Erin Gobler

  • How to Use Credit Cards Responsibly: 6 Tips You Need to Know

    Let me guess: You’ve heard personal finance experts and influencers say that credit cards are bad and that you should cut yours up immediately.

    Yep, we’ve all read those warnings. And many of us have probably wondered if they were right and maybe even felt guilty for swiping our credit cards on the regular.

    If this is the only type of personal finance expert you’ve been following, then you’ll probably be surprised to see me say that I love credit cards

    While it’s true that credit cards have high interest rates and have caused many Americans to go into debt, when used correctly, they’re an incredible tool. In fact, not only do most credit cards not have to cost you a dime, but you can even make money by using credit cards.

    If you’re going to add credit cards to your personal finance toolbox, then it’s important to understand how to use them responsibly and in a way that really benefits you (and not the credit card issuers).



    The problem with credit cards

    Before we talk about how to use credit cards responsibly, we should first acknowledge some of the problems with credit cards and why some people seem to have such strong feelings about them.

    One of the biggest problems with credit cards is the amount of money they cost consumers in interest each year. When you carry a balance on your credit card (meaning you don’t pay off the full balance each month), you’ll pay interest on that amount.

    Unfortunately, the average credit card interest rate at the beginning of 2022 was 16.13%. That number is only going to rise as interest rates do. And because the average credit card balance is $5,525, many Americans end up paying an awful lot of interest each year.

    Credit card interest, more than any other kind, can hold you back from reaching your financial goals. Not only are the interest rates notoriously high, but that interest compounds daily, meaning the interest that accrued is added to your credit card principal and also begins to accrue interest.

    So why have so many people managed to accrue large amounts of credit card debt? There are three primary reasons I can pinpoint:

    1. People spend money they don’t have. Rather than spending money that’s already in their bank account, they spend money they haven’t earned yet. Then they pay those purchases off in the future when they get paid.
    2. People lose control of their spending. Swiping a credit card is painfully easy sometimes, especially if you’re struggling with emotional spending. 
    3. People use credit cards as an emergency fund. When financial emergencies pop up and you don’t have an emergency fund in place, a credit card may be the only option.

    Unfortunately, all of these factors result in people getting into financial trouble with credit cards, which is why some financial experts advise so strongly against them. The good news is that if you learn to use them correctly, you can avoid these problems for yourself.

    Read More: How to Pay Off Credit Card Debt Fast


    The benefit of credit cards

    Before I dive into tips for using credit cards responsibly, let’s talk about a few benefits of using credit cards. 



    One of the biggest advantages to using credit cards is how they can help you build your credit history and credit score. Now, some personal finance experts (*cough* Dave Ramsey *cough*) will tell you that a credit score is unnecessary because it only encourages the use of more debt.

    This couldn’t be further from the truth.

    First, there are some situations where debt is simply unaffordable. For example, most people I know can’t afford to buy a home in cash. In that case, a good credit score is vital.

    But even if you’re not taking on more debt, a credit score is important. Landlords can run your credit to decide whether to rent you an apartment. Insurance companies use your credit score to set your insurance premiums. Even employers can use your credit score when deciding whether to offer you a job.

    So yes, a credit score is important.

    The best way to build your credit using credit cards is to use your cards each month but use less than 30% of your balance. If you use more than 30% throughout the month, then you can pay your balance weekly instead of monthly to keep your running balance lower.

    The other step to building credit with credit cards is to pay your balance off in full each month. Doing so will show lenders and credit bureaus that you can use debt responsibly. Plus, it will help you avoid those costly interest charges we talked about earlier.

    Read More: 7 Hacks to Boost Your Credit Score Quickly



    My personal favorite perk of using credit cards is the rewards you can earn. Depending on how much you spend on your card and the credit cards you use, you could earn thousands of dollars of rewards and perks each year.

    There are a few different ways you can earn rewards on credit cards.

    First, many credit cards offer a welcome bonus, where you’ll get a large number of points if you spend a certain amount of money (usually around $3,000) in the first few months of having the card. One of these bonuses alone helped Brandon and me take an almost free trip to an all-inclusive resort in the Dominican Republic.

    Another way to earn rewards with a credit card is through your regular spending. Many credit cards offer a certain percentage of either points or cash back on each dollar you spend. You can use those points for statement credits, gift cards, money in your bank account, free travel, and many more.

    In addition to these rewards, many premium credit cards offer perks that include hotel and airline statement credits, travel insurance, extended warranties, and many more.



    Carrying a credit card is far safer than carrying either cash or a debit card, thanks to the fraud protection they all come with. Basically, you aren’t on the hook for fraudulent purchases made with your credit card.

    Technically debit cards also offer this fraud protection, but here’s the problem: When someone fraudulently uses your debit card, the money leaves your bank account. And while you’ll probably eventually get that money back if the purchase was really fraudulent, it could take a while. In the meantime, you’re simply out that money.

    But in the case of fraudulent transactions on a credit card, you never have to worry about the money leaving your bank account, and the credit card issuer won’t require you to pay for those charges.


    How to use credit cards responsibly

    Now that we’ve talked about some of the advantages and disadvantages of using credit cards, it’s time to dive into what we’re really here to talk about: using credit cards responsibly.



    First and foremost, it’s important to understand your credit card terms. You can find these by logging into your online account and finding your credit card agreement or another document that shares this information. The details you’ll want to look at include:

    • Purchase interest rate
    • Balance transfer interest rate
    • Annual fee
    • Over-limit fee
    • Late fee
    • Foreign transaction fee
    • Statement date
    • Payment due date

    Once you know your credit card terms, keep them in mind as you use your card. Always pay your bill on time, and proceed with caution anytime you use your card in a way that will require you to pay unwanted interest or fees.



    Here’s how most people use their credit cards: They put expenses on them throughout the month, often for groceries, eating out, and other spending. When they get paid next month, they use a part of that paycheck to pay off their credit card bill.

    The problem with using your card that way is that you’re using money you don’t actually have yet. You’re using February’s income to pay for January’s spending rather than using January’s income.

    The best way to avoid this problem is to spend only money you already have. If you’re going to spend $100 on groceries and put it on your credit card, that $100 should already be in your bank account to pay off that credit card bill.

    The easiest way I’ve found to limit myself to only spending what I have is to get one month ahead on my budget. Click over to the post to learn how!



    It’s critical that you know your credit limit for a few different reasons. First, if you spend over your credit limit, you’ll usually be subject to some sort of fee. It’s an expense that could be easily avoided by paying attention to your card balance and spending.

    The other reason it’s important to know your credit limit is how it affects your credit score. One of the most important factors when it comes to your credit score is your credit utilization, which is the percentage of your available credit that you use at any given time.

    In general, the higher your credit utilization, the worse it is for your credit score. It’s recommended that you keep your utilization below 30%.

    When you know your credit limit, it’s easy to ensure your credit utilization is low. Suppose you have a credit limit of $10,000. You’ll know to keep your balance below $3,000 at all times.

    If you use your credit card for all of your spending as I do, then you can pay off your card more often to ensure your credit utilization doesn’t get too high. I have a recurring note on my to-do list to pay my credits cards off in full every Monday.



    It probably seems like common sense that using your credit card responsibly includes paying your bill on time. But it bears repeating because the average household pays an average of more than $100 per year in late fees.

    The simplest way I’ve found to ensure I never pay a bill late is to set up automatic payments. I have automatic payments set up on every single bill I have, so even if I stopped checking in on my accounts, my bills would get paid.

    Another solution for ensuring your bills are paid on time is to create a bill calendar. You can create a digital calendar or a physical calendar and write down the date that each of your bills is due, including your credit card.

    Paying your credit card bill on time will help you avoid annoying late fees and will help keep your credit score healthy since one late payment can cause a major ding in your credit (and multiple late payments can do even worse).



    Most of us probably don’t get actual credit card statements in the mail each month. Instead, they’re available on your credit card issuer’s website. But whether you get a physical copy or see them online, it’s worth looking them over at least once per month.

    First, looking at your credit card statement at least once per month can help you stay on top of your spending and notice any bad spending habits. It’s easy for overspending to slip through the cracks, but looking at your statements forces you to face it head-on.

    The other reason it’s important to check your monthly statements is to make sure there’s nothing there that shouldn’t be there. If there are any fraudulent charges on your credit card, you’ll want to know right away so you can alert your credit card company.



    We’ve already talked about how many Americans have fallen into credit card debt, and most of us don’t want to be there. The single best tip for using your credit cards responsibly is to pay your balance off in full each month.

    Not only will paying off your full balance help save you money on interest and avoid racking up debt, but it will also help your credit.

    Unfortunately, there is a myth floating around out there that carrying a credit card balance actually helps your credit score. That’s simply not true. Sure, it’s important to show your credit card companies you can use debt responsibly — which requires that you actually use your credits. But you’ll get even more benefits if you pay them off in full.


    What if you have credit card debt?

    You might be reading this post already in credit card debt and wondering how it applies to you. I’ve put together a few more tips specifically for people who already have credit card debt.



    It probably goes without saying, but avoid increasing your credit card debt if you can help it. I understand that sometimes financial emergencies happen, and additional debt is unavoidable. But if possible, don’t let your balance grow anymore.



    If you make only your minimum payment each month, it could take you years to pay off your current credit card debt.

    Let’s say you have $10,000 in credit card debt with an interest rate of 18%. Based on the normal formula to calculate the minimum payment, you’ll pay about $250 per month, and it will take you a little over five years to pay off the debt.

    But over that five years, you’ll pay more than $5,300 in interest. Yep, more than half of the amount you initially borrowed. But if you doubled your monthly payment, you’d pay it off in just two years and pay only about $2,000 in interest.



