Money Monday Part 1 – Setting and Sticking to a Realistic Budget

Hi Friends! Its the year 2020….everything was going great, you drank your water, minded your business, flourished in your career, then BOOM came March and the entire country went on lockdown and you may even have lost your job. Thoughts like, WTF am I going to do are running through your head?!?!

I remember a year ago when the pandemic hit and I knew a lot of people whose life changed OVERNIGHT… financially! I had friends who I know make good money, live their best life eating out, but didn’t have more than $250 in their savings…I was absolutely shocked to say the least! HOW SWAY?

Let me start by saying that I’m not a financial advisor by any means….but I was poor growing up and one thing I did know was that once I was able to control my finances I would never be poor again! With that said, if you know me in real life, you know I have a serious shopping and spending problem but what you probably don’t know is that my savings is POPPIN! Because I also have a huge savings problem (not a bad problem to have).

I wanted to start this mini series to share my experience in managing my finances in hopes that, if this situation ever happens again (lets hope not) you’re not having to make life decisions between feeding yourself and paying the light bill.

First thing first…you do NOT need to make a lot of money to start a smart savings plan. You need a plan, commitment, and patience to watch your money grow. In 2015 I graduated grad school and my first job paid me $22/hr. which translates to about $42,000/yr. (before taxes) and started aggressively saving from that day on! 

About 5 years later, I was able to save a six figure amount. How Sway? Creating a plan, investing, and having patience!

I’m starting this off as a 6 part series for the next 6 Mondays, broken out as below;

Part 1 – Set a Realistic Budget

Part 2 – Take Advantage of Company Offered Services 

Part 3 – Start Off Small

Part 4 – Invest in Yourself and Raise the Financial Bar

Part 5 – Reinvest Your Side Hustle $$

Part 6 – Professional Investing Services 

Part 1 – Set a Realistic Budget

I say realistic because most people will write their rent and bills and assume that for the next 10 years they aren’t going to need to take a vacation, get their nails done, have a drink with friends, etc. Well let me tell you, you played yourself! When people tell me that making budgets don’t work, its mostly because  you’re not keeping it real with yourself! Remember that this is a long term savings plan and the best way to stay committed is to create a plan that you can stick to and keep adapting for years to come. Think of it almost as a lifestyle change.

If you’ve been following my blog for a while then you know that I love love love to travel! I’m happy to share that during the first years I implemented this plan, I was still able to travel although definitely more on a budget and I, went out with friends, dabbled in fashion, etc. This plan does NOT work if you’re unhappy with your life! You’ll quit before you even start.

Next, Get Rid of Your Debt and Save

Credit card, school loans, pay day loans, I’m not sure what your finances look like but paying/reducing your debt is key! Especially those things that are high interest. More importantly, commit yourself to staying OUT of debt! If the numbers don’t add up, consider a side hustle. I’m in CA so everyone has a job and a side hustle or two (we’ll discuss more of this in part 5)….

My financial advisor always reminds me that just by paying off a debt, I’ll make whatever the interest is for that year. If you’re credit card is at 20% on a $5,000 debt then you’ll save $1,000 that year alone just by paying it off!

Then, Purchase Within Your Means

When I was 18 I purchased a brand new Scion TC with a MSRP value of $20,000. I put $7,000 down and for the next 6 years I paid $250/month for my loan. If I could go back in time I would slap the shit out 18 year old me. I wasn’t meant to have a car that cost $20,000 but instead $7,000 or less. In the end I paid $18,000 just for the car in addition to the $7,000 I put down. Totaling $25,000. Now that’s not bad in overall cost but what if I had invested that $250/month over 6 years? I would have about $22,000 at the end of the 6 years and that is assuming a very conservative interest rate, assuming I was playing it safe. I could then have taken that $22,000 and reinvested and continued to put $250/month and easily doubled my money within the next 6 years!

That sums up part 1 of this blog series and many of you will want to skip this and go straight to the next ones to understand how money is/was made. BUT part 1 is easily the most important step of them all. Without this step you won’t have a good foundation to start on, trust! I tried to save money for years before realizing that I was trying to run before I could even crawl. Don’t worry if this first step will take some time, everybody wants to make quick money and unfortunately quick money isn’t available to be made for everyone….that’s life.

Tip of the Day – Don’t compare your journey with those around you. For one, you have no idea the truth about their situation. I had friends who I thought were living it up and must be making BANK BANK (or funded by their parents) because they were always travelling, drinking wine and eating out everyday, buying expensive luxury brands. Little did I know that they were maxed out on their credit cards and maxing out school loans to pay for their lavish lifestyle. Now they’re scrambling to get their debts paid off so they can save to get a house and even start having children…never compare your journey. What’s meant for you will be there for you.