I’m a free spirit. I don’t like people telling me what to do.
With most things, I want to be able to do my own thing, you know?
That’s why the idea of a budget always looked SOOO boring to me.
Like, who are you, Spreadsheet, to tell me what I can and can’t do with my money?
Life is short, I don’t want to feel guilty when I buy my Starbucks Almond Milk Cappuccino!
So I always kinda-sorta half-a$ed my finances.
That was until I received a letter in the mail saying that I was delinquent in one of my bank accounts for lack of payment!
EXCUSE ME???
Me? Delinquent?
I’m a good citizen! I pay my taxes. I open the door for strangers.
What do you mean delinquent?
It turns out that I hadn’t paid my credit card balance in over 8 months! It was this old credit card that I had forgotten about.
Stupid $500 balance!
I fully paid it off the day I received the letter. But the effects are still lingering on my credit score.
Terrible. I felt like I had gotten a financial STD!
So I knew that I had to go to financial rehab.
Literally, 2 weeks later, I signed up for my church’s Financial Peace University class.
It’s a program created by financial expert Dave Ramsey, and it completely changed my life!
I established some solid principles to manage my money that now give me all the freedom and control that I want.
Spoiler alert: a budget isn’t modern-day slavery. It actually sets you financially free.
P.S. this post may contain affiliate links. This means that if you click through and purchase something, I may receive a portion of the price. It’s at no extra cost to you, but the profits go directly back into improving this blog!
After finishing FPU, I started volunteering as a coach for the following classes, so I was able to learn even more and tweak my system.
Of course, today I continue learning.
But I feel like these money principles can have an incredible impact on your life, no matter where you are in your financial journey.
These are my principles, not strict rules. In the end, take whatever works for you!
- Keeping a budget
- No-debt culture
- Have a goal
- Prioritize what’s important to you
- Plan ahead
- Generosity is the key ingredient
- Books I recommend
1) Keep a budget
Before you freak out, to me a budget means freedom. You can do whatever you want.
You want to spend $2,000 a month eating out? Cool. Totally your choice.
What a budget does is help you organize and understand your spending habits.
Meaning, your budget is kinda the spinal cord of your financial support system.
And look, I’m not a naturally organized person, I struggle to stay organized.
So if I can do it, you can do it 100% too!
Also, your budget can look different for different people.
To keep up with yours, feel free to use the strategy that you like best.
You can do it by pen and paper; you can have an Excel Sheet and keep your tab organized month to month.
You can also get an app, which is what I do. There are wonderful options out there.
Personally, I do it through an app because, as I told you, I need the most support I can get.
I need a system that’s streamlined for me and that also looks pretty.
Throughout the years I’ve learned a lot about money and personal finances.
And even when I don’t completely agree with all of Dave Ramsey’s ideas, I can tell you that his money management principles completely TRANSFORMED my life.
If you want to set up your budget, here are the categories that I include in mine:
Income
I start by including every source of income I have.
In your case, if you get paid weekly you’d write “check 1”, “check 2”, “check 3”, and “check 4”. If you get paid bi-weekly, you’d do “check 1” and “check 2”.
You get the idea.
If you get paid on commission, you can either work with an average, or use the minimum amount you make each month, and then adjust.
Totally up to you.
Also, don’t forget to add any unexpected income or anything that comes through your side hustle at the end of the month.
Giving
We’re going deeper into generosity in a bit, but for me giving is my second category.
I give a percentage of what I make every month.
In the end, if I have a surplus, I may give more, but to me, generosity is a big principle, so it’s the first place I put my money towards.
Savings
Have you heard the phrase “pay yourself first?”. This is what it means!
If you wait until the end of the month to put money into your savings, you’re never going to do it.
(Tbh, if I have $20 extra at the end of the month, I’m getting a new lipstick on Sephora, not responsibly putting it into my savings).
We’re also going to talk about goals in a bit, but a great first goal is to save $1,000 because it builds momentum (psychologically), and it shows you that saving is not that hard and that you can do it.
Housing
These are our house-related costs. It includes rent (maybe mortgage for you). Also water, electricity, water, Netflix, cable, internet, etc. You get the deal.
Transportation
This is for anything that I use to get from one place to another.
Allocate money for your Uber, for your bus, your subway pass, etc.
Transportation also includes gas for your car, tolls, and parking.
Maybe during Covid you’re spending more time at home, working from home, in which case, awesome, you may be saving in this category.
Nevertheless, don’t ignore this category!
Food
Of course, this includes groceries.
Woo and I have been trying to stick to an $80/week budget… not very successfully.
I’m sorry, I’m being honest!
Personally, in this category, I include restaurants because that’s food technically. Like, if I go out for dinner, that’s a meal that I’m not having at home.
Some people classify restaurants differently, to me, it just makes sense to do it like this.
Personal
This includes those extras like clothing, phone, hair, getting my nails done.
Also, personal digital subscriptions like Spotify and Apple Storage.
Just because these items are “extras”, doesn’t make this category less important, but usually not spending money here is not life-threatening.
Of course, we need clothes, but we don’t have to spend thousands every month.
Health
This category includes doctor’s visits, medicines, and any additional supplement such as vitamins.
It can be a doctor you visit monthly, or a couple of times a year. Make sure to make space for those expenses in your budget.
Insurance
We include health, homeowners, home renters, life insurance, etc.
Again, this may be different for you, but I like to have all my insurances under one “roof”.
One quick note about health insurance: as an immigrant, I’ve struggled a lot with this, so I’ve learned to always check for different insurance option
Here in North Carolina, for example, there are some amazing options from private companies for people with low income, so if you can’t afford insurance, do some Google research to see if there’s any other option.
Debt
I could write a whole post about debt repayment.