    Using a credit card that already has a balance on it can make it even more difficult to get out of credit card debt.

    First, when you’re mixing old purchases with new ones, it can be difficult to separate them and know how much you should pay each month.

    It’s also easier to convince yourself that it’s okay to go into just a bit more debt.

    Let’s say you have $5,000 in credit card and want to make a $100 purchase that you can’t quite afford. Instead, you put it on your credit card. What’s another $100 on a $5,000 balance, right?

    The problem is that most of us don’t do this just once (and I know this from personal experience). Instead, you’ll use this argument to justify purchase after purchase as your debt continues to grow.

    For the time being, it’s better just to avoid using any credit cards with balances already on them.


    Are credit cards right for you?

    Listen, I love credit cards. I love how they help my credit score, and I especially love the money I save with credit card rewards. But I can also acknowledge that credit cards aren’t right for everyone.

    If you’re someone who struggles to control their spending, then credit cards may not be right for you. Unfortunately, they’ll likely do more harm than good to your credit score. And the rewards you earn on your credit cards will be outweighed by the interest you end up paying.

    If you really aren’t sure whether using credit cards is the right move for you, try asking yourself this one question: Can I commit to sticking to my budget and paying off my full credit card balance each month?

    If the answer is yes, then you can probably benefit from credit cards. If the answer is no, then it’s probably better to skip them.

    You can see my favorite credit cards by visiting the full list of my favorite money tools and resources.

  • Lifestyle Creep: What It Is and How to Avoid It

    If you’re anything like me, then your first job out of high school or college wasn’t exactly lucrative. Like many people, I entered the workforce earning well below the average salary.

    The good news is that over time, most of us see our salaries gradually increase, which can open up a whole new world of opportunities.

    Unfortunately, it often feels like those pay increases disappear as quickly as they appeared. We struggle to save money and wonder where all that extra cash went.

    The answer? Lifestyle creep. 

    And while lifestyle creep can seriously cut into your salary increase, there’s good news. There are several ways to avoid it and even reverse it if it’s already a problem for you.



    What is lifestyle creep?

    Lifestyle creep — also known as lifestyle inflation — is the gradual increase in your discretionary spending as your income rises.

    Some lifestyle inflation is intentional. As we earn more, we choose to increase our standard of living as well. But plenty of lifestyle creep also happens without us even realizing it. We simply have additional money in our bank account, and so we spend it.

    While it’s natural to elevate your lifestyle as your income increases, it can also seriously derail your financial goals. When you increase your lifestyle in an amount equal to your pay increase, you aren’t allocating additional money to your emergency fund, retirement accounts, and other financial goals.

    Lifestyle creep may seem relatively harmless, but it can actually land us in a very precarious situation. Recent data shows that about 54% of Americans are living paycheck-to-paycheck, including 40% of those with income over $100,000. Unfortunately, that means there’s little left in the budget to cover financial emergencies or reach financial goals.


    Lifestyle creep examples

    Lifestyle creep can come in many different forms. In some cases, lifestyle inflation happens as the result of many small increased expenses that add up. For example, you might sign up for a new streaming service here and there, splurge for nicer clothes, or switch to organic groceries.

    It’s these small increases in spending across many categories that allow lifestyle creep to go unnoticed until you take a hard look at your budget.

    In other cases, lifestyle inflation is much easier to spot because it comes in the form of large purchases. You might elevate your lifestyle by upgrading your house or apartment, buying a new car, or taking extravagant vacations.


    How to avoid lifestyle inflation

    Lifestyle inflation often happens without us even realizing it, but there are several ways to help avoid it. Keep reading to learn five ways to avoid lifestyle creep.



    You’ve almost certainly heard that the best way to control your spending is to have a budget, but it’s worth repeating.

    When you have a budget, you’re telling your money where to go rather than simply spending the money that’s in your account.

    One of the best budgets to address lifestyle creep is the 50/30/20 budget. Using this budget method, 50% of your income goes toward needs, 30% goes toward wants, and 20% goes toward savings and debt.

    This budgeting method makes it easy to address pay increases because you use the same percentage to split up your budget no matter how much you’re making. When you have extra income, you can simply divide it up using this same framework.

    Need help starting your budget? Visit our complete guide to creating a budget (and actually sticking to it).



    Goal-setting requires making a clear plan for your money. For example, if I want to fund the down payment on a home in two years and it’s going to cost me $24,000, then I know I need to save roughly $1,000 per month for that goal.

    If I’m excited to become a homeowner and that goal is really important to me, I won’t be tempted to spend that $1,000 on unnecessary spending. Nope, I’ve already got a plan for that money.

    One thing I know about myself is that I’m far more motivated to save when I have a specific goal in mind versus when I’m saving just for the sake of saving.

    If you don’t currently have any short or long-term goals you’re working toward, now is the time to start. Visit the free guide I created on setting and reaching your financial goals.



    The situation when lifestyle creep is most dangerous is when we don’t actually earn a high enough income to cover it, which is, unfortunately, the case for many people,

    According to Bankrate, roughly 54% of Americans carry a balance on their credit cards. And data from Experian shows the average credit card balance is about $5,525.

    There are some situations where debt is hard to avoid. If a financial emergency comes up and you don’t have the cash to pay for it, it might be necessary to finance it with a credit card or loan. And for large purchases like cars, financing is the only option for some people.

    But often, credit card debt is the result of lifestyle inflation that gets ahead of our income. I say this from experience! When I got divorced at 27, I could no longer afford my lifestyle and ended up racking up some credit card debt before I got serious about my personal finances.

    If you want to avoid lifestyle creep, it’s time to set some serious boundaries with yourself as to when you are and aren’t okay with getting into debt.



    One of the reasons it’s so easy to increase our spending when our income goes up is that we simply have more money in our bank account. And when the money is there, it’s easy to spend.

    A great way to avoid that problem is by automating your savings.

    When I was ready to get serious with saving, I set an automatic transfer from my checking account to my savings account the day after I got paid each month. At first, it was only $50, but I gradually increased it over time.

    And you know what? I didn’t miss that money in my bank account. It was out of sight, out of mind. And because it wasn’t there to spend, I didn’t feel tempted.

    You can use this automatic savings technique when it comes to building your emergency fund, saving for a big financial goal, funding your investment accounts, and more.



    When you’ve gotten pay increases in the past, have you ever sat down and intentionally decided where that money would go? Most people don’t, but it’s actually the best way to avoid lifestyle creep.

    Let’s say you’ve just found out you’re getting a $3,000 raise (after taxes). When you break it down monthly, the extra $250 doesn’t seem like much. But when you look at the big picture, $3,000 is a decent chunk of money to put toward your savings and other financial goals.

    So rather than just increasing your spending by $250 when you get your pay increase, sit down ahead of time and decide exactly where that $250 will go. Maybe you’ll put it toward student loans, the down payment on a house, or your investments. 

    And remember, you can, of course, put some of that money toward lifestyle elevation (we’ll talk about that more later). It’s just important to be intentional.


    Can you reverse lifestyle inflation?

    Unfortunately, most of us have already fallen victim to lifestyle creep throughout our adult lives. So while it’s important to talk about ways to avoid inflating our lifestyles with each pay raise, it’s just as important that we talk about remedies for our existing lifestyle creep.

    Can you actually reverse lifestyle inflation?

    I’m not going to lie — it’s really hard to reverse lifestyle inflation. Once you’ve upgraded your living situation, your eating habits, or your wardrobe, it’s hard to go back to the more affordable version you once had. But that’s not to say it’s impossible to reverse lifestyle creep.

    I think the key to eliminating some of the lifestyle inflation that’s already worked its way into your budget is to get really clear on your values. Because when you get really clear on your values, it’s easier to spend money in ways that align with them.

    Here’s an example for you. I used to spend a lot of money on clothes. In college, I would hit the mall with a friend and drop a couple of hundred dollars, sometimes on things I only wore a few times. 

    Even later in my twenties, I would fall victim to emotional spending, buying clothes when I was anxious, depressed, and more. The difference is that because I earned more money than I did in college, I also bought nicer clothes.

    But here’s the wild thing: I don’t actually care about clothes that much. I typically wear the same few items in my closet, meaning there’s rarely a purpose for me to buy new clothing.

    On my own personal finance journey, I spent a lot of time identifying my values. I realized that nice clothes weren’t really something I valued, yet I was spending a lot of money on them. And because I had that clarity, I was able to reverse that lifestyle creep.

    I’ll also readily admit that there are some forms of lifestyle creep that I have no desire to reverse. My husband and I really value good food, and we love trying out local restaurants. Our food spending has increased over the years, but I’m not particularly interested in cutting it. 

    But I feel comfortable with that decision because I’ve identified my values, and I know it’s a form of spending that aligns with our values.


    When is lifestyle creep okay? What you need to know about lifestyle elevation

    Inflating your lifestyle in proportion to each salary increase will make it difficult to ever make meaningful progress toward your financial goals. 

    But that doesn’t mean lifestyle creep is never okay. After all, no one expects you to maintain the same standard of living you had in your early twenties when you earned minimum wage and shared an apartment with three roommates. 

    And frankly, cutting out lifestyle creep altogether will make it awfully hard to motivate yourself to earn more. What’s the point if you can’t enjoy any of it?

    The key to doing lifestyle inflation correctly is to be intentional about it. Decide what spending increases would add actual value to your life. This intentional lifestyle creep — we’ll call it lifestyle elevation — might look like upgrading to a nicer home, buying quality clothing that will last you longer, buying healthy groceries instead of whatever is cheapest, and more.

