One of my pet peeves in the financial advice community is that people are quick to judge the actions of others, and how their finances are impacted. They also offer solutions that are filled with assumptions that often don’t even apply…ever hear this when you asked for some actually useful financial advice.
“Having a tight month? Give up those overpriced coffees everyday, and you’ll save $5 a day! That adds up…if you give up that daily cup of coffee, you’ll save $150 a month! That would be almost $2000 a YEAR!”
Okay, but what if I am not out there buying coffee, and literally every time I have Starbucks, it was a planned budgeted item, or purchased with a gift card? It’s also SUPER RARE, and honestly, probably always gets posted about on Instagram when I do get to have it.
Yes, there is someone out there who needs a reality check about their Starbucks addiction. But many people who are out there trying to get ahead need actual advice, not shame being thrown their way when they have a rare indulgence.
So here’s some of my favorite pieces of actually helpful financial advice.
Have an Emergency Fund
One of the best things that you can do for your financial health and security is create an emergency fund.
You can start out with $1000 with the intention to grow that amount to equal 3-6 months of expenses.
Creating this emergency fund serves several purposes, but it means that if anything happens, you have the liquid cash to be able to handle what comes your way.
Car engine blew? Emergency fund. Lost your job? Emergency fund has you covered. Had a medical emergency? Emergency fund to the rescue.
An emergency fund will create a feeling of security that will help you remain calm and in control during the hard times that come…and they will come.
Create a Realistic Budget
Instead of knowing “generally” where our money goes, we created a budget that accounts for every dollar. Every dollar that goes into a sinking fund for a vacation or car, every dollar that goes into our emergency fund, every dollar that goes into our savings account.
Every dollar has a job – and we know where it goes!
But the thing that has helped us is being realistic with that budget. It allows for us to do the things that are important to us.
When we see where our money goes, we’re able to see how much we reasonably spend in categories such as food, housing, clothing, fuel, and more.
Carefully Choose Your Spend or Save Items
Deprivation makes it hard to make logical decisions. So rather than go completely tightwad, I evaluate what I need to spend money on, or save money on.
Can I use store brand foods rather than name brand? Great! Can I find drugstore makeup items instead of going to Sephora? Fantastic!
There may be some expensive items that you prefer, but you have to choose carefully about what matters the most to you in this area. If you’re going to truly take control of your finances and save money, you have to be willing to sacrifice.
Remember: sacrifice doesn’t mean that you have to be miserable. Sacrifice is making intentional hard choices so that you can have better things later.
Never Make an Impulse Purchase
This has been the biggest game-changer piece of financial advice I’ve ever heard.
I am an emotional shopper, and am particularly prone to spending money instead of dealing with my feelings in a healthy manner.
“Add to cart” is ok: but I wait at least 24 hours before hitting the purchase button.
If I wait to spend money, it gives me time to ask if it’s a want or a need, and if the purchase will actually be worth it.
That also tends to give me time to look at my budget (I reconcile transactions in EveryDollar [heads up, it’s FREE!] every weekday morning). I’m able to see all of my budget categories, and if I actually have room in my budget for that item.
So fear not, you’ll have no judgement from me when you have your occasional Starbucks, or your Avocado toast. What is the best piece of actually useful financial advice you’ve heard? Share it in the comments.