I love Dave Ramsey’s method, so if you want to pay off debt, Google “Dave Ramsey Snowball Method”.
It’s basically about paying your debt from the smaller debt to the largest.
Even when this is not the best method mathematically, it creates momentum psychologically so it’s my favorite.
Basically, I’ll pay the minimum for everything I owe and go super aggressive on the smallest debt to pay it off first.
Let’s say you have $1,000 on a Macy’s Card at a 24% interest rate; you also have $5,000 on your Apple Credit Card at an 18% interest rate, and you owe $25,000 in student loan at a 9% interest rate.
In this case, you don’t pay the debt with the largest interest (mathematically smartest idea), but pay the smallest balance first: the Macy’s Card.
After you pay that balance off, move to the next one, and so on.
Remember, pay the minimum in everything else and go aggressive on your main focus.
Investing
Okay, I’m not investing right now because my student loan has a high interest so I want to get rid of that first.
But if your student loan’s interest rate is under 5-6%, I would look into investing and see what’s the right fit for you.
I recommend Ramit Sethi’s “I Will Teach You To Be Rich” book.
It’s the best for investing, it’s to the point, no fluff, and very entertaining.
2) No-debt culture
This one is hard and different people have different opinions.
I’m not talking about not using credit cards AT ALL. I’m talking about avoiding getting in debt to finance your weekend Zara shopping spree.
Or (and this one is HUGE for me) buying a course that’s $1000, or 10 comfortable $100 payments.
If I don’t have the money, as a rule of thumb, I don’t buy it (easier said than done, I know!).
You can use a credit card to build credit, but I don’t consider that using debt if I pay if off completely at the end of the month.
Again, I’m not a financial expert. So if I can do it, you can do it.
3) Have a goal
This is a fun way to kinda “gamify” your finances.
Having something to look forward to is super inspiring! It can be paying off your student loan.
It can also be something smaller like saving to get your hair colored by the hot stylist you’ve been stalking on Instagram for a while.
Whatever you want, the point is to choose a goal that excites you and motivates you.
Like, if your goal is to save a “6-month emergency fund” but you don’t know why that goal is relevant to you, it’s going to be completely pointless.
You’re gonna quit.
Let’s say you wanna save money because you want to quit your job. Or you want to pay off debt so you can start saving for a house.
Whatever excites you.
If you’re new to setting financial goals, and if you live in the US, I recommend setting the goal of saving $1,000 as soon as possible.
More than the amount itself, it’s about the mindset and the physiological effects of realizing that it’s not impossible.
It creates momentum and it’s super motivating.
So, if you’re not in the US, adapt of course depending on your reasonable costs of living.
$1,000 is a large goal, I remember the first time I read about this challenge.
I was making minimum wage. I thought that there was NO WAY that I could do it.
But I got disciplined and started doing many side jobs.
I was babysitting, doing social media, I worked at a club charging cover at the door… But in the end, I did it!
And that win transformed my mindset about money.
4) Prioritize what's important to you
I don’t believe in cutting back on EVERYTHING.
Like, I don’t wanna live a deprived life until I’m completely out of debt, have saved $20K, and invested $50.
But I do recommend prioritizing your big important items and don’t overspend in other areas.
Ramit calls this identifying your “rich life“.
Your rich life includes those expenses that make a huge difference because they “elevate” your life.
I would say, this is an opportunity to hone in on your femininity.
Maybe it’s going for a bougie cup of coffee on Friday afternoon, maybe you like to spend on skincare, or maybe you’re a fashionista who loves quality clothes.
Define those priorities and cut back on the rest.
5) Plan ahead
Again, a huge tip for your budget.
Don’t wait till December to run like a chicken without a head desperate because you need $800 and you just can’t stretch your budget.
If you’re expecting to make a big expense at a specific time, (like a birthday, anniversaries, etc.) start building a fund months in advance.
Forgetting to get an anniversary present or a gift for your mom’s birthday because you didn’t have time to buy a present, it’s just poor planning.
If you know that those events are coming, plan accordingly.
For example, I do this with shopping for clothes since I tend to shop 3-4 times a year.
As much as I love fashion, I don’t really enjoy shopping, so I tend to make my shopping a seasonal activity.
So I make sure to plan ahead and build some kind of “clothing fund”.
6) Generosity is the key ingredient
Generosity is more about your heart than about your wallet.
It’s about knowing and having the confidence that money comes and goes.
You know that really, in the end, it’s not your money, it’s God and by His grace, you’re able to receive it in your bank account.
God is using your company, or your client, as a conduit to give you money, so allow Him to use you to provide for someone else.
I could tell you crazy stories and blessings that I’ve received after being generous, but I don’t wanna leave you with the impression that we give to receive.
We give because we’re detaching ourselves from money.
We give even if we don’t receive anything in return.
God doesn’t work like Sephora, He doesn’t have a Points System where after you spend X amount of money you receive X rewards.
Again, the key aspect of generosity is the heart, not the number of zeros in the check you’re giving.
Bonus: Resources I recommend
I don’t want to give you a thousand options that will leave you overwhelmed.
Hands down, 100%, Dave Ramsey and Ramit Sethi are the place to start.
Get their books -and really anything they sell-.
Amazing people!
I know this may seem a lot, but I promise that every one of these tips is somehow interconnected.
Once you start implementing one, you’ll be able to integrate the rest before you know it.
You know that I always say that the whole point of feminism originally was to give women the power to choose.
Well, choosing where our money is going is a HUGE part of honoring that privilege.
Sharing is caring! So make sure to share this post with a woman in your life that wants to get her finances in order.
Brownie points if you also give her Ramit Sethi’s book!
See you soon!
With love, E. ♡