    One rule of thumb some experts recommend is allocation 50% of wage increases to lifestyle elevation, while the other 50% goes toward your financial goals of paying off debt, investing for retirement, etc.

    Another way to manage your lifestyle elevation is to use the 50/30/20 budget, as we discussed earlier. The benefit of the 50/30/20 budget is that you never have to think about the appropriate amount to spend — it’s all laid out in the budget structure.

    Ultimately, what you choose to do with future raises depends on your financial goals. While many people — me included — want to enjoy some of the fruits of their labor with a little lifestyle elevation, those that are seeking FIRE — or financial independence, retire early — often put nearly all of their pay increases toward investments for their big goal. You have to find what works for you.


    Final Thoughts

    Lifestyle creep may seem harmless, but it can seriously derail your financial goals and even result in you living paycheck to paycheck.

    The good news is that as long as you’re intentional about it, you can elevate your lifestyle while still making room in your budget for saving, investing, and taking care of your future self.

  • Sinking Fund vs. Emergency Fund: What’s the Difference?

    When I started budgeting for the first time, I would get so frustrated because I felt like I was doing really well. But then, one big expense would come up and throw off my entire budget for the month.

    Sometimes it was unexpected car repairs or a medical bill I didn’t expect. But other times it was expenses I knew about and just didn’t plan for, like my vehicle registration or my Amazon Prime subscription.

    This went on for years until I found two simple tools to help me avoid these budget mishaps: sinking funds and emergency funds.

    In this article, I’m explaining what a sinking fund and emergency fund are, when to use each one, and how to start building them. I promise these tools will totally change the way you budget!


    Sinking Fund vs. Emergency Fund: What’s the Difference?


    What is an emergency fund?

    An emergency fund is just what it sounds like — it’s a chunk of money set aside for emergencies. First, an emergency fund can be used for large and unexpected bills. But more importantly, it can replace your income for a short time if you unexpectedly lose your job.

    Experts generally recommend having at least 3-6 months of expenses set aside in your emergency fund. That’s enough to give you some breathing room in case you lose your job.

    In light of the pandemic, it’s more important than ever to have an emergency fund. And if it’s feasible for you to save more than 3-6 months of expenses, I definitely recommend it.



    To build your emergency fund, start by figuring out just how much you want to save. And remember that saving 3-6 months of expenses doesn’t necessarily mean saving 3-6 months of income. If you lose your job, assume that you’ll cut out some of your discretionary spending. It really only needs to be 3-6 months of necessities.

    Once you know how much you want to save, you can start transferring money into the account each month. I do recommend keeping this money in a separate savings account — preferably a high-yield savings account — so you’re never tempted to spend it.

    When you aren’t currently saving, it feels impossible to get started. I started by setting up an automatic transfer from my checking account to my savings account. Start small – my initial transfers were only $50. But once you get into the habit and see the benefits of having a savings, you’ll start making more room in your budget.


    What is a sinking fund?

    A sinking fund is a saving strategy you can use to save all year long for expenses that come up only occasionally. For example, let’s say you spend $600 per year on Christmas. Instead of spending $600 out of your December budget and likely going way over budget for the month, you would save $50 per month throughout the entire year.

    Sinking funds can be used for three types of expenses:

    • Planned expenses like your vehicle registration or Amazon Prime subscription
    • Unplanned expenses like car repairs
    • Savings goals like a vacation or the down payment on a new car



    There are so many categories you can make sinking funds for. And honestly, once you get the hang of it, you’ll be excited to set up more sinking funds. It’s kind of addicting! Here are some sinking fund examples:

    • Vehicle registration
    • Car repairs
    • Car insurance
    • Home repairs
    • Christmas
    • Medical bills
    • Pet expenses
    • Vacation
    • House downpayment
    • Association dues
    • Clothing
    • Car replacement
    • Weddings
    • Kid-related expenses
    • Tuition
    • Annual subscriptions
    • New appliances



    To build your sinking funds, start by figuring out how much you want to save for the entire year. For some categories, this will be easy. You can easily figure out how much you’ll need for your annual subscriptions or vehicle registration.

    But it might be more challenging to figure out how much to save for unplanned unexpected like medical bills and car repairs. For those, you can page through your old bank statements to get a good idea of how much you spent last year. Once you know how much you want to save throughout the entire year, there’s a simple sinking fund formula you can use. Just divide the total amount you want to save per year by 12, and you know how much you’ll want to save each month.

    Don’t feel overwhelmed by the sheer number of sinking funds you could start. Choose those that are most important to your life and come up most often, and you can build on them from there. I started with just a couple of sinking funds, and now I have nearly a dozen!

    As for tracking your sinking funds, I love to use the app You Need a Budget (YNAB), which has a system designed to track these savings categories. Another tool you can use is Ally Bank, which has a high-yield savings account with “buckets” where you can allocate parts of your savings to certain savings categories.


    Final Thoughts

    Both your emergency fund and your sinking funds are an important part of your financial plan, but they have very different purposes. To make the most of your savings, I recommend using both! Your sinking funds will help you budget for expenses both planned and unplanned that come up only occasionally, while your emergency fund is there to protect you in case of a job loss.

  • Is Renting a Waste of Money?

    We need to talk. More specifically, we need to talk about one of the most common myths I see making its way around the personal finance world. That myth is:

    “Renting is a waste of money.”

    Multiple times per week, I hear from people who want to buy a home because they’re worried they’re throwing away money by renting. Maybe they heard this from their parents, or maybe it was strangers on the internet.

    But wherever they heard it, they made a major financial decision based on other people’s decisions rather than what’s actually best for their situation.

    In this article, I want to clear up that misconception by showing you how renting is definitely not throwing away money.


    Is Renting Throwing Away Money_


    Why people say that renting is a waste of money

    Before I talk about why renting is definitely not throwing away money, let’s cover the reasons why people think this is the case. Because in the interest of full disclosure, there are some benefits of homeownership that have made it so popular.



    Every month when you pay your mortgage, a portion of your payment goes toward your principal (meaning the amount you initially borrowed).

    Your equity is the difference between your home’s value and the principal you still owe on your mortgage. And so, as you pay down your principal, your equity in the home increases.



    The real estate market may ebb and flow, but just like the stock market, home values generally increase over time. As a result, many homeowners are able to sell their homes for more than they paid for them, resulting in a capital gain.


    I’m not going to argue the validity of either of these statements. It’s absolutely true that paying your mortgage builds equity in your home and that your home’s value is likely to rise over the years. But in the next couple of sections, we’ll talk about why those things don’t matter as much as you might think.


    The return on investment of homeownership

    It’s true that home values have consistently increased over the years. Since 1940, home values have increased an average of 5.5% per year.

    Depending on your investing experience, you might think 5.5% sounds pretty good. But what about when you compare it to other investments?

    According to the Securities and Exchange Commission, the stock market sees an average annual return of about 10% per year. That’s nearly twice as much as the increase in the value of a home. And stocks don’t come with the maintenance costs required of homeownership, as we’ll discuss later.




    Let’s say you invested $100 per month for 30 years into an investment with a 5.5% annual return. After 30 years, you’d have more than $87,000.

    But if you had invested that same $100 per month into an investment WITH a 10% return? Because of compound interest, you’d end up with just shy of $200,000 — more than twice the return on a 5.5% investment.

    It’s also important to note that the amount you pay for a house is far from the only investment you make into it. When you account for all the other expenses, it’s likely your returns from the increase in value are completely wiped out.


    Let’s do the math: Renting vs. buying

    It’s easy to think you’re throwing away money by renting because the money you pay each month doesn’t build equity in your home. But let’s look at an example that might change your mind.



    Closing costs aren’t an ongoing expense of homeownership, but they make up a substantial cost in the first year. Closing costs run between 1% and 3% of the home’s purchase price. For a home priced at $335,000, your closing costs would be $3,350.



    Let’s say you rent an apartment for $1,500 per month. You’re sick of throwing away money renting, so you buy that $335,000 home with a monthly mortgage payment of $1,500.

    But that entire $1,500 doesn’t build equity in your home. In fact, in the early years of homeownership, most of your monthly payment goes toward interest. If you have an interest rate of 3.5%, then about $11,622 of your payment goes toward interest in the first year.

    Note: I found these numbers using Bankrate’s mortgage amortization calculator for a mortgage of $335,000 and an interest rate of 3.5%.



    Next, let’s talk about property taxes. Rates vary depending on where you live. But according to the U.S. Census Bureau, the average household spends about $2,471 on property taxes each year. We’ll use that for the purposes of this example.



    Another ongoing cost of homeownership is homeowners insurance. The cost will vary depending on where you live, the size of your home, how much coverage you want, and many more factors. According to ValuePenguin, the average cost of homeowners insurance is $1,445 per year.



    Finally, let’s talk about home maintenance. As a homeowner, you’re responsible for any repairs that need to be done. There’s no more landlord to call.

    Unfortunately, it’s impossible to predict how much you’ll spend on maintenance each year. However, experts recommend planning for about 1% of the cost of your home. On your $335,000 home, you could expect to spend $3,335.



    People like to argue that renting is throwing away money. But as you can see, there are many expenses of homeownership that don’t build your equity in the home. Let’s compare how much money you throw away renting versus in your first year of homeownership.

    renting vs. owning

    As you can see, you “throw away” significantly more in your first year of homeownership than you would be renting. And sure, closing costs are a one-time cost rather than an ongoing one. But even if you eliminate that cost, you still throw away more money per year owning a home than you do renting.


    Owning a home vs. real estate investing

    None of this is to say that you can’t make money from real estate investing. In fact, It’s important real estate can be incredibly profitable. But your primary home is not an investment property.

