Talk Money To Me

Today, I am breaking a cardinal rule of good manners and talking about money at the dinner table. Or whatever table you are at right now. Point is, we don’t spend enough time having real conversations about money. In the past, I have been afraid that by sharing what I make and what I spend, I am making myself vulnerable to a lot of comparison that might not feel very good. But in an effort to face that fear, break the mold, and use a lot of cliches in one sentence – I am going to share some taboo information with you today.

Before we get to that, let’s talk context. My career in banking started a few years after college, so I have been in the field for seven years now! The exclamation point is necessary because as a millennial in arrested development, I should not be old enough to have a career that long just yet, but here we are. Over the past year specifically, I have spent a lot of time learning about financial wellness and what it means to be financially healthy. On our way to looking at a breakdown of my budget and spending habits, I want to share four things that I think you should be doing to find financial health.

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Automate your savings

Establishing recurring debits from your primary account to a savings account is a great way to guarantee that you’ll save money every month by making saving a passive habit. Begin by determining how much you bring in every month (if it varies, be conservative with this estimate) and then settle on a percentage that you are comfortable living without. This can be a tricky number to settle on, but don’t worry, automation can be modified.

De-automate your spending

In the same way that savings is easier when it’s automatic…so is spending! Blind spending is a trick that makes businesses rich and consumers poor. Assess your auto-debits and cancel things that you do not use. In my opinion, a likely culprit is subscription services – Dollar Shave Club, myLOLA, FabFitFun, Birchbox – you might be spending hundreds of dollars a year to fill a junk drawer in your home. You’re not getting a good deal, you’re getting played for a fool.

Treat yo’self

While you’re building your budget and accounting for every dollar, be sure to add a category for YOU! I’m a big fan of compartmentalizing money, so if it’s helpful to open an additional account to hold these funds – do it! Until you have a handle on your finances, it may be easiest for you to withdrawal your fun-money and keep it in cash. It’s a great way to avoid over-spending and if you don’t spend it, you’ll have the extra in your pocket next month.

Check in and reassess regularly

Don’t be like Ron Popeil – “Set it and Forget It” is fine for the kitchen but not for your money. Use the alerts offered by your financial institution to setup balance threshold notices or download an aggregator, like Personal Capital. You will have to determine the amount of time that you want to dedicate to financial wellness, but just make sure you’re checking your budget at least once a month to crunch the numbers and see if you are hitting the mark or identify where you need to make adjustments.

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If you have made it this far, you have earned a spot in my circle of trust, so let’s take a look at my finances. The screenshot below shows a budgeting tool that allows you to view your monthly budget – where your money is going – in percentages.

My budget is based upon an income of $5,000.00 per month. It’s important that this is net income – the dollars you bring home after taxes and deductions. Upon entering the Total Monthly Income, the tool does the math for me based upon the recommended percentages. By modifying those default percentages, I can create an image that reflects my monthly budget – just make sure you don’t exceed 100%!

Using this tool is a great exercise to determine how you are prioritizing spending, and a good start to creating a monthly budget. By visualizing where my money goes every month, I’ve been able to identify and take action to reduce blind spending while finding space for things that improve my quality of life (i.e. nice apartment in the Bay Area, high quality vitamins, travel savings, etc) and still have money left to put in my savings.

As with any self-improvement change that you’re looking to make – be kind and patient with yourself, especially in the beginning! The real secret to financial health is recognizing when changes need to be made and DOING SOMETHING ABOUT IT! It’s never too late to start…but when it comes to saving your money, it’s also never too early.

Thank you so much for taking the time to read and if you have any feedback on my writing skills or the content itself, leave me a comment, I would love to hear from you.