Guest post from Jessi of JessiFearon.com:
Managing money isn't easy. If it was, then there wouldn't be thousands upon thousands of books, podcasts, classes, workshops, and more on the subject.
Even though I was raised in a home where managing money was made a priority, and my mom taught us how to budget, I ended up failing with money in my early adult life. I've fallen down with money many more times than I can count and my guess is that you've hit a few stumbling blocks too.
No one is perfect – especially when it comes to managing money.
Even though we've failed with money more times than I can count we've succeed even more times than we've failed. We've managed to pay off over $100,000 of debt in four years as a one-income family of five and save up a hefty emergency fund that allowed my husband to quit a job he no longer loved to start his own business free from worry over how his family would survive.
Finding peace with money isn't easy but it's a fight that's worthwhile. And if you're ready to find peace with money, here's how to find it even when times get rocky.
1. Make a Plan
Ever notice how when you have a plan in place, all of sudden you're not so anxious anymore? It's like you find a slice of peace when you've created a plan. Even the most disorganized among us benefits from having a plan in place.
And guess what?
Managing money is no different. When you have a plan in place for your money, all of sudden there's this peace that washes over you. It takes you from feeling out of control to feeling empowered.
So if you don't already have a budget in place, now is the time to create one. Seriously, don't wait until tomorrow – do it now. There are several different ways to create a budget so don't think there's a "right” or “wrong" way to do it because there's not – there's only the way that works best for you and for your family.
But if you've never budgeted before or are currently living the dreaded paycheck-to-paycheck cycle, I encourage you to try what I call the Quick Start Budget as it will help you get into the habit of budget and will help you break the cycle of paycheck-to-paycheck by first helping you learn how to budget the money you actually do have sitting in your bank account. Click here to read more about this super simple starting point with budgeting.
If you aren't living paycheck-to-paycheck but still have no idea where to begin with budgeting, I encourage you to read over the Beginner's Guide to Budgeting and fill out the accompanying printable worksheets to help you get started in learning how to budget your money.
Once you have your budget in place you'll start to feel that sense of peace and empowerment but that's not the only thing you'll have to do in order to truly find peace with your money.
2. Stick to the plan
Yep, you'll have to actually stick to the budget you just made which yes, is way easier said than done but not impossible.
The reason sticking to a budget is so hard is because we are our own worst enemies. We have wants and needs just like everyone else and sometimes we just want something so bad that we can justify it as a need in order to attempt to give us some peace about spending the money.
Those little justifications really add up. And before you know it you're right back where you started – scrambling to control your money.
So let's just not do that and instead make our plan and actually stick to our plan. During my financial coach training, one of the mentors shared that he and his wife struggled so much with sticking to their budget because with four kids it easily got out of hand. So they did something kind of crazy.
They posted their budget on their fridge for everyone that comes over to see! Seriously, he texted us a photo that night of it. He said that it not only helped him and his wife stick to the budget but also helped his kids stick to the budget. They learned not to ask for things because the budget was up on the fridge and they could see (and count) that there wasn't money for whatever that thing is they wanted.
So get creative and make your budget a priority for you and your family.
3. Build a cushion
We all know that Murphy's Law is really thing. Anything that can happen will in fact happen and it always happens when we least expect it. So guess what? A crisis WILL happen to you and your family at some point.
Hopefully it won't be a life or death crisis but regardless, something will happen. Like the car breaking down, the basement flooding, an emergency surgery, or even the breadwinner losing their steady job.
Life happens and when it does, you need to be prepared. You need to have an emergency fund set up so when life does happen, you're ready.
When it comes to setting up an emergency fund, I suggest you start off with an easy number that you can realistically save up in the next three months. Something like $500; $1,000; or $2,000 and you can go as high as $5,000 if you're in a higher income bracket. But the point of this starting point is that it's meant to be somewhat easy to save up in three months.
After you've reached your starting point, you can then work to build up towards your three month emergency fund and then your six month emergency fund. You determine your three and six month emergency fund needs by tallying up your living expenses for one month and then multiplying that number by 3 or 6.
4. Dump the debt
When it comes to financial peace nothing provides more peace than knowing you own everything you have. Knowing there isn't a threat of someone coming to take your car because you can't afford to pay for it. Knowing there isn't a threat of bankruptcy if you can't pay back those thousands of dollars you swiped on your credit cards.
It's incredible.
Couple this sense of peace with the peace of having an emergency fund in place and you'll truly start to feel the blessing of managing your money well.
When it comes to paying off debt, you'll need to look over your budget and determine how much extra you can apply every month from your budget towards paying off your debt. If you determine you don't have anything extra, then I encourage you to either make some tough choices and start reducing your expenses or find other ways to generate additional income (or do both!)
You need money to pay off your debt – it's not going to pay itself off, which means you must decide how much you're willing to sacrifice in order to become debt-free.
After you've determined how much you're going to apply extra towards your debt every month, you'll need to list out your debts in a "plan of attack" in order to organize how you're going to make this happen.
For us, we used the debt snowball method but you can use whatever method you like, so long as you use it. In case you have no idea what the different methods are, here is a little explanation:
Debt Snowball Method: In this method, you pay off the lowest balance debt first and then "snowball" up from there to the next lowest balance debt.
Debt Avalanche Method: In this method, you pay off the debt with the highest interest rate and then "avalanche" from there down to the next highest interest rate debt.
Once you've decided on the method you'll use, write out your plan and start attacking your debt!
5. Give yourself grace
Yes you will stumble on this journey. You'll forget to budget one month; you'll forget to stick to your budget; you'll struggle saying "no" to something you really want; you'll struggle cutting things out of your budget.
Heck at times you might even get downright resentful of others who aren't living life by a budget because they seem to have all the fun. And trust me, I get that. I've been on the journey for a long time and I can tell you that it will be very hard at times and there will be times when you want to beat yourself up, but I encourage you to give yourself grace.
Give yourself grace and have the strength to pick up and keep moving forward.
Alright, so what are your thoughts? Are you debt-free (or on the journey to become debt-free)? If so, what advice can you offer someone just starting this journey?
Struggling to figure this all out and wondering how you finally gain control over your money? If so, I have a special offer just for Money Saving Mom readers – 50% off my course Real Life Money Plan™! Join over a thousand other students and make financial peace a reality for your family. Head here and use code: MSM25 at checkout!
Jessi is the writer behind the blog, JessiFearon.com (formerly The Budget Mama) and is a dedicated financial coach using the gifts God gave her to encourage, empower, and teach others how to manage their money well.
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