    When you purchase an investment property, the increasing home value isn’t really where you make your money. You make your money by renting out the property and bringing in passive income each month.

    In other cases, you can make money by flipping homes, where you buy a home, renovate it, and then it for a significant profit. Neither of these situations applies to your home.


    Is renting better than buying?

    You might be reading this article and thinking that I’m saying homeownership is a bad idea or a waste of money. But that’s not remotely true. In fact, my husband and I are saving for a home right now.

    We want to own a home because we love our community, and we want to become a more permanent part of it. We want a space that’s truly ours. We want a yard where our dog can run around and where we can entertain friends.

    Edit: Since I originally wrote this post, my husband and I bought a home. Buying comes with a huge price tag and lots of responsibility, but we’ve found it worth it, even without the financial gain.

    There are also many reasons I love renting a home. I love that I don’t have to mow the lawn in the summer or shovel the snow in the winter. I love that if an appliance breaks down, my landlord replaces it. I love that if I want to move, I can do so with very little notice because I don’t have to sell a house first.

    There are many great reasons to own a home, and there are many great reasons to rent. But the benefits of homeownership aren’t financial.


    Final Thoughts

    We’ve all heard the financial myth that renting is throwing away money. And while there are many great reasons to own a home, thinking that you’re saving money isn’t one of them. In fact, as we figured out above, you actually throw away a lot more money by owning a home.

    The good news is that you can make the right choice for yourself, regardless of what your parents or society has told you.

  • How to Start Investing as a Millennial

    Are you a millennial? Then we need to talk about why you should be investing and how you can start today.

    Millennials are those born between the early-1980s and mid-1990s. Made up of about 83 million people, our generation is the best-educated and most diverse, but we’ve gotten a tumultuous start to our financial adulthood.

    Many millennials entered the job market during and immediately after the 2007-2008 financial crisis. In other words, we got off to a rough start.

    Because of that, it should come as no surprise that millennials are a bit leery of putting their money into the stock market. Data shows that more than two-thirds of millennials have nothing invested for retirement. 

    It’s time for us to fix that. In this article, I’m sharing a few simple steps to help you start investing as a millennial.


    How to Start Investing as a Millennial


    Why you need to be investing

    The first question you might be asking yourself is why you need to invest. After all, isn’t investing risky?

    Investing is the most effective way to build wealth and help your money to grow for the future. It’s a way of putting your money to work to make passive income so that you aren’t relying on trading time for money. 

    Another important reason to invest is that without doing so, most people would never be able to retire. It’s only because of compound interest that invested money grows large enough for people to retire. 

    Finally, investing helps protect your money from inflation. Many people feel safest with their money in a savings account. But because of inflation, money in a savings account is losing its value every year.

    The Federal Reserve has a target inflation date of 2% each year. And I think we all know that throughout 2022, it’s been far higher, meaning your money is losing value more quickly.

    In most cases, you’d be hard-pressed to find a high-yield savings account that pays that much as the rate of inflation, no matter what that rate is. As a result, your money becomes less valuable each year.

    But what happens when you invest that money? According to the Securities and Exchange Commission, the stock market has an average annual return of 10%. Not only are you protected from inflation, but your money is actively growing each year.



    The reason investing is so effective is because of the miracle of compound interest. In other words, your money makes money. Then, the money you made also begins to make money.

    Let’s look at a quick example:

    Let’s say you were to save $250 per month each year from ages 25 to 65. By the time you retire, you will have $120,000.

    But what if you put that same $250 per month into the stock market with a 10% return? You’d retire with about $1.34 million. So you can see how important compound interest is.

    To figure out how much you could have in the future by investing in the stock market, you can use a compound interest calculator.


    Investing vs. trading

    One of the biggest misconceptions I hear from millennials is that they hear they should be investing, and they think that means opening a brokerage account and buying individual stocks. So before we dive in any further, I want to clarify what I mean when I say investing.

    Trading generally refers to buying short-term investments with the intention of selling them after a short time for a profit. Traders usually try to time the market, selling before a stock price falls and buying before it rises.

    For many people, day trading is a full-time job. It takes an incredible amount of research and understanding of the stock market, and most people are still ultimately unsuccessful. Unless you have the time and understanding to do it properly, I would avoid trading.

    Investing, on the other hand, is a long-term strategy. It involves buying and holding investments over many years for the purpose of growing wealth. Investing is less about timing the market and more about time in the market. 


    Investing for retirement

    The most important type of investing that everyone should start with is investing for retirement. In fact, you may already be investing without realizing it since the first place many people start investing is in their employer’s 401(k) plan.

    If your employer offers a 401(k) match, make sure you’re investing at least enough to get the match. If you have more room in your budget, you can increase your contributions even more.

    Outside of an employer 401(k), another great way to invest is through an individual retirement account (IRA). This option offers more flexibility and a way of diversifying your tax advantages.

    There are also plenty of options to save for retirement when you’re self-employed, including a SEP IRA and Solo 401(k).

    Not sure how much you should be investing for retirement? Personal Capial’s retirement calculator is my favorite way of figuring out much to set aside each month to live comfortably during retirement.


    Investing for financial goals

    Your first priority should be investing enough to reach your retirement goals. But if you’re doing that and still have room in your budget, you might consider investing for other financial goals as well.

    As a general rule of thumb, you shouldn’t invest any money that you plan to need within the next five years. The stock market can be volatile, and when you invest your savings, you risk seeing your portfolio’s value decrease substantially right before you need it. For goals less than five years out, you can put your money into a high-yield savings account and earn a bit extra.

    So what does this look like in practice?

    Let’s say you’re saving for a home you plan to purchase in about three years. The best place to save that money is in a savings account. But that dream vacation home you plan to purchase in 10+ years? Feel free to save for that in a brokerage account.


    Investing while paying off debt

    Many of the people I work with are in the process of paying off debt. And many find themselves wondering whether they should be investing while they’re paying off debt.

    There’s a little more that goes into it, but the short answer is: Yes!

    No matter what, I always recommend investing at least enough to get any 401(k) match your employers. Once you’re doing that, your next priority should be to pay off any high-interest debt, such as credit cards or personal loans.

    Once you’re left with only low-interest debt like student loans, you can split your money between investing and paying off debt, or you can decide to go all in on one. Yes, the debt is important. And yes, there’s a huge emotional burden that comes with carrying debt.

    But ultimately, the return you can expect to get in the stock market is higher than the interest rate you’re paying on your debt. And the more time your money has to grow in the market, the better off you’ll be during retirement.

    When it comes to investing for other goals beyond retirement, that really comes down to what you’re comfortable with. Some people are more worried about getting their debt paid off as quickly as possible, while others are more focused on building wealth.


    Determining your asset allocation

    One of the biggest questions people have when it comes to investing is what they should actually invest in. 

    The first thing to know about asset allocation is that you should be diversifying your portfolio. In other words, don’t put all your eggs in one basket.

    First, you can invest across asset classes, meaning you put your money into a variety of different assets. For example, rather than just investing in stocks, you would also invest in bonds and other securities.

    You should also diversify within asset classes. For example, rather than buying stock in just one company, you’d buy stock in many companies across various industries.

    The idea of choosing your investments might be overwhelming, but there are tools to make that job easier. Index funds, mutual funds, and ETFs are investment vehicles that hold many different assets. When you invest in the fund, you’re investing in every security in the fund.


    When we land on this topic, many people want to know what are the best investments for millennials. I can’t answer that question for you, and neither can anyone else on the internet. The best investments for you depend on your financial goals, risk tolerance, and more.

    Personally, I rely on both a robo-advisor and diversified index funds to help reach my various financial goals. The same strategy may or may not be right for your goals.


    Choosing the right investing platform

    Another important decision you’ll have to make is the investing platform you use. If you invest through your company’s 401(k), you won’t have to worry about this. But if you’re investing in an IRA or a taxable brokerage account, you’ll have to decide which type of account is right for you. 

    There are two primary options to choose from:

    • Traditional brokerage firm: With a traditional brokerage firm, you’re responsible for choosing your own investments. This option is ideal for those who want to be hands-on investors. Popular brokerage firms include Vanguard, Fidelity, and Schwab.
    • Robo-advisor: For those who don’t want to choose their own investors, a robo-advisor is a great alternative. You answer a few simple questions about your goals and risk tolerance. Then the robo-advisor chooses your investments for you. My favorite robo-advisor is Betterment.


    Final Thoughts

    For many millennials, the idea of investing feels overwhelming. People who are new to the investing game consider it to be too risky, often compared to gambling.

    But long-term investing and gambling couldn’t be more different. Additionally, investing is one of the most effective ways to build wealth and financially prepare for the future.

  • How to Stay Motivated to Pay Off Debt

    When my husband and I got married, we had six figures of student loan debt. And unfortunately, we definitely aren’t alone.

    The average student loan balance is nearly $38,000. And a significant number of borrowers are in the same position my husband and I were, where our student loan debt was considerably higher than the average.

    When you throw in credit cards, car loans, and other debts, most people are paying off debt for the majority of their adult lives.

    I know as well as anyone how easy it is to lose motivation when you’re paying off debt. There have been plenty of times in my adult life when I simply made the minimum payments because anything more felt too overwhelming. I knew I would have to increase my payments to get the debt paid off more quickly, but I couldn’t bring myself to do it.

    I’ve worked hard over the past couple of years to find strategies to keep my head in the game. These strategies helped me start paying more than the minimum payment to pay off my debt more quickly without sacrificing my lifestyle.

    In this article, you’ll learn 8 tips to help you stay motivated while paying off your debt.


    How to Stay Motivated to Pay Off Debt

    There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.


