When the new year arrived, my husband and I were hit with the reality that our finances were in need of a serious remodel. We had racked up debt over the holidays, and were feeling like we were treading water. Each month we found ourselves just barely getting by as well as adding a little bit more to our growing debt. With the pandemic, economic instability, rising prices of gas, food and overall adulting and other imperative survival things, we were feeling an overall sense of unease and instability. Little did we realize not only were we feeling this instability financially, but it was bleeding into every part of our lives. Sound familiar?
Financial stress can cause so many negative effects on your life. From mood swings to difficulty making decisions, sleep issues, the list goes on. I don’t know about you, but this is no way to live. I decided to seek out someone to help us get back on track. That’s when we reached out to Katy Almstrom, a local financial coach. At first, this felt like another added stress and expense. But it has proved to be one of the best choices we’ve made this year. I knew if we didn’t begin to make changes, we would continue digging ourselves in a hole of debt that we would never get out of.
5 Things I Learned From My Financial Coach
Diving into finances felt really scary at first, but the thing is, getting control of your finances can be so empowering. We work so hard each day, and understanding where this money goes and being able to control how we use it, is an incredible life shift. There will always be road blocks along the way, but having a proactive plan in place to prepare for these and a way to execute them, I have learned is so imperative.
With rising costs and financial uncertainty, I wanted to share 5 important things I’ve learned from my financial coach. Hopefully some of these insights can help you too.
Understand Your Finances
As I have learned from our financial coach, when beginning to dig into your finances, it is important to first get a hold of what it is you are making and spending each month. So many of us don’t even know how much we are spending on groceries or take out each month. We don’t pay nearly enough attention to subscription auto payments that we may not even be utilizing or need anymore. Using an app to track your monthly income and expenses it a great way to begin to bring awareness to these things.
Katy suggested we use EveryDollar and we love how easy and accessible it is.
No need to buy the subscription just use the free version. She suggests not connecting your app to your bank account and instead inputting your expenses every few days. This will build that awareness around what you are spending.
One of our big aha’s with EveryDollar has been the amount of money we spend on groceries each month. It was very clear after one month of tracking, that this is an area we can work on and make improvements. It is helpful to be able to use the app to track where we are with our grocery spending and budget. Some things we are trying to spend less on groceries, is a weekly grocery pick-up. I order online on Thursday evenings and meal plan for the week. We are sticking with simple meals with just a few healthy ingredients to keep things both easy and affordable.
The grocery pick-up has allowed me to be much more intentional about each item in my “cart” and avoid grabbing any last minute items. Another thing we are doing is using Thrive Market to buy expensive kids snacks, diapers and other monthly food staples to save on those brands.
Simplify, Simplify, Simplify
Katy is all about simplifying your finances, which in turn simplifies your life. It is amazing how true this is and how I have found this to filter into each part of my life over the last few months. When we told Katy we were working with 5 different banks between the two of us with all of our finances she encouraged us to simplify this. We now have one trusted, local bank with both individual, joint and savings accounts. This will eliminate the stress of constantly transferring funds and having to borrow cards when our monthly income has not come through yet.
Consider how you receive your income and how you pay for expenses? Can you simplify this process so it makes your life easier each month?
Get Control of Your Debt
One of our biggest concerns going into our first meeting with Katy was our credit card debt. Katy quickly put us at ease telling us that yes, credit card debt is not great, but that it is something we can 100% get ahold of and pay off in a few years. BUT only if we make a plan and execute that plan. So after checking into a few different options, she suggested we use NerdWallet to find a credit card to transfer our debt to with 0% APR for the first 18+ months. We had no idea how much our rising APR was holding us back from paying off our credit cards.
Unfortunately credit cards can be an incredibly slippery slope and they make it nearly impossible to get out of it. By transferring our debt and committing to a monthly payment we will hopefully be able to wipe our hands clean of debt in 18 months!
The big question to ask is what purpose is your credit card providing for you? If you say it is for emergencies, but you are using it regularly, make sure you are being careful about how much you are spending. Credit cards give us a false idea of how much money we have and can therefore spend.
Plan for the Future
Planning for the future is one of the best ways to get ahold of your finances. Instead of being reactive and stressed when big financial “surprises” arise, you are prepared and have the nest egg to execute. Katy calls this sort of savings account a “Sinking Fund”. This fund is for everything from unexpected car expenses (which are always expected, especially living in Vermont where cars take a serious beating), home improvement projects, vet appointments, oil bills, etc. If you set aside a certain amount of money to this fund each month, you will provide yourself with a safety net designated to these unexpected, yet expected expenses that are not already budgeted for in your monthly budget.
Another way to plan for the future, is to consider what expenses you have coming up. Maybe you are planning to do a project on your home this spring or summer or need to buy a new car. Begin to set aside money each month for those projects and future expenses. You can keep track of your “Sinking Fund” money in an excel spreadsheet. Be intentional about your money and what you will use it for. Maybe you decide to take on a few extra shifts at work and that money will go towards the stone patio project this summer. Or maybe you sell the furniture in the bedroom in your house and use that profit towards converting that space into an office.
Reflect On Your Work, Income and Goals
One of the biggest takeaways I’ve had working with Katy is we are more in control of how much we are making and how we are making it than we think. And this goes so far beyond just a job and income, but truly how we are living our lives. We get set in our daily grind and forget that we have choices and we can reroute if things are not working for us.
Consider how much you are making and if it is enough for the life you want to live. Not only should you consider the amount you are making, but also if this jives with your passions, goals and priorities. Is there another way to make the same amount or more, but be less stressed? Or would you be willing to make less money and prioritize doing work that feels more authentic and aligned with who you are and who you want to be? Don’t sell yourself short, opportunities abound and you deserve to be happy and bountiful in all aspects of your life!
Do you have any helpful budgeting tips? Let us know in the comments below.
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