Taking Control of My Finances
Before reading Smart Women Finish Rich for our Secret Society Book of the Month...the extent to which I knew about finances was the suggestion to put 25% of your monthly income into savings and blind faith in the app Acorns. Besides that...well it was all a foreign language beyond the bounds of my curiosity. I've always been a worker-bee. I worked throughout college and earned enough money to support my solo travels around Europe and a move to LA. I continued to make enough money to support myself via various jobs. I figured...if I'm making money, I'm alright. I've always believed money would always be there.
But, reading this book made me question:
How can I believe money will always be there if I don't understand even the simplest fundamentals to healthy financials?
Although I've just started this new financial journey of mine, I thought I'd share the biggest takeaways I'm now implementing. Perhaps this can help you take control of your own finances, regardless of your life circumstance or age. Sure, my 24-year-old values may differ greatly from where my values may lie in 20, 30, 40 years. But, the foundation to financial success remains the same.
So, where does one begin?
i. As David Bach would say, construct a "values ladder" by asking yourself "what is most important to you about money?" • Nailing down what you truly value about money can provide some clarity on how to best use what you have. For me, it is freedom that matters the most. Money provides me the freedom to travel, try new things, seek out new adventures, and live how I desire to live.
ii. Take a close look at where your money is going and how much you're making • Once you have defined your most important value surrounding money you can take a closer look at where you're spending money and how it's aligning with said value. Where have I spent the most money since the beginning of the year? Well..After careful analysis I'd say it's split between clothes and travel. Does purchasing new clothes align with my money values? No....does travel? Yes! Halfway there. Cutting back on clothes and putting the money I would be spending frivolously on clothing into stocks and savings can realign with freedom.
I'm pretty crazy about recording things...I used to write down exactly what I did each day in a planner (including what I ate...watched, you name it). I've since chilled out, but I still keep a meticulous count of what I spend and make every month. I hadn't been using that information for any specific purpose, just found it interesting. Some months I'd spend $200 on groceries. Other months my grocery bill would triple. Interesting. But since reading this book, these numbers mean much more to me.
iii. Start investing now. It's never too early or too late and you don't need millions. Turn small daily expenses into funds to purchase stock: that daily Starbucks run, those late-night snacks you really didn't need, clothes simply because they were on sale. This is still unknown territory for me and something I'me eager to explore. David Bach suggests hiring a financial advisor. I'm beginning my search for someone reliable and affordable. There are also a few apps out there now, like Acorns, that round up your purchases and invest the extra few cents. It's low risk and low reward, but I think I have about $300 in there now. Cash out anytime. It's like another secret savings.
I'm a freelancer, so I pay my taxes at the end of the year and don't have a retirement 401K by an employer. Any of you out there in a similar situation need to pay even closer attention to your finances and plan with great foresight for the future. Save for taxes, build your own retirement account. This can be hard to imagine doing at a young age if you're in your 20s as well, but oh man has this book opened my eyes to how crucial these plans are for peace of mind when our 60s come along. Nothing is guaranteed, freelance or not.
iv. Build that Fuck You Fund Lacy talks about • Seriously, do it. I'm working on mine, slowly but surely. You never know what could happen and to be prepared to live at least 3-6 months sans income. Sounds intimidating to save up that much when you're ripe out of college and have, what feels like, piles of bills and debts to pay. But add what you can each month, be consistent and patient. For me, who values freedom when it comes to money, having a fuck you fund will surely provide me with that sense of freedom.
v. Don't stress yourself out. Money is energy. Living in fear of lack and drowning in anxieties surrounding money will only make your process of owning your finances that much harder • Money will be there, just be smart, learn all that you can, plan for your future and trust in The Universe that it will continue to be there.