    Have a debt payoff plan in place

    One of the most common problems people run into when paying off debt is that they simply make their minimum payments every month. Either that or they pay a little extra on each debt but still barely make progress on any of them.

    They don’t look at their balances altogether, and they don’t set a strategic debt payoff plan.

    The most important first step to tackling your debt is crafting a debt payoff plan. The two most popular are:

    • Debt snowball method: Prioritize the smallest debt, putting all extra money there while making the minimum payment on your other debts.
    • Debt avalanche method: Prioritize the debt with the highest interest rate, putting all extra money there while making the minimum payment on your other debts.

    I prefer the debt avalanche method because you end up saving the most money in the long run. But the debt snowball method often results in small and quick wins, which helps keep people motivated. At the end of the day, the best debt payoff plan is the one you’ll stick it.

    Once you have a debt payoff plan in place, you’ll start seeing progress on your payoff and start to see the end in sight. is hands-down my favorite tool to create a debt payoff plan. Just enter your debts, and the tool will help you prioritize and tell you how long it will take you to pay them off. The best part is that it’s a free tool.


    Create helpful habits

    Motivation is great to help you jumpstart your debt payoff plan, but unfortunately, it’s not always enough to stick with it. That’s where habits come in.

    Your habits will keep you moving on your debt payoff plan when you aren’t feeling motivated. Helpful habits to help you pay off debt include tracking your spending, using a budgeting app, and scheduling weekly or monthly money dates with yourself and/or your partner.

    The book Atomic Habits by James Clear is the best book to learn about habits and how to create healthy, helpful habits.

    The benefit of creating helpful habits to help you pay off your debt is that it no longer feels like you’re working so hard. Some of the actions required to tackle your debt become automatic, meaning you’re putting in less effort without getting less of a result.


    Break it down into small, manageable steps

    When you’re paying off a lot of debt, it can feel overwhelming to look at the big number all the time. Instead, it can be helpful to break it down into small, manageable steps.

    I like to focus on one debt at a time using the debt avalanche method. I make the minimum monthly payment on every debt except the one with the highest interest rate. That highest-interest debt gets all of my attention.

    All of my extra money goes toward that one debt, and I regularly calculate how many months until I can expect to pay it off.

    Breaking it down into small pieces helps to keep me motivated, because the end for that one debt is in sight, even if my final debt-free date isn’t.


    Create a visual progress tracker

    Visually tracking your debt payoff can be a great way to keep you motivated during your debt payoff journey. You’ll be able to see your progress first-hand and feel excited each time you get a bit closer.

    There are many printable debt trackers available for free online. When we started paying off debt, we just used the whiteboard in our living room to create a visual representation of our debt.

    There are also online services you can use to track your progress, such as, which I’ve already mentioned.


    Make it automatic

    No matter how motivated you are when you start, there will absolutely be months when you don’t feel like making those extra debt payments. You’ll find other things you’d rather spend that money on, and it’s super easy to talk yourself out of prioritizing your debt.

    To plan ahead for those months, I recommend setting up automatic debt payments. Instead of creating an automatic payment for the minimum payment amount, set it up for the amount you actually want to put toward your debt to pay it off faster.

    Read More: 6 Easy Ways to Automate Your Finances


    Find your community

    Paying off a huge amount of debt can feel incredibly lonely and isolating. But the reality is that there are millions of people going through exactly what you are.

    One of the best ways to stay motivated while paying off your debt is to find a community of people to share your journey with.

    Whether it’s a Facebook group or debt payoff accounts on Instagram, having people to share your journey with, vent to, and celebrate wins with will be a game-changer.


    Remember your why

    Putting extra money toward debt each month can be discouraging. Each month, I can think of things I’d rather spend that extra money on, and it makes me want to press pause on my debt-free journey.

    But then I remember why I want to be debt-free. And I picture what our life will look like when that debt is gone.

    If you’re feeling discouraged, think about what comes next. How will you feel when you aren’t in debt to companies? What goals will you save for when you don’t have money going toward debt each month?

    In those moments when you lose your motivation, remembering your why is the perfect thing to help you find it again.


    Celebrate small wins

    Just because you’re prioritizing debt payoff doesn’t mean you can’t enjoy your life. Celebrating small wins will help keep you excited while paying off your debt and will prevent you from burning out.

    Decide on a specific milestone — it could be $1,000, $5,000, or any number that makes sense for your debt payoff plan. Decide ahead of time how you’ll celebrate when you hit that milestone.

    It doesn’t have to be expensive, but please make sure it’s not something you do on a regular basis. It should be exciting and out of the ordinary and something you only treat yourself to when you hit that milestone.


    Final Thoughts

    Paying off debt can be long and frustrating, and it’s easy to lose progress on your way. There are plenty of steps you can take to help boost your motivation and remember why you started in the first place.

  • How to Create a Five Year Financial Plan

    Do you know what you’ll be doing with your money five years from now?

    Chances are, no. Five years seems so far away, and it’s hard enough to figure out what you’re going to do with your money next month, let alone years from now. 

    But data consistently shows that those with a written plan are far more likely to reach their goals. And by making a plan for your future money, you can make intentional choices and have the exact future you envision.


    How to Create a Five Year Financial Plan

    There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.


    Why create a five-year financial plan?

    I know what you’re probably wondering: Why five years? It seems like an arbitrary amount of time, but it’s really not.

    Five years is a short enough period of time that you can reasonably set goals for that period. While you don’t have a crystal ball, you may be able to picture what you’d like your life to look like five years from now.

    Five years is also long enough that even for those bigger goals, five years could be long enough to help you save up enough money and accomplish them.

    Saving for the down payment on a home seems daunting when you decide you want to buy next year. But if you know you’ll want to buy several years down the road, you can start saving early.

    Five years seems like a long time, but it goes fast. And if you don’t make a financial plan for those five— years, they’ll pass before you know it.


    How to create a financial plan


    I truly believe that the first step in any goal-setting exercise — whether it’s setting an individual goal or making a full-blown financial plan — should be identifying your values.

    Far too often, we live our lives on autopilot, doing the things we think we’re “supposed to” be doing. But we haven’t taken the time to really decide whether that life actually aligns with our values.

    One of the first exercises I did with my money coaching clients when I offered that service was helping them to identify their most important values. From there, we could make sure their budget prioritized those values. And then we could set financial goals that aligned with them.

    So think about what you value. Maybe you value freedom, and that manifests itself in travel. Or maybe you value security, and a life well-lived would include buying a home and having a large nest egg. 

    If you’re having trouble thinking of values, you can literally just Google “list of values.” You can read through it and see what resonates with you.



    As you sit down to craft your five-year financial plan, consider what your next five years will look like. Envision your life one, and then three, and then five years from now.

    Where do you live — both the location and the actual home? What do you do for work? Are you married? Do you have children? What hobbies do you do in your spare time? What kind of car are you driving? What trips are you taking?

    It might seem like you can’t possibly know what you’ll be doing five years from now. But if you really think about it, I’m guessing you can come up with a vision for what you might like to be doing.

    As you picture your life in the future, write down everything you see.



    Alright, you know that list you just made of what you envision for your life in the next five years? Well, it’s time to take that list and turn it into specific financial goals.

    For each thing you’d like to accomplish, write down the date you’d like to accomplish it by and how much it will cost.

    Some of these will be easy. You might know that a big goal is to become debt-free in the next few years, and you currently have $50,000 in debt. But some might be trickier. Maybe you think you’ll be having a wedding in a few years but have no idea how much you’ll need to save.

    No matter what your goal is, chances are you can do a little research to find out how much you can expect to spend.

    Once you have your list of goals, I want you to do one very difficult thing: prioritize them. I know it’s hard to look at a list of goals and decide which you want to come first. But at the end of the day, it’s easier to save for one big goal than many.

    I recommend putting them in the order you’d like to achieve them and going all-in on the biggest one. That way, instead of making little progress on many things, you can make big progress on one.

    Read More: How to Set Financial Goals



    Once you’ve figured out what goals you plan to save for over the next five years, it’s time to figure out how much you’ll save.

    When you sat down and identified your goals, you hopefully identified when you want to reach each goal and how much it will cost. If so, this part should be pretty easy.

    All it takes is a little math. Divide the amount you need to save for your goals by the number of months you have to save. You’ll know how much you need to save each month to make it happen.

    You might see that number and realize you could be saving even more. That’s great news because it means you can move on to the next goal that much faster.

    On the other hand, you might see the number and realize that your current list of goals isn’t exactly realistic over the next five years. That’s totally fine and pretty normal.

    In that case, you have a few options:

    1. Adjust your expectations so that your goals fit within your current saving capabilities, or
    2. Decide that you’re willing to do what it takes to reach your goals no matter what, even if it means either drastically cutting your spending or increasing your income, or
    3. Do a little of each. Adjust your goals slightly, but also reduce spending and increase your income to make sure you can reach your goals.

    It’s okay for goals to feel a little uncomfortable.

    When Brandon and I first set the goal of buying an RV and traveling full-time, I didn’t actually think we’d be able to do it. I ran the numbers dozens of times, and it just never seemed possible. But lo and behold, we accomplished our goal, and we even did it ahead of schedule.

    So I guess what I’m saying is plan as much as you can and leave room for a little bit of magic.



    Yep, we’re going to talk about the B-word. I’ve talked to so many women over the years who tell me they hate budgeting and they want a way to reach their goals.

    And yes, there are personal finance experts who will tell you they can help you reach your goals without a budget. But then they describe the spending plan they teach, and it sounds an awful lot like a budget, just with a different name.

    At the end of the day, the only way to be intentional about the amount of money leaving your bank account each month is with a budget. And when you budget, it’s easy to create a five-year financial plan because you know how much you’ll be able to save each month for the foreseeable future.

