“You are more likely to hear from your buddy that he is on Viagra than that he has credit-card problems.” – Dr. Bradley Klontz, Creighton University Financial Psychology Professor
She Didn’t Write the Book on Finances
Let me start by saying I was forced to write about this. Why? Well because Lydia Loizides (our founder and my boss) is everything I’m not. Incredible career. Stable income. Great partner. Kids that make you proud to be a mom. The whole 9 yards. No, she did not pay me to write this, but you get the picture. In my mind, she’s the type of person that can save because they have the budget to.
Her: “Let’s do an article on finances.”
Me: “Fantastic. Tell all the people your brilliant ideas. All the CEOs and CFOs and COOs of the world will have a brilliant retirement fund in no time.”
Her: “No. By ‘let’s’, I mean you.”
Now anyone that knows me could have told her that this is a terrible idea. Why give the girl with $36 and a broken car to her name the voice of the finance gods? It’s because of this: being broke in your 20s is not a foreign concept. Hell, being broke in your 50s is not a foreign concept. This is America. A 2016 survey from the Federal Reserve found that 47% of Americans could not afford a $400 emergency, meaning that nearly half of all respondents would have to either borrow the money, sell something to come up with the cash, or not pay the expense at all. A 2017 GOBankingRates survey found that 57% of Americans have less than $1000 in their savings. So how do we, the less frugal of the world, tighten up our budgets and savings and stop living paycheck to paycheck?
Kick Your Excuses out the Door
“I pay $1000 a month in student loans.”
“My rent is through the roof.”
“This car insurance is killing me.”
Sound familiar? Yeah, same. So we’ll have to kick these like a bad habit. As with any habit, the first step is admittance. Can you admit that you have a spending problem? If you can’t, stop reading now. You’re wasting everyone’s time. If you can, we’re in business. The reason these excuses come up short isn’t because they’re not valid, it’s because everyone has them. Yet, we still buy $6 frappuccinos from Starbucks. Now, I’m not saying sacrifice your Pumpkin Spiced Lattes or avocado toast. By all means, you have the right to indulge. I’m suggesting we should balance. Let’s take a look at last week’s expenditures, shall we? This is not including bills. These are extra, frilly, “I probably didn’t need” things that I spent money on – the amount that I don’t want to do this is astronomical so you’re welcome.
September 10th - September 16th
Eating Out: $119
The Bar: $41
According to my bank statement, and I wish I was lying, I have spent $213 on things I don’t need. Two hundred and thirteen dollars over the course of 7 days. The worst part? I had no idea until I just did the calculations. So do I have a spending problem? Yes. Okay great. Step 1 of Alyssa’s “Budgeting for the Broke” series complete.
Write It Down
This is annoying because how many times have we all heard, “Oh, just track your spending!”? I never do it. Why? Because to me, that sounds redundant. It’s all on my mobile app, I can look at it anytime I want. It’s all there. Well, as we can see from Exhibit A above, I clearly do not check my mobile app on a regular basis, and I don’t actually know how much money I’m spending on “just a little something here” or “just a little something there” because I “just deserve it”. In looking at the above, I do not “just deserve to spend $213” a week since I am neither a Kardashian nor a Gates. So write it down. No matter how big or small the purchase is, track your spending for a week. Write it down, and on Sunday, when you’re planning your workweek, add it all up and see just how much you’re blowing on the “little things.” And then rethink for your next week and start all over again.
We get it in our heads that saving is some far off goal. Oh, when I get my next paycheck, I’ll start saving. When I finally pay off my student loan, I’ll start saving. When I [fill in the blank]. I do it all the time. But saving doesn’t have to be some huge undertaking. You don’t train for a marathon by getting up one day and deciding that sure, 26.2 miles seems doable today. No, you take it in small strides. Maybe you start by running for 15 minutes, increasing gradually to 30 minutes, then slowly a 5k, then a 10k. You get the picture. Rome wasn’t built in a day.
It can be as simple as saving $3 a day, every day. That adds up to about $90 a month. That’s $1095 a year unless of course, it’s a leap year, and then hey, bonus day! Take that money and throw it into a savings account with interest, and here’s the secret or so I’ve been told, do not touch it. See if you can double it to saving $6 a day every day the following year, for an ending total of $2190 in savings. You’ll then have over $3000 in total savings which is enough to plop into a Vanguard Index Mutual Fund at the end of the year. And then, in the words of Kanye, just watch the money pile up year after year. Too much? Try $2 a day. Still too much? Try $1 a day. Any amount that you can save is helpful.
So where can we shave off some money? Well for me, I can drink my coffee at home. Factoring in the cost of coffee, that’s about $45 I would have saved last week. I can cut back on “going out”. It’s not that I personally am spending $41 at the bar, it’s that I get generous and “let me get the next round” tends to slip out. I can plan my meals out and pack a lunch every once in a while. We so often talk about healthy meals to eat at home and meal prep, but it’s the application of that which can often feel like a burden as opposed to a way to simply live better in all aspects, financially and physically. I can learn to say no. It’s okay to not always go out for dinner or lunch or the theatre. It’s okay to say no. And I have to continually remind myself that. Remember, I’m not saying I’m never eating out again, never buying another cup of coffee, or never going out with my friends. I’m simply suggesting that we all practice a little mindfulness with our finances.
Get an App
It’s the 21st century. It’s that simple. My favorite app for saving is called Qapital. I got it in the spring as a way to tighten up my budget a little and saved hundreds, really. When summer came around, funds got tight, and I drained those savings. So getting an app and then actually sticking with it is important.
Reasons I love Qapital? You can set your goals. So right now I have a travel goal and a general savings goal set. You can then choose which rules you want to apply. So for instance, I have “Round-up to the nearest $2”, which will round every purchase I make with my debit card up to the nearest $2 and send it to my savings in the app, and “Set & Forget $3 every day”, which will automatically take $3 out of my account and put it into the savings in the app without me thinking about it. It does have an automatic fail-safe for if your account drops below $100, and it’s easy to transfer funds from your Qapital savings to your checking.
You can use this link to sign up and get $5 for when you meet your first goal if you so desire. And no, this is not sponsored content.
It’s Okay to Fall Off the Wagon
As with breaking any bad habit, it’s not the end of the world if you slip up. Just because you have a crack in the screen of your phone doesn’t mean you should then repeatedly smash your cell on the floor. Bad choices happen. Try not to spiral. Savings should fit into your life without overwhelming you. Again, baby steps. Practicing what I preach 101.
Now I so badly wanted to wait and write this article when I’m “financially stable” so that I can look back and tell you wonderful people “how I did it and how for $19.95 a month, you can too!” But for the sake of authenticity, here we are. I’m starting from ground zero, and maybe you’re starting from ground zero too, and we’re going to do this together. So in the spirit of being transparent, check back for this piece’s follow up in two months.
Take the challenge with me by tagging your Instagram stories and posts about how you're saving money in your everyday life with #savewell and our tag @helloworkwell for an Instagram story feature. Happy saving!