It is a new year, and this is the time when people put action towards their goals so they can forget about them next month. I too am doing this; I have started my second week of meal prepping. Sunday I made tacos. I meal prepped chicken and ground beef, got canned corn and refried beans, cut up grape tomatoes and lettuce, purchased corn and crunchy tortillas. I even made rice, which I froze. This week I’ve had tacos, taco bowls, taco salads, taco cat and taco face. I originally thought meal prepping were for people that had their shit together so they can save money, be healthy and save time. I am not really saving money, I am not cooking healthy, but it saves me so much time that it is totally worth it.
Another thing people do in the New Year is diet and exercise. Is my old condo gym brimming with people right now? I don’t know, I have been getting over the flu and I am like 95% better, but that last 5% is giving me a workout break. Usually when people start their fitness plan, they first get on that scale to see where they are. They take measurements around their gut, their arms, and their thighs. Some folks even time a mile run or record how much they can bench press. You get the picture, they figure out where they are so they can track their improvement later.
So similar to your physical health, apply the same methodology towards your financial health.
1) Figure out how much money you have, how much debt you have, and how much you are investing. Calculate your net worth. The goal is to increase it right? But if you don’t know how much you have, you don’t even know if your net worth is increasing. Even if your bank account isn’t going up, if your credit card debt is decreasing, then you are on the right path!
2) Next determine how much money you are spending every month and where it is going. Categorize your spending between fixed and variable spending. Fixed expenses are expenses that do not change depending on how much you use it. It doesn’t matter how many days you stay at your place, your rent will stay the same. It doesn’t matter how much TV you watch, your cable or Netflix bill will not change. Get it? And then figure out your Variable expense. If you go to a bar and drink less, you will spend less, unless you are so pretty that other people buy them for you. If you eat out one less time a week, how much money will you save? You can basically only budget your variable expenses, because you can’t go to your landlord and change your mind until the lease is up. Which is why they call it fixed.
3) Pay off your High interest debt (credit card debt). Credit card interest sucks your soul. This tracker calculates your debt balance based on your monthly payment and interest. This is important. It is kind of like going on that scale every month to track your progress. Did you spend more and increase the debt? Or did you cut up the cards and pay off a chunk.
4) Your emergency fund is for emergencies. Interesting concept, right? Want to know what happened to people during the last recession? They lost their job, their retirement savings plummeted, and their home went underwater ALL AT THE SAME TIME. This happened to a lot of people, even responsible college educated people. And then tack on things like getting in an accident, paying for treatment or helping a family member. Shit happens. So this is why you need an emergency fund.
5) Invest. Don’t have your money sitting in the bank losing value due to inflation. Have it work for you. And then have that money that you earn work for you again. And again and again. I can honestly say that my investments contributed more to my net worth than my job. Just think about that. Working 40+ hours a week vs. Investing. My net worth is mainly attributable to real estate investing tho, and I get that it is hard to convince you to drop tens of thousands of dollars right now. So, take the first step and invest in something easier (S&P500), which was my first step too.
Calculate your Net worth. Figure out your Income Statement and Budget. Pay off your Credit Card Debt. Build an Emergency Fund. And Invest.
Similar to getting fit, your financial health also takes time. Your Financial Plan requires monthly entries, and you need to change your habits when you realize it was a bad idea to spend $99 on shoes you only wore once. It also takes patience, because it won’t happen overnight. It isn’t a race; just take your time. You can do it!
If you are worried that you can’t get your financial shit together, read: I’m a Dumbass to realize that I am actually an idiot and why are you reading this? Want to see another one of my financial mistakes; check out: My Laziness cost me $20K. And don’t know where to start with money, Start Here.