Alright guys, today we are talking about a big one. How to control your money that always seems to disappear on you. You see, controlling your money is a lot like getting a new dog (for you cat people, I have no analogy for you here).
Sort of like when you get a new pet, no matter how hard you try, you just can’t get it to do what you want sometimes. Forget getting it potty trained and keeping your new friend from chewing up your favorite shoes. Training a new pet is a daunting task, much akin to training your income to get it to do what you want.
But, dogs do get trained, and people do take control of their finances, so how do we potty train ourselves to stop pissing away our money?
1) Budget, Budget, oh, and did I mention budget?
You’re probably thinking, “I have heard this a million times”, and you probably have.
But did you ACTUALLY do it??
Execution is so important in this. You have to immediately take the time to sit down and write out your expenses for every month. There are many options out there for budgeting. (There are even apps like Mint that you can sync your accounts with and set budgets to keep yourself from overspending.)
If you’re wondering how I budget, I actually prefer using a sticky note app on my computer.
I write down what date my bills are due, and how much they are for the month. This will give you a total number for the cost of living. For example,
- Rent Due on the 1st – $1,200.00
- Car Note Due on the 9th – $270.00
- Internet Due on the 10th – $60.00
- Insurance Due on the 18th – $200.00
- Gas – $70.00
Total — $1,800.00
Really put your effort into this; take the time to total up EVERYTHING you buy EVERY month, no matter how small the cost. Once you have filled these out, you now have an idea of how much you’re spending (an estimate on some things like gas is better than nothing).
The next step is making sure those necessary things are paid every single month with no worries. Because if these things are important enough for you to purchase every month, then you most likely need them in your life.
Some things will be exceptions and you can go ahead and cut things out that you don’t need and cancel them during this stage (e.g. the gym membership you got that you said you would use, but never use). This eliminates so much financial stress.
I use this total to determine my budget by dividing my total cost of living for the month by 2. (I get paid bi-weekly) The number will change according to how many times you get paid a month.
- Ex. $2,800/2 is $1,400.
After finding this number I know EXACTLY how much I need to put away every two weeks (since I get paid bi-weekly) for bills and other necessary monthly expenses. So when I get my paycheck or any money, I put $1,400 directly into my savings account.
With the remaining money, you have to decide how you want to use it. You have to make sure not to dip into that money that you put away.
Leaving this money alone is what will help to eliminate your stress of not having enough for bills.
If you get paid weekly, then you would put $700 dollars in your savings every payday. Then at the end of the month, you transfer everything you set aside to your checking’s account and pay your bills. Overspending is no longer possible with this method because that money is off limits for anything other than bills. This eliminates a world of stress and is a habit that has changed my life personally.
You have GOT to budget to make sure you have no financial worries or forget any bills. It will take discipline and it will take time. But, IT WILL BE WORTH IT.
2) Decide what to do with the money left over.
So, you have all your money for bills transferred away from your checking account, and you’re now wondering, “What do I do with the rest of this money I have from my check?”
Or you’re thinking, I don’t even have enough money for my bills. In which case, you need to look at what you can possibly cut down on to save money and afford your bills. About that leftover money… There is only one logical answer here for spending it… Blow it right..? That’s right. Just burn right through it. (Like this fool pictured below, burning a 100 dollar bill… I sure hope that’s monopoly money for his sake.)
Don’t laugh… For most people, that’s how they treat it.
The leftover money is NOT the expendable cash you get to blow every week. Not if you ever want to be financially stable and free that is. What you do with this money is the difference between financial comfort and a stressful and anxious life. YOU CHOOSE.
First and foremost, this money should go towards a safety net.
I hold enough money in my savings to cover at least a year of my expenses. For some people the number that makes them feel comfortable is different, but I would suggest a minimum of three months’ worth of expenses. (actually, over at Money under 30, they have made an awesome calculator that you can use to find exactly how much you will need. You can find the calculator here.)
To start, transfer around 40-50% of the money that is left from your check to your savings account to build up your savings net.
Secondly, that high-interest debt. If you have any credit card debt or any high-interest loans, these MUST go first. Nothing will sink you into a negative net worth faster than high-interest debt.
Put at LEAST 30-40% of the money leftover towards these high-interest debts. Continue doing this until your high-interest debt is paid off, then you can move on and begin focusing on investing.
I can’t express enough how satisfying these first two steps will be for you. They will give you a feeling of safety knowing you have enough for emergencies, and more importantly getting that debt paid off will give you a feeling of freedom and accomplishment.
