4 Mistakes You are Making with Your Personal Finances
I’ve learned a lot from the things that I have done wrong along the way, and from what my clients have told me about their financial habits before we started to work together. So I am here today to share some lessons with you. Learn from my mistakes so that you can be financially successful and feel like the boss of your money!
1 - Not knowing where all your money is going. I was guilty of this for way too long and waited to have the huge wake up call of getting fired to really have my eyes opened. Are you ignoring your money right now, and hoping it will all work out while you watch your savings become depleted? Are you wondering what savings is, or worse yet, seeing your debt increase? If so, it’s time to peel back the layers of your spending!
What you can do: Full disclosure, this won’t be fun, but being broke isn’t fun. So you pick your version of no fun my friend. You need to figure out where your money has gone for at least the last two months. Pull up your online banking and your credit card statements and break it all down. Use a pen and paper or start an excel spreadsheet, whatever feels easiest for you. Assign each transaction to a category. Be as specific as you can so you can see the full picture. After all your work is done, you should have a very clear picture of where your money has been going. Use this information for step 2!!
2 - Not having a budget! Seriously, make a damn plan for your money already!!! What are you waiting for??
How? Have a look at your numbers from your spending review above and use those as a starting point for your budget. CLICK HERE to get my free template and really get to work on making a plan that will work for you. Make sure it balances. If it doesn’t balance, go back to the plan and adjust by getting creative to add extra income or cut expenses. Having a plan for your money that balances is the key to long term financial success.
3 - Not Including saving for emergencies and the holy shit expenses of life in your budget. Don’t let a curveball that life is going to throw at you derail your financial plans. Think about things like annual expenses (insurance premiums or subscriptions could be a few things you may need to add) as well as other things that could come up as large expenses. Items like car repair and home maintenance are items that you may not think about when creating your budget.
Want to make this easier? Set up separate savings accounts with automatic transfers on payday. That way you can set it up and know that it will happen without you having to remember to do it. Check out this post on SINKING FUNDS for more details.
4 - Not being patient with yourself when you are working to make changes with your money. Big changes can be difficult. The first 3-4 months of trying to implement a budget and stay on track with it are going to be HARD. Sticking with it will lead to managing your money becoming a whole lot easier in the long run.
I recommend setting time aside at least weekly to check in on how things are going and evaluating if you need to make any changes. Know that your budget shouldn’t be static, it needs to change with you. Especially when you are early on in your budget and getting to know what works for you.
It’s important to make time to manage your money because if you don’t, you’ll eventually be forced to by a curveball or other life event. Don’t wait. Get out ahead of your finances and make long term changes that will help get you to where you want to be financially!!
-Sherry