    If you don’t have a monthly budget yet and aren’t sure where to start, you can use my guide: A Step-by-Step Guide to Creating a Monthly Budget.



    Tracking your progress is one of the most important steps to any plan, and your financial plan is no exception. After all, it’s all about follow-through. And how will you know if you’re following through if you don’t actually track your progress?

    I track my progress in a couple of ways:

    1. I sit down each week and update my budget and spending tracker to make sure I’m staying within my monthly budget. If I’m not staying on track, I can cut back as needed.
    2. I sit down each month and plan my budget for the following month and update my net worth. If I went over budget the previous month, I adjust, either by changing how much I budget for or figuring out how I can cut back on certain areas.



    As you make your way through your financial plan, it’s important to check in on your progress.

    And while we’ve already talked about tracking your spending and your progress on a more granular level, it’s important to check in on the bigger picture too. Sit down each year and take an inventory of where you planned to be at that time versus where you actually are.

    By scheduling an annual check-in, you can change course if things aren’t going quite the way you expected them to be.

    It might be that you check in on your financial plan and find that you’re falling behind. In that case, you can either find a way to speed up your progress or adjust your expectations.

    On the other hand, you might check in on your plan and find that you’re ahead of schedule. That’s great news! In that case, you can adjust your goals to accomplish even more in your five-year plan.


    What to include in your financial plan


    A five-year financial plan seems like a huge undertaking, and it definitely is. And if you look at it as one big picture, then it’s going to be hard to make strides.

    Included in your five-year plan should be annual and monthly budgets.

    The concept of a monthly budget is pretty common. You figure out how much money you have coming in each month, and you create a plan for exactly how you’ll spend it.

    The idea of an annual budget isn’t quite as common, but it’s still an important way to make a plan for your money.

    Creating an annual budget can help you identify those less common expenses, such as your annual vehicle registration or holiday spending. I use sinking funds to save for these expenses and my annual budget to plan for them.

    Read More: What Are Sinking Funds and Why Do You Need Them in Your Budget?

    An annual budget can also help you to see what’s going to be happening with your money three, six, nine, and twelve months from now.

    Here’s an example: Let’s say you’ve got a monthly car payment, but you’ll be paying off your loan in just a few months. When you use an annual budget, you’ll know ahead of time where you’ll reallocate that money each month. As a result, you have a better idea of when you’ll reach your next goal after that.

    I love planning, and helping people to craft long-term financial plans is one of my favorite things, but I also know that the foundation of every great financial plan is your budget.



    Building an emergency fund should be the first step in anyone’s financial plan. It helps prevent future financial mishaps from becoming disasters and helps set a solid foundation for the rest of your financial goals.

    There are two reasons you need emergency savings:

    • One-time emergency expenses
    • Income replacement in the event of a job loss

    There’s definitely some debate as to how much you should save in your emergency fund. Certain financial experts recommend saving just $1,000 while you’re paying off debt, but I’d strongly recommend against this.

    As a minimum, I recommend saving three months of expenses in your emergency fund. Once you’re debt-free, I’d go even further and shoot for at least six months of expenses.

    One of the reasons an emergency fund is so important is that it helps you avoid future debt.

    Imagine you didn’t have an emergency fund and had an emergency $1,000 car repair. If you put it on the credit card and it takes a few months to pay it off, you’ll pay interest, meaning your emergency costs even more. But if you had an emergency fund, you could just pay for it and be done with it.

    Read More: How to Build an Emergency Fund & How Much to Save



    If you’re paying off debt, that should absolutely be a part of your five-year financial plan. Now, depending on how much debt you have, you may not plan to pay it all off in the next five years. For those with high student loan debt — which is many people these days — it’s okay to take longer if that fits your plan better.

    The first step to creating your debt payoff plan is to decide which strategy you’ll use to pay down your debt. The two most popular strategies are the debt snowball and debt avalanche.

    The debt snowball is where you prioritize your debt based on balance, paying down the smallest debts first. The debt avalanche is where you prioritize based on interest rate. You pay down the debt with the highest interest rate first.

    The other decision you’ll have to make is how much you’ll put toward debt each month. It can be tempting to pay just the minimum payments and use the money for other goals. But I highly recommend paying at least some extra to pay it down faster.

    Paying your debt off early can help you save hundreds, thousands, or even tens of thousands of dollars on interest. And if you have high-interest debt like credit cards, I think that should be your absolute priority. 

    I recommend using a tool like to help you plan your debt payoff. You can experiment with the order and see how much faster you’ll be debt-free by paying just a little extra each month.



    Your financial plan should also include any other financial goals you might be saving for. In fact, this right here is why a five-year financial plan is so important. When you can anticipate the goals you’ll want to reach several years from now, you can start preparing for them now.

    When crafting your financial plan, map out when you hope to achieve each of your financial goals and how much they’ll cost. From there, you can easily figure out how much you need to save each month.

    Common financial goals include:

    • Buying a home
    • Taking a vacation
    • Going back to school
    • Starting a business

    …and many, many more.



    As you’re mapping out your financial goals, be sure to map out any major life events you think will come up over the next five years. Unfortunately, we often don’t start planning and saving for these until they’re upon us, and then it’s hard to catch up.

    Major life events to consider in your financial plan include getting married, starting a family, or moving to a new city.

    Even if you don’t know for a fact that one of these things will happen, you can still plan and save for them. Plenty of people start saving for a wedding long before they’re engaged or start saving for kids long before they’re pregnant.



    When you’re young, it’s easy to brush off saving for retirement, thinking you have plenty of time. This is how I felt for years, and I was incredibly lucky to have an employer that required us to contribute a certain percentage of our income to our retirement accounts each year.

    No matter your age, retirement savings should be a part of your financial plan. Your age and how much you want to have when you retire will determine how big a part of your financial plan.

    For younger people who don’t plan to retire until they’re 60s, saving for retirement is actually pretty simple.

    The Securities and Exchange Commission reports the stock market produces a return of about 10% per year. Using that number, if you start saving when you’re 25 and invest $250 per month until you’re 65, you’ll retire with more than $1.3 million.

    In some situations, you may need to save more per month to reach your retirement goals. That might be the case if you’re closer to retirement age or if you’re working toward early retirement.

    Not sure how much you need to save? The Personal Capital Retirement Planner is one of my favorite tools to help figure it out.



    I’ve found increasing my income to be the best way to speed up my financial plan and reach my big financial goals. And the good news is that there are many ways to do this.

    Many people hope to start their own businesses someday. If this is you, make sure it’s a part of your financial plan. Online businesses today often quire little start-up costs, but it’s worth setting aside money either way. Luckily, you’ll ideally then see a return on that investment.

    If you aren’t interested in starting a business and simply want a way to increase your income temporarily, that’s even easier to do. 

    There are plenty of side hustles — either online or in-person — where you can earn extra money in your spare time. Once you know how much you can make each month, you can work that into your financial plan to help you reach your goals even faster.

    If you’re interested in finding additional income streams, check out my guide on how to earn more money this year.


    Final Thoughts

    Having a financial plan is essential to making sure you are where you want to be in the future. Five years is the perfect amount of time — it’s just short enough that you have an idea of what goals to save for and just long enough that you have plenty of time to save.

    Financial planning sounds a lot more complicated than it is. While you might picture sitting down with a financial planner and paying them a pretty penny to put together a plan for you, this is something you can do on your own — and for free!

  • How to Stop Comparing Yourself to Others Financially

    You wanna know one of the most common complaints I hear from friends, readers, and anyone else I talk to about personal finance?

    “I can’t help but look at my friends and feel like they’re doing better than I am.”

    People tend to feel that their friends are making more money, don’t have as much debt, or aren’t facing the same financial hurdles they are.

    And so they spend hours stuck in comparison, feeling jealous that they don’t have as much money or feeling less than for not being in a better place financially.

    All this comparison does is hold you back from reaching your goals and make you feel resentful when you don’t need to.

    Because here’s the thing: those people you’re comparing yourself to financially are comparing themselves to someone else — maybe even you.

    In this article, I’m sharing why you need to stop comparing your finances to other people’s and how you can finally do that.


    How to Stop Comparing Yourself to Others Financially


    Why you need to stop comparing your finances to other people’s


    When was the last time you posted something on social media about your financial struggles, the fight you had with your partner, or the bad day you had at work?

    I’m guessing it’s not likely. People don’t tend to share the hard stuff on their social media pages. Instead, they share the highlight reels. They share their absolute best days and favorite moments.

    And from those moments, you have no idea what someone’s life really looks like.

    It’s easy to look at someone who just went on your dream vacation and feel jealous that they could afford it and you can’t. But what you might not see is that they put the whole thing on a credit card, and it will take them years to pay it off.

    This is just one example, but it shows you that what someone posts on social media isn’t really a good indication of what’s going on behind the scenes.      



    Have you ever noticed how all-consuming it can be to compare yourself to others?

    Imagine you’re running in a race, and you keep looking around to see where you’re fellow runners are. You’re distracted and aren’t focused on the trail ahead of you. Not only are you running more slowly than you otherwise could, but you may also stumble since you aren’t looking where you’re going.

    The same applies to your finances.

    You notice that your peers aren’t struggling with the same student loan debt you are, and you spend all of your time thinking about it. Meanwhile, you aren’t spending time thinking about how to achieve your goals faster. So instead of helping get you to where you want to be, that comparison trap actually holds you back.

    Unless you have a very good reason for comparison (i.e., comparing your salary to others in your industry to make sure you’re being fairly compensated), it’s actually hurting you.



    Comparing your finances to other people’s can get really expensive really quickly.

