in your own family. Now I don’t mean to be a Debbie downer here, but telling yourself that you don’t have to understand your finances because your husband handles them… that just isn’t true.
That is is fear speaking to you.
So let’s get over that fear. Let’s sit down with your husband, significant other, or on your own and look at the bank accounts. Let’s get real in 2020 and face your financial fears. The funny thing about fear is that once you face what you fear, it becomes smaller. Once you look at your debt in the face and create a game plan, it’s no longer this massive monster. It’s just a dwindling part of your life. Once you figure out how empowering it is to actually look at your financial situation, you won’t ever go back to living in ignorance. Once you figure out that you can save more money this year, you’ll be so excited to get started.
** FYI I am not a financial consultant, I am not giving you investment advice, I’m not working on behalf of anyone… this is just how I budget to feel in control of my financial future. **
FYI all of these steps are homework for next week. Write everything out. Make some spreadsheets. Let’s get real.
How To Save More Money This Year:
1.) Get real about your finances
As I said above, the first step toward saving money is to look at your current financial position. FOR REAL. Where are you at? What are your debts? What are your assets? What is your income? What projects or life events do you have to plan for? What will those things cost? What are your goals – long term and short term? Answering these questions will better prepare you to come up with a savings goal for the coming year.
2.) Figure out your taxes (as best you can)
When I look at my financial situation, taxes are a large chunk. They’re also non negotiable. So it makes sense to take it off the top before I start budgeting. The easiest way to do this is to talk to an accountant, or you can estimate with this chart here. The first step in figuring out your financial house is to figure out how much you’re really bringing home – after taxes.
***FYI a very easy way to save more money is to live in a tax friendly state.***
Ashley and I love where we live – and we also love that Nevada is one of the few states left that doesn’t impose a state income tax on most income earned here. There are 7 states that currently don’t tax most income earned:
- South Dakota
I know it doesn’t make sense for most people to just get up and move, but I wanted to include this way to save more money this year – in case – you have a job where you can work from anywhere.
If you live in a state that has a state income tax (and I am sure many of you do) you’ll have to account for that as well. You can check out your state’s income tax >> here.
3.) Figure out what you make – post tax
For some people this will be pretty cut and dry. If you’re a school teacher, you can pretty much guarantee that you will make X next year after taxes. If your income is variable like Ashley and mine… use last year’s taxes as a guide.
4.) Figure out what you spend
How many times have you heard yourself or your girlfriends say – about money – “I just don’t know where it goes”. That is crap. That is absolute crap. We say that because lying to ourselves is easier than sitting down and looking at our bank accounts. The idea is to write down your monthly expenses in a list. BE READY to be honest. You will mess this whole thing up here if you’re not honest.
- Rent, mortgage, car, insurance, groceries, copays, gas, hair, nails, TARGET, drinks with girlfriends, waxing, Starbucks. Anything you spend goes here.
The best way to do this is to actually look back at your expenses from last year – month by month. Download those account statements and get to work ladies. You will start to see that there are expenses that fall into multiple categories. For most people (myself included) expenses will fall into one of these two categories… 1.) fixed necessary expenses and 2.) variable and mostly unnecessary expenses.
You’ll also start to notice trends within your spending. Maybe you’ll see that your daily Starbucks run eats up $7 a day – that’s $2,555 a year. Maybe you’ll see that your Postmates bill is $150 a week – that’s $7,800 a year. Maybe you’ll notice that date night with your spouse equates to $300 a month – that’s $3,600 a year. If you cut out all those things by making food/coffee at home, you’d save over $13,000 a year without even trying. That’s WILD, right? Let’s tackle your Target “happy horseshit” addiction next. :/ Yes… I went there.
All you had to do was look.
I don’t know what your situation is, but when I look at my expenses, I see trends every time. I also ALWAYS see very easy ways to save money.
5.) Pie chart yourself
Here is the key to saving money. You ready? We’re going to break down your personal financial situation into percentages.
The amount of money you make post-tax (from step #3) is the whole pie – 100%. The amount of money you spend on expenses (from step #4) is your expenses slice. Whatever is leftover of your whole pie is your savings slice. So now you have a very cut and dry pie chart of your financial house.
The goal is to have some kind of slice left over for savings. I get that this is not easy. I understand that some months it feels like you can barely keep your head above water. I get that things come up and there will be months you can’t get there. But the goal is to have a plan. The REAL GOAL is to keep growing that savings slice. Month by month.
Maybe you’re saving to pay off student loans. Maybe you’re trying to get out of credit card debt. Maybe you want to pay off your mortgage. Maybe you’re saving to start a family, or to buy your first home, or to retire early… whatever the case may be… there are ways to get there that are sitting in front of you from the exercises you just did.
Here’s the REAL SECRET… there are a couple ways to REALLY change your financial pie. First and foremost, understand that nothing is forever. YOU CAN CHANGE YOUR FINANCIAL SITUATION.
Here is how:
A.) cut expenses and save more.
B.) make more money and save more.
OR – the most effective way to save more –
C.) do A and B together. Grow your financial pie and shrink your expenses slice.
You can do it. We can do it together.
Do steps 1-5 and come back next week for more. Next week we’re going to cover our best ideas on how to cut your expenses. The next week we’ll go over some easy ways to make more money and up your side hustle. I worked two jobs for the past 5 years – there is NO shame in that game. Anyone who tells you there is, or anyone who looks at you differently for wanting to make money from pursuing your dreams…
Sis, they don’t belong in your life.
We’ll go from there. Whatever you want to know, I’ll answer. DM us your goals. Let us know what you want to save. Tell us what you are looking to get to. Heres the deal… you can do it. I know you can. Will it take a couple hours to get the full picture? Sure. Will it be uncomfortable at times? Sure. Will you be judged by people who don’t understand what you are trying to do. Sure. But will it be worth it in the end? And will you sleep better at night? 100%
Here’s to all of us in this community achieving our goals – personal, spiritual, emotional and financial in 2020. I can’t wait to get started together!
Love this content! More finance talk, please and thank you!
This was golden.
This is one of my favorite articles you have done!
Love this! Thank you!
One of the best blog posts I’ve read in a long time! Well done!
What wonderful tips. Definitely am gonna sit down with my husband and go over these. Thank y’all so much
Well done! Excited to read more! Happy 2020! May God bless us all!
Love this! So important! I was just curious why Tennessee was not included on the list of states since we don’t have a state income tax. You may have been considering another factor but just wanted to ask about that. (We do have a very high sales tax unfortunately, but I’ll take that over state income tax! I’ve been lucky to have also lived/worked in Texas and Florida.)
Tennessee has “nearly no state income tax”, but because of the taxes on interest and dividends from investments – I believe – that is why it is not included in the list of “no income tax” states. Tennessee and New Hampshire fall in the “nearly no state income tax” category.
Can you do a post on investments? Roths etc?