I get asked most of the time how can I start to be more active with my money. Sometimes it is a wife asking how she can get more involved since her husband takes care of everything, and she has no idea where all their money is. This can be very scary, what if something happens to your husband? OR What happens if he isn’t managing the money right? You don’t want to be scratching your head trying to figure out why you thought you’d be retiring, but you just had to borrow money from your parents or declaring bankruptcy. You might think I’m exaggerating, but I’m not. I’ve seen it happen and if you don’t believe me, just do a little search.
Now the other times, the women who ask me, are on cruise control. They get paid, pay their bills, and whatever money is left, they shop with, spend on themselves, or maybe save a little. Think of it like you wake up, go to work, come home, and go to sleep. And repeat for 30 years until you can hopefully retire. You are on cruise control with your money and with your life. It’s time to get off this hamster wheel and live your life, not just go through the motions. And what will help, is taking charge of your money so you can use it to help live the life you want and deserve. Remember it’s not about making more money or saving more money, it’s about the lives you can change with that money. So I’ve come up with a money detox to get you started.
You’ve heard of a health/juice/diet detox, so why not a Money Detox? Let’s apply the same concept to make small changes with your money, which can lead to drastic changes with your life goals. Instead of removing one thing from your diet, we will add one thing a week that deals with your money.
Here are my Top 12 Money Detox steps to telling your money whose boss:
Month 1 focuses on your cash flow.
- Week 1: What is your net income? Sit down and calculate what your total pay is and then how much hits your bank account after taxes are taken out, health insurance premiums paid, 401k contributions are made, etc. This is what you have to live off of.
- Week 2: What are your fixed expenses? Go through your monthly expenses and calculate how much you are spending on housing, utilities, gas, insurances, loan payments, taxes, etc. These expenses shouldn’t be more than 50% of your income.
- Week 3: What are your variable expenses? Your variable expenses are where you can find some extra savings. Usually there is one category that is causing you some bleeding, which for me was shopping as you know. In preparation for our upcoming baby, I cleaned out all of our rooms and closets. I got rid of 10 garbage bags of clothes and stuff, most of it donated. And I fully blame home goods, Target, TJ Maxx, and stores like those for all this stupid shit (as my husband calls it, please excuse my language!). Don’t fall into the trap! Look at how much you are spending on stupid stuff and think about whether it’s worth it or not. Think of what you could be doing with that extra money each month.
- Week 4: Do you have a surplus or deficit each month? This will be your first month of calculating, but please, please, please do it every month so you can see a trend with your money. Do you have extra money left over? Is it all spent? Are you spending more than you’re making? If you are breaking even or overspending, it is time to make some small changes in your spending. If you have extra money or a surplus, what are you doing with that extra money? Is it going to pay down your debt? Are you building up your emergency fund? Or is it just sitting in the bank account wasting away? How can you make the most of this extra money? Schedule a call to get started by clicking the button below:
Next week, we will go through Month 2, which deals with your finances and investments.
Happy Detoxing!
Jessica Weaver, CFP®, CDFA™, CFS®
Wealth Advisor