After moving to the Spokane area, I re-entered the real estate industry and when speaking to people about homeownership, the most common thing I heard was people didn’t know how to manage their money. I could absolutely relate to this. I had gone through a period in life that made me have to re-evaluate how I was managing my money.
From that process, I have put together 5 steps that helped me get from a “I’m Broke Mindset” to a “I’m on my way to Financial Peace and Freedom Mindset” – that anyone can do!
Step 1 – You must know about your income. Get your paycheck stub. This will tell you not only how much you get paid but also how often, how much is being taken out for taxes and if you are currently investing into 401K plans. Locate your Net Income, the amount after all deductions, to calculate your monthly income. If you are paid twice a monthly take your net pay and multiply by 2.
Step 2 – You need to write down your expenses. To be successful in budgeting you need to look at your fixed and fluctuating expenses. Write down all of your monthly necessities, that is everything from Mortgage or Rent, Utilities (Electric, Water, Sewer, Garbage, phone etc), transportation, food, toiletries, and other personal expenses. Now add all of these items up. This will be your Expenses.
Step 3 – Evaluate your bank statements. Look over every dollar you spend to track your spending and learn your habits. Try and find items that are not true necessities and see what you can remove or cut back on so you free up funds for savings. Small sacrifices can add up to big investments down the road.
Step 4 – Set a savings goal – Place a specific amount into a savings account each paycheck. I found a bank that was not easily accessible to my family and after opening we only had an ATM Card for it. Find free ways to reward yourself for reaching your savings goals, whether weekly or monthly. Think an outdoor walk, trip to library or museum, family movie at home, to recognize the work you’re doing.
Step 5 – Stick to your plan. After you have set your goals, remind yourself every paycheck that you have a goal of Financial Peace and Freedom and that you are not willing to compromise on that. Having something visual to focus on like a vision or dream board, or a calendar or chart to track your progress so you can actually see your growth.
You’ll also want to schedule a day and time every time you get paid that has you re-evaluate all of these steps and see where you can tighten up – we all need reminders and can find room for improvement. Following these 5 steps will help you keep your Money Right and Tight – and soon you’ll be shining an even brighter light.