    A survey from 2019 found that 48% of millennials had spent money they didn’t have and gone into debt to keep up with their friends.

    What’s crazy is that we’re going into debt to keep up with other people who are going into debt to keep up with us.

    Maybe you look at your friend and think, “I’m not sure I can afford this girl’s trip, but she makes about the same amount I do. So I guess if she can afford it, so can I.”

    And she’s looking back at you and thinking the exact. same. thing.

    Next time a friend suggests something that’s a little outside of your price range, ask if you can do a budget alternative instead. Instead of hitting happy hour for wine and charcuterie, ask if you can do a DIY version at your place. I’m willing to bet that other people would rather do the same thing.



    It’s easy to feel jealous or resentful that you can’t afford the same things as everyone else. But have you ever really stopped to ask yourself if you want those same things?

    I used to feel jealous of people who could splurge on makeup and clothing. And at times I went over budget to have them for myself.

    But when I really thought about it, I realized that wasn’t me. I wear basically the same outfit every day, and I rarely wear makeup. When I do, the drugstore stuff is just fine.

    Another thing to consider is that their priority might be short-term satisfaction, while yours is long-term security and happiness.

    Sure, you could afford to go on more vacations or have a more expensive car payment. But at what cost?

    Spending more money on those things might hold you back from your long-term goals of retiring early, buying your dream home, or starting a business.



    Just like you don’t really know what the ins and outs of someone else’s finances really look like, you don’t know what the rest of their life looks like either.

    Everyone has their own battles. Yours might be financial, and someone else’s may not.

    But the person you’re feeling jealous of might be facing something that you have no idea about, whether it’s an unhappy relationship, an illness in the family, or something else altogether. In fact, they might be looking at your life and feeling jealous because you aren’t dealing with the same struggle.


    How to stop comparing your finances

    It’s not easy to stop comparing yourself to others, especially when we see so much of other people’s lives on social media. But with a little work and practice, you can change your mindset and stop falling into that comparison trap.



    For every minute you spend thinking about someone else’s financial situation, that’s one less minute you spend thinking about your own. And the time you don’t spend thinking about your own goals just pushes back the date of when you’ll finally reach them.

    If you want to change your financial situation, put your goals front and center. You can do this by:

    • Sitting down and setting specific and actionable goals
    • Write your goals down somewhere that you’ll see them each day
    • Carve out time in your calendar every week to work on your goals
    • When your mind starts to focus on other people’s finances, sit down and do something to move you one step closer to your goals, even if it’s as simple as updating your budget



    How does money make you feel?

    For many people, the answer is anxious, angry, stressed, resentful, depressed, and so much more. And it’s easy to feel that way when you think about all the things going wrong, or all the financial struggles holding you back.

    But what if you changed the way you thought about money?

    For example, let’s say you’re working on paying off debt. And each month, when you make that debt payment, you feel all sorts of negative feelings.

    You feel angry at past you for getting into debt in the first place. You feel resentful at the system where college is so expensive and people have to go into debt to get a degree. You feel embarrassed for letting your debt situation get so out of control.

    But what if you decided to think something else?

    Rather than focusing on the things your debt doesn’t allow you to do, think about the things it did. Instead of focusing on how your student loan payment sucks, think about how that debt allowed you to attend your dream school that you would never have been able to pay for with cash.

    Think about how your credit card debt, while perhaps ill-advised, allowed you to go on the best vacation you’ve ever had or leave an abusive relationship.

    Think about how your last car broke down unexpectedly, and you’re so grateful you were able to get a loan to buy a new one.

    It’s not going to be easy to change these thoughts. You’re actually going to have to work at it. But if you continue to remind yourself of these thoughts each time the negative ones come up, you can finally start to change your mindset around money.



    Listen, I know that just about every self-improvement article you’ll ever read is going to tell you to practice gratitude, but there’s a good reason for that.

    Especially when it comes to your finances, showing gratitude for the things you already have is one of the best ways to reduce comparison and feel really happy with where you are.

    It’s easy to feel frustrated or resentful about the six-figures of student loan debt my husband and I had when we got married. And it’s really easy to look at the people in our lives who aren’t struggling with the same thing and feel a bit jealous.

    But when I really pay attention to the great things in my life, I’m not jealous at all.

    I have an amazing husband, a dog who we love, and we get to travel the country in our RV. Debt or no debt, I wouldn’t trade my life for anyone else’s.



    I find that social media is one of the biggest culprits when it comes to comparison.

    When you see others posting their highlight reels online, it’s easy to wonder why they seem to be doing better than you. Maybe they’ve gone on an amazing trip, have a wardrobe that’s out of your price range, or are buying a house when you can barely afford your student loan bill.

    If you didn’t see those things on social media, you wouldn’t know most of them are happening. I’m all for keeping up with close friends and family on social media. But do you really need to know what the people you went to high school with are spending their money on?

    I certainly don’t expect you to fully give up social media. But you can either unfriend or unfollow people who are just causing you to compare, or you can simply spend less time on social media. It could do wonders for your mental health.


    Final Thoughts

    Comparison is one of the worst feelings because it constantly makes you feel as if you’re doing something wrong or aren’t enough. But it’s not true.

    By overcoming that comparison trap, you’ll have more time and energy to focus on your own finances, and you’ll reach your goals that much faster.

  • 6 Easy Ways to Automate Your Finances

    Have you ever added up how much time you spend each month on your finances? Or, separate from the time you spend working on your finances, how much time you spend stressing about your finances?

    When I first decided to change my financial situation, it felt like hours per week. Hours per week, and I never seemed to make any progress. And the more time I spend without progress, the more the stress would eat into every other part of my life.

    Finally, I found one trick that saved me time, reduced my stress, and finally started making a difference: automating my finances.

    Money doesn’t have to be hard. In fact, sometimes the easiest solution is also the one that makes the biggest difference in your finances. In this article, I’m sharing why it’s important to automate your finances and six easy ways to get started.


    6 Easy Ways to Automate Your Finances


    Why it’s important to automate your finances

    I truly believe that automating your finances is one of the simplest and most effective ways to take your finances to the next level.

    There are a few reasons I think it’s the best way to go:

    1. Automating your finances saves you time. Chances are, you spend more time on your finances each month than you think. There’s paying bills, checking your account to see how much money you have left, and so much more. The more you automate, the more time you save.
    2. Automating your finances saves you money. Have you ever forgotten to pay a bill on time and gotten stuck with a late payment penalty? Or maybe you didn’t realize how much money you had spent, and so your bank stuck you with an overdraft fee? You can avoid these things when you automate your finances.
    3. Automating your finances saves your credit. Anytime you miss a monthly payment, it could have a negative impact on your credit score. And your credit score is what determines if you can get loans and credit cards to help with future goals.
    4. Automating your finances helps you reach goals you may otherwise not. I didn’t start really saving money for my goals until I automated my finances. Whether you’re saving for a house, paying off debt, or something else, automating your finances will help you get there.
    5. Automating your finances reduces stress. For some people, managing their money is a huge source of stress. Imagine if you could eliminate the things that bring you so much stress, like paying bills each month or worrying about where your money went.


    How to automate finances

    Ready to start automating your finances? Here are the six easy ways anyone can automate. The best part is that each only takes a few minutes to set up, but altogether, they’ll save you tons of time each month.



    If you’re brand new to automating your finances, setting up automatic bill pay is the perfect place to start. It only takes a few minutes to set up and it will save you time each and every month.

    I think just about every company allows its customers to set up automatic payments at this point. Some even offer a discount when you use autopay.

    Using automatic bill pay has two big benefits. First, it saves you time each month since you don’t have to sit down and manually pay each of your bills.

    The other benefit is that it could potentially save you money and save your credit score.

    Things fall through the cracks — it happens to everyone! And unfortunately, sometimes, the thing that falls through the cracks is paying a bill on time.

    When you’re late on a bill, you’re often stuck with a late payment penalty and a ding on your credit report. By setting up autopay, you never have to worry about that again.



    I’m not kidding when I say that automating my savings was one of the most important changes I made in my finances.

    Every month, I’d tell myself that I would save whatever money I had left at the end of the month. But somehow, there was never anything left when the end of the month rolled around.

    I finally set up an automatic transfer from my checking account to my savings account the day after I got paid each month. I never had to think about it, and I honestly barely noticed having less money in my checking account, and yet my savings was growing.

    You can use these automatic transfers for so many purposes.

    If you’re still saving up your emergency fund, you can transfer money to a high-yield savings account each month.

    Once you’ve got your emergency savings fully funded, you can use your automatic transfers to save for other big goals.

    Read More: How to Build Your Emergency Fund & How Much to Save



    Many people I talk to find the idea of tracking every expense exhausting. For those people, I recommend signing up for a budgeting app that does it for you.

    With most budgeting apps, you can connect your budget to your bank accounts and credit cards, and it automatically pulls in all of your spending. You can also set it up to automatically categorize your spending, so it’s easy to see how much you’ve spent in each category.

    I wrote a few blog posts to help you find the perfect budgeting app for you:



    If you’re working on paying off high amounts of debt, you know how long it can take. And the best way to speed up is to make extra debt payments using either the debt snowball or debt avalanche

    When you set up an automatic payment, you’re committing to putting extra money toward your debt each month. And that commitment is what’s going to get you debt-free ahead of schedule.

    You can do this two ways. First, you can set up an extra payment each month. Or you can just automate your normal monthly payment but schedule a payment that’s larger than your minimum required amount.



    I’m almost certain that if my first employer after college hadn’t required me to put 7% of my paycheck into a retirement account each month, I wouldn’t have saved for retirement at all. 

