Money is scary. It can make or break you. There are simple ways that you can take control of your finances.
It requires work: I won’t tell you it won’t be hard at first. But like any discipline, it takes time, and will eventually grow to the point where it becomes painless and actually exciting.
Here are 4 simple ways that you can take control of your finances. These are ways that we were able to help take control of our finances and feel like we were really getting ahead.
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Make a Budget
Budget isn’t a bad word. In fact, it’s become one of my favorite words now.
John Maxwell says that a budget is telling your money where to go, instead of wondering where it went.
He’s right. I’ll be frank, I used to equate budget with being poor. We were making decent enough money, but somehow, it felt like it all just disappeared every month.
All of our bills were paid, but somehow, there wasn’t money leftover…and there should have been.
In advertising, every time I hear the word budget, it’s painted as being something “less than.” It’s the cheap option; the lesser quality.
In our home, we use EveryDollar to make a zero balance budget. That means that every dollar that comes in has a purpose; an allocation.
By the way: EveryDollar is FREE. You can download it for iOS or Android, or use it on a desktop. It takes a little bit of a learning curve, but once you GET it, you get it, and suddenly you’re finding extra money all over the place. I HIGHLY recommend it, especially if you’re feeling like your finances are out of control.
With our budget, we have had to find ways to be able to keep life affordable. We’re still able to have a weekly date night, we’re still able to purchase what we need, and sometimes even just the things that we want.
Create an Emergency Fund
One of the best things that you can do for your financial well-being is create an emergency fund of at least $1,000. As you grow financially, you should increase that emergency fund to have at least 3-6 months worth of expenses.
So how does that come into play? We experienced it this past summer, and were very thankful for that emergency fund.
My car likes to initiate this “fun” game with me where the check engine light turns on every 6 months to a year or so.
We play the game of “what needs to be fixed this time?”
Most of the time, it’s little things. No biggie.
Run an OBD reader and figure out the codes (by the way, if you don’t own an OBD reader, you should invest in one! They can help you learn what the error messages are on your car, and you can google the problem BEFORE you go into the mechanic. You can speak with at least a little intelligence about the problem, and have a rough idea if you can DIY a fix or if you need to call in reinforcements. Knowledge is power!)
We played that check engine light this past summer, during an exceptionally busy few weeks. We were planning to go on vacation, I was working quite a few hours of overtime at work, and Joe was pretty busy too.
Yellow engine light.
BLINKING yellow engine light.
Spoiler alert, that’s a bad thing. It’s a car’s version of the blue screen of death.
When we limped into the mechanics, after diagnosing engine misfires, we were horrified to learn – long story short – that the entire engine had to be replaced.
We already knew that the timing belt was going to give out within a year or so – it’s a 2004, after all. Cars don’t last forever.
It was still more economical to replace the engine than the car, so we replaced the engine.
Thanks to our emergency fund, we were able to cash flow an engine replacement. The only stress was working out the timing of the fix – going down to only 1 car is really difficult for us and our schedules (especially when about to leave on vacation!), but we survived it.
Stop Impulse Purchases
Remember as a kid, standing in the checkout line looking at all of the gum and candy? I used to think that I would buy that stuff all the time when I became an adult.
Childhood me imagined that adult me would be at the checkout line, thinking “Man, a Twix sounds good right now.”
Goodbye, $1.99. Or whatever a king-sized Twix costs these days (cause you know they don’t have mini candy bars as impulse items.
The problem is, adult me likes more expensive things. Ever hear the joke about having champagne taste on a beer budget? Yeah, that is me.
Add to cart. Checkout.
Add to cart. Checkout.
Add to cart. Checkout.
It wasn’t big purchases that busted my budget. It was little impulse purchases that kept adding up.
I’ve learned that I need to stop impulse shopping. Those impulse purchases truly do add up faster than any other expenses.
See, as an adult, I am the master of my money, and the decisions that I make with it. If I think of a need, I can just open Amazon, and with a few clicks and a short wait, I have the item on hand.
The worst part is that many times, those items I have gotten haven’t been items that I actually truly needed. So I have stopped impulse shopping. Nothing wrong with adding to cart, for sure. But I don’t check out immediately.
Here’s how I stopped impulse shopping:
- Wait at least 24 hours from thought to check out – that allows me to truly know if it’s a need or a want.
- Is it a need? If so, add to NEXT month’s budget.
- Leave items in my cart.
- NEVER make purchases with a credit card – only my debit card.
Make a Shopping List … and Stick to It
One of my weaknesses was when I’d go to the grocery store to get food … but I didn’t have a plan. That meant I’d just be idly grabbing things off the shelf and throwing it in my cart.
When I got home, it was horrifying to realize just how much food was:
- Just sitting there on the shelf (in the form of ingredients)
- Getting thrown away because it was spoiled (moment of silence for Spring Mix boxes)
Sitting down weekly and PLANNING our meals has revolutionized our food budget.
When I plan, I only purchase the items I actually NEED, rather than items I think that I might want.
So there you go, now you have 4 ways that we have taken control of our finances. What are some things that you do to help feel like you are in control of your money?