If you don’t have any high-interest debt, you can take this money percent and focus on growing that savings account to a comfortable place, (so put 70-90% of your money towards savings) or begin putting it to work in an investment (more on that in the last step).
Lastly, with the remaining 10-30%. Find something you ENJOY spending money on. It could be a hobby, or something even as simple as dates or things for your loved ones. (I like to buy nice things for my girlfriend or spend money on my bike or running stuff)
The last step is just as important as the first two. If you aren’t taking time to spend money on things you enjoy in your life, then why are you even making money? I used to obsess over this and horde my money.
Now I make it a point to spend some every once in a while, and it has helped me to enjoy my life so much more.
3) Invest the money remaining.
So, I’m using the extra money to save and have already paid off high-interest debt…What now?
The best thing I think you can understand about money when it comes to comparing it to a dog is that it has a LOT of potential.
But, it all depends on how you train it.
Most people’s money sits around and is quite lazy actually.
But what you have to do to really take your life up a notch and get to feeling comfortable, is starting to put your money to work for you.
There are so many ways to do this, you would not believe.
There are tons of different markets to get into (depending on how tolerant you are to volatility and how much research you want to do). There are more options now to make and grow money than there have ever been before.
I would recommend taking the time to decide what things you might be comfortable investing in, and what sort of goals you have. For some people that extra money is better spent putting towards a down payment on a rental property or invested in the stock market or maybe a CD or even cryptocurrency, or even building your own business. I personally do a little bit of all of that.
I mean, Why not…? I think passive income and putting your money to work for you is so underrated. There are apps that will literally do every single thing for you for less than what you would pay for a fun-sized Snickers bar at your local grocery store.
Just some examples —
If you are interested in real estate but don’t have the funds to buy a rental property quite yet, there are crowdfunding sites like Fundrise that can get you started.
(FYI this is a very illiquid investment just like buying actual property, meaning it’s a long-term investment. Do not expect to be able to sell your holdings and receive the amount in less than 3-5 years)
If you’re interested in the stock market, here are some of the apps that I have used in the past and really enjoyed for different reasons:
- Robinhood– a free, no-fee to trade exchange that allows you to buy and sell stocks at your own discretion. I still use this app daily and love it even more now than I did several years ago when I found it. They are always adding new user options and growing their platform in a way that is in the best interest of the investor. There are not many differences between Robinhood and any other investment firm except that its simplicity and ease of use is unparalleled. They also have some crypto available to some users in some states.
- Acorns– an app that allows you to invest little amounts at a time with deposits and roundups (an action that rounds every purchase you make to the nearest dollar and invests the change). I also love this app for the everyday person who doesn’t really want to learn the market and build a portfolio on their own. Acorns takes your age and adjusts your risk management based off of that and income and builds a customized portfolio of publicly traded ETF’s for you.
- Stash Invest– an app that provides many different ETFs and even individual companies that you can purchase up to as little as five dollars’ worth at a time. This is my favorite as I am interested in buying individual stocks and do take time to research and analyze stocks and choose a few for individual investment along with my ETF’s. I recommend Stash for beginners as it strives a lot to educate investors and makes investing interesting.
If you’re interested in cryptocurrency, then there are apps and sites like Coinbase and Binance that are great for getting into the market and learning a little bit about different coins and the future of blockchain (like what purposes they have) as well as how to invest and hold them.
These are just a few examples of places you can plant your money and allow it to grow over time. Each comes with their own level of volatility and risk. I don’t want to go into too much detail about these markets specifically as I will be writing more specific posts about each investment market and how you can get into them.
Even if it’s just getting a high yield savings account or putting your money into a 3-year certificate of deposit (CD). You HAVE to put your money to work and allow it to grow, or else you will always find yourself running out of it before you can replace it with more.
TAKE CONTROL TODAY.
It’s time to get busy living better.
No more stressing about your money. You need to take the time to get control of your finances and eliminate financial stress from your life. So you can focus on YOU.
Taking control of my income was one of the most revolutionary changes I have ever made in my life, and I want to see you do the same. I want our readers to feel the same comfort I have come to feel in my life financially.
So next time a fool tries to get you to blow your money, you let ‘em know you’re busy living better than that, and they can have that blasphemy all to themselves.
Let me know what budgeting process you use or if you tried any of these and how it’s working out for you! I look forward to hearing from you.
Until the next one,
After growing up in a poor household, Noah set out to learn as much about finance and personal development as possible so he could live a better life. He worked his way up from an online Virtual Assistant to now the CEO of an Austin based Media company in just a single year. He continues to learn the best ways to save his money, invest it, and achieve things he never thought possible, and loves teaching others how to do the same!
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