    Honestly, it just seemed so far away, and like I had years until I had to worry about it.

    Now, almost a decade later, I can’t tell you how grateful I am that my employer required automatic retirement contributions.

    If your employer offers a 401(k) plan, by far, the easiest way to automate your retirement savings is to have your employer take money out pre-tax and put it into your account. If you’re lucky, they might even offer to match a portion of it.

    If your employer doesn’t offer a retirement plan — or you’re self-employed so you are your employer — you’ve still got plenty of options.

    For those with an employer who doesn’t offer a 401(k), I recommend setting up an individual retirement account (IRA) and setting up automatic monthly transfers.

    If you’re self-employed, even if you just run the business alongside your full-time job, you’ve got even more options. I wrote an entire guide about how to save for retirement when you’re self-employed.

    Not sure how much to save? There are plenty of online retirement calculators to figure out how much you should save each month to have enough for retirement — I recommend Personal Capital’s Retirement Planner.



    Your credit score is one of the most important numbers in your overall financial picture. And anything that goes onto your credit report is likely to impact that score in either a positive or negative way.

    Far too many people don’t find out about negative marks on their credit report until they apply for a loan and the bank breaks the bad news to them.

    There are plenty of services — some of them even free — that automatically monitor your credit for you. I use Credit Karma, and one of my credit cards also offers this service for free for having their credit card.

    If a negative mark shows up, you’ll know about it right away.

    Read More: 7 Hacks to Boost Your Credit Score Quickly


    Final Thoughts

    Automating your finances is one of the simplest and yet most effective ways to take your finances to the next level. You can start slow by setting up automatic bill pay.

    Once you’ve checked off everything on this list, you’ll notice how much less time you spend worrying about your finances each month.

  • 12 Smart Ways to Use Your Tax Return (and 3 Things to Avoid)

    Tax season is always bittersweet. You dread collecting all of your tax forms and going through the actual labor of preparing your tax return. But it often ends with a tax refund, which is something to get excited about.

    I remember how excited I was to get my tax refunds in my early twenties. But looking back, I couldn’t tell you a single thing I did with that money. My guess is that I squandered most of it on unplanned and unneeded expenses.

    In retrospect, I really wish I’d used that money more wisely, perhaps to pay off debt or fund one of my big goals.

    In this article, I’m sharing 12 ways to use your tax return wisely, as well as three things to avoid doing with that money.


    There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.


    12 things to do with your tax return


    If you don’t currently have an emergency fund, building one should be your first priority when you get a tax return.

    People often underestimate just how important an emergency fund is. Almost 25% of Americans have no emergency savings at all, and only 41% of Americans would be able to cover a $1,000 emergency with savings.

    Unfortunately, these expenses will inevitably come up. You never know when your car will break down, or you’ll have an unexpected medical bill. And without an emergency fund, people usually have to resort to debt.

    The pandemic also showed us just how important an emergency fund is. Millions of Americans lost their jobs without having savings to fall back on.

    Not sure how much to save? I generally recommend saving at least one month of expenses while paying off debt and at least 3-6 months of expenses once you’re debt free.

    Read More: How to Build an Emergency Fund & How Much to Save



    Paying off debt can feel impossible at times. You make your monthly payments but somehow never seem to make any progress.

    Extra income injections like tax returns are an excellent way to pay down your debt faster. If you have high-interest debt like credit cards or personal loans, that’s a great place to start. If you don’t have high-interest debt, you can put your tax return toward student loans, a car loan, or your mortgage.

    Depending on how big your tax return is, you might be able to make a big dent in your balance. And even if it’s just a small amount, it’ll reduce the amount you pay in interest over the long run and help you become debt free more quickly.

    Read More: Debt Snowball vs. Debt Avalanche: Which Debt Payoff Strategy is Right for You?



    Your tax return can be a great way to pay for a financial goal you’ve been dreaming of, like a big vacation or home renovations.

    Your tax return can help you reach your goals even faster. And if you don’t have much wiggle room in your budget, your tax return might be just what you need to reach that goal that didn’t seem possible.

    Read More: The Best Money Goals to Set in 2023



    Most people spend their money as (or even before) they earn it. For example, many people struggle to balance the timing of their bills with their paychecks to make sure they have enough in their bank accounts. Others use their credit card for everything and then pay it off the next time they get paid.

    While this might work for some people, it often means spending money you don’t have. Plus, you’re living paycheck to paycheck, and a single late paycheck could result in having to pay your bills late.

    The best solution to this is to get one month ahead in your budget. So instead of using your paycheck for this month to pay this month’s bills, you’ll actually use it to pay next month’s bills. 

    Here’s a full guide to help you get one month ahead on your budget.



    Starting a business was one of the best decisions I’ve ever made. It provided extra income while I was working at my government job. And ultimately, I made enough money to quit my job and run my business full-time.

    I was pretty lucky in that my business required almost no start-up costs. I paid for the cost of a website domain and a few other small things, and I was ready to go.

    But looking back, there’s a lot more I could have done in terms of education and coaching. And many people start businesses that require more start-up costs. 

    If you’ve been thinking about starting a business, commit to using your tax return this year to get it up and running. You won’t regret it!



    There are so many opportunities today to advance your career through continuing education, training, or additional certifications. Unfortunately, those things cost money, and many employers can’t foot the bill.

    If you’re getting a tax return this year and don’t have other plans for it, consider what steps you could take to further your career or help you get the credentials you need to change careers. 


    7. FUND AN HSA

    Healthcare costs have been increasing steadily over the years, and many families just can’t cover them.

    Unfortunately, medical bills have become the primary reason for bankruptcies. And it’s not just people without health insurance. High deductibles and poor coverage mean that many people with health insurance still end up with huge out-of-pocket costs. 

    Luckily, there’s a great option to help you save for future medical expenses.

    A health saving account (HSA) is available to anyone with a high-deductible health plan. It has triple tax advantages. First, contributions are tax-deductible. Next, you can invest the money and it grows tax-free. Finally, you can spend the money tax-free on qualified medical expenses.

    If you have a high-deductible health plan, I highly recommend opening an HSA!



    One of the great things about tax returns is that it’s often money you forget you have coming. You aren’t counting on it to pay any bills, meaning it’s just a bonus.

    If you aren’t relying on your tax returns to help pay your bills, build an emergency fund, or pay off debt, I encourage you to consider donating at least part of it to charity.

    There are so many people struggling in our communities, and it’s only become worse since the pandemic began. Chances are, there are many people in your area struggling to pay their rent or buy groceries.

    There are a lot of great organizations out there helping people to make ends meet and keep food on the table. And let’s not forget the organizations helping save animals, research prevalent diseases, and fight climate change. Whatever it is you’re passionate about, there’s an organization working on it that could use your help.



    Many people underestimate the importance of saving for retirement. When it’s decades away, it’s hard to see it as an immediate need. But the thing is, your money has more time to grow the earlier you start saving!

    If you aren’t currently saving for retirement, consider starting now. And even if you’re already contributing to a 401(k) through your employer, you can set up an individual retirement account to help you save even more.



    College costs have grown like crazy. In 2021, the average student at a four-year in-state public university spends more than $25,000 per year. And if you’ve got small kids at home, costs might be even higher by the time they head off to college.

    There are several good options to help to save for your child’s college education. First, a 529 plan is a tax-advantaged account specifically designed to help you save and invest for college. Another option is a custodial account, which parents can open on behalf of their children to save and invest.



    If you already have a fully-funded emergency fund, have paid off your debt, and contribute regularly to a retirement account, you might consider using your tax return to invest through a taxable brokerage account.

    I don’t recommend doing this until you’ve got your financial house in order otherwise and are already on track to hit your retirement goals. But if you can check those boxes, investing can be a great way to grow your wealth and help you to reach other financial goals.

    Not sure how to get started? My current favorite investing book is Broke Millennial Takes on Investing by Erin Lowry.



    Some people love getting a huge refund every year. They see it as free money they can spend or use to fund their goals.

    But here’s the thing — it’s not free money. It’s money you worked hard for that was unnecessarily taken out of your paycheck. Money that could have earned interest in a savings account or that you could have used to cover expenses throughout the year.

    Unless you’re dead set on receiving a refund each year, consider adjusting your withholdings to have less money taken out of your checks. Just make sure you have a plan for that money, so you aren’t mindlessly spending it throughout the year. 


    What not to do with your tax return


    Here’s an all-too-common scenario: Someone gets a tax return and decides to use it to upgrade their computer or another high-value item. Their tax return isn’t big enough to cover the cost of the entire computer, so they put the rest on a credit card.

    Now you’ve taken your tax return and somehow used it to get into even more debt.

    I’m all for using your tax return to put toward big items you’ve been saving for. Just make sure you have enough to buy them outright rather than going into debt to buy them. The only exceptions to this would be using your tax return to help fund a car or house downpayment. 



    When I was in my early twenties, I would be so excited every year when I received my tax return. I though of it as free money that I could spend on whatever I wanted.

    But instead of intentionally putting it toward my financial goals, I’d spend it mindlessly on clothing, take out, and other things I didn’t plan for and didn’t really need.

    It’s okay to spend your tax return on whatever is important to you, just be intentional about it and have a plan for that money!



    Whatever you do, be intentional about what you do with your tax return. Without a plan, that money could end up sitting in a traditional check or savings account, not earning you anything. If you want to keep the money in savings, transfer it to a high-yield savings account so you can earn more interest than you would through your traditional bank savings account.


    Final Thoughts

    I know how exciting it can be to get a tax return and think of all the things you can spend it on. I also remember the analysis paralysis I felt when I wasn’t sure what the best use of that money was. I hope this post helps you decide how best to use your tax return this year!