Erin Gobler

  • How to Pay Yourself First and Finally Start Saving Money

    How to Pay Yourself First and Finally Start Saving Money

     

    Here’s how most people approach saving money:

    They tell themselves that they’ll save whatever is left at the end of the month. But someone there never seems to be anything left when the end of the month rolls around.

    I was stuck in this pattern for years, and I know how frustrating it can be.

    I finally learned the “pay yourself first” strategy, which has completely changed the way I budget and has helped me to save money consistently each month.

    In this article, I’m sharing how you can pay yourself first to pay off debt, build your emergency fund, and save for your biggest financial goals.

     

    How to Pay Yourself First and Finally Start Saving Money

     

    What does it mean to pay yourself first? 

     

    The concept of paying yourself first means that you set aside money in your budget for savings and financial goals before budgeting for anything else.

    The entire purpose of the “pay yourself first” strategy is to avoid the problem I talked about earlier, where you run out of money each month before you have a chance to save any. 

    When you pay yourself first, you transfer money out of your checking account as soon as you get paid each month before spending any. Then, you can only spend what’s left.

    Paying yourself first is an effective way to build your emergency fund or save for a financial goal. You can also use it to pay off debt by making extra debt payments as soon as you get paid.

     

    How to pay yourself first

     

    Follow these steps to implement pay yourself first in your own budget.

     

    Step 1: Calculate your income and expenses

    First things first, write down your monthly income and expenses.

    If you’re a salaried employee, calculating your monthly income will be easy. If you have an irregular income because you’re self-employed or are an hourly employee, this will take a little more work. I recommend checking what your income has been for the past 3-6 months and taking the average amount.

    It should also be easy to figure out your fixed expenses. These are the non-negotiable expenses you have to pay each month like rent, insurance, and your student loan payment.

    Once you’ve calculated your fixed expenses, try to determine how much you spend on other expenses throughout the month. Your variable expenses will include things like groceries, transportation, clothing, etc. These change each month, but you can probably look back a few months and find the average.

     

    Read: Creating a Monthly Budget: A Step by Step Guide

     

    Step 2: Set financial goals for yourself

    One of the most important steps in paying yourself first (at least in my opinion) is setting financial goals.

    It’s easy to tell yourself that you’ll save money. But unless you really have a why behind your savings, it can be hard to stick with it. If you set a specific goal, you’ll have something to motivate you to follow through. 

    Financial goals you might save for include:

    • Building your emergency fund
    • Start saving for retirement
    • Saving for a new car
    • Saving for the downpayment on a home
    • Saving for a vacation
    • Renovate your home
    • Start a business
    • Reach financial independence

     

    Read: How to Set Financial Goals You Can Achieve

     

    Step 3: Decide how much you want to save each month

    Once you’ve calculated your income and expenses and figured out what you want to save for, decide how much you’ll save each month. You want to make sure you’re saving enough to make a real difference, but not so much that you don’t have enough money for your monthly spending.

    An easy way to figure out how much to save is to divide the amount you want to save by the number of months before you want to have it saved.

    Let’s say you’re planning a vacation next summer and you expect to spend around $2,000. If the trip is 12 months away, just divide $2,000 by 12. You’ll find that you need to save roughly $167 per month for the next year.

    If you’re new to pay yourself first, you might worry about overspending and running out of money. If you’re just getting started, begin with a small automatic transfer.

    When I first started using this strategy, I did an automatic transfer of $50 the first week of the month. As I adjusted to my new spending limitations, I increased my monthly savings.

     

    Step 4: Automate it

    The best way to ensure you pay yourself first every month is to automate it. Set up an automatic transfer to go through a day or two after payday each month. That way, you’re saving regularly and you don’t have to think about it.

    I can almost guarantee that if you don’t automatic it, you’ll often come up with an excuse for why you can’t save as much this month.

    And if you’re using the pay yourself first method to pay off debt, just set up an automatic payment each month for the amount you want to pay.

     

    Benefits of paying yourself first

     

    Paying yourself first is one of the best strategies to help you build your savings or pay off debt every month.

    Many individuals and families struggle to make progress on their savings. The most recent data shows that only about 39% of Americans would be able to cover a $1,000 emergency.

    Not only can paying yourself first help to prepare you for a financial emergency, but it can also help you make progress on your financial goals.

    The pay yourself first method is especially well-suited for people who struggle with spending. Think of it as a reverse budget. Rather than having to stick to your spending plan to save, you’ll be limited to spending what’s left after saving.

     

    Final Thoughts

     

    I know how frustrating it can feel to be so determined to save, and yet you somehow never manage to. Paying yourself first is one of the best ways to reach your financial goals, even if you’ve struggled to do so in the past. 

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  • How to Use a Zero-Based Budget to Reach Your Goals

    How to Use a Zero-Based Budget to Reach Your Goals

    When I started budgeting, I thought I was doing great.

    I had plenty of money left over in my budget after accounting for all my expenses, and I thought for sure I’d be able to save a lot and pay off my debt quickly.

    But somehow, the end of the month would roll around and I never had any money leftover.

    I just couldn’t figure out where all my money was going. Sure, I’d usually eat out more than I planned or make an impulse purchase here and there to buy new clothes. But surely it wasn’t enough to spend all of it.

    Why couldn’t I save when I knew I had wiggle room in my budget?

    It turned out that the key to changing my financial situation was zero-based budgeting. Rather than spending the extra money in my budget, a zero-based budget forced me to make a plan for each dollar I earned, including putting money toward savings and debt.

    In this article, I’m sharing what a zero-based budget is and how you can use one to reach your financial goals.

    How to Use a Zero-Based Budget to Reach Your Goals

    What is zero-based budgeting?

    Zero-based budgeting is a way of planning your spending where you make a plan for each dollar. When you use a zero-based budget, you budget down to zero every month, meaning your income minus your expenses always equals zero.

    It’s important to note that budgeting every dollar doesn’t mean you spend every dollar. The purpose of zero-based budgeting is to help you pay off debt and save for goals because you include them as a line item in your budget.

    Zero-based budget advantages and disadvantages

    The biggest advantage of zero-based budgeting is that it forces you to be intentional about your spending. Rather than have a large sum of money available to spend each money, you can only spend money that you’ve actually budgeted for that purpose. 

    For anyone paying off debt or trying to reach a big financial goal, a zero-based budget is the best way to ensure you actually make progress each month.

    The biggest downside of zero-based budgeting is that it requires more time than traditional budgeting. You have to make a detailed plan for your money and then track every expense throughout the month to make sure you’re sticking to it.

    How to make a zero-based budget

    1. Write down your monthly income. If you’re a salaried employee, this should be easy. For freelancers and other workers with irregular income, start with your average monthly income.
    2. Write down your monthly expenses. Be sure to include fixed monthly expenses like rent and insurance, as well as variable spending like groceries and entertainment.
    3. Set financial goals. A zero-based budget only works if you decide ahead of time where your money is going. You should have specific financial goals to send extra money to. Your goal can be anything from saving for a big expense to paying off debt.
    4. Give every dollar a job. When you finish your budget, your income minus expenses should equal zero. This doesn’t mean you spend every dollar! It simply means that every dollar is either budgeted for spending OR budgeting for debt payoff or a financial goal.
    5. Work on getting one-month ahead. The zero-based budget is easiest to use when you’re one month ahead on your budget. In other words, you’re using last month’s income to pay this month’s bills. This is important because it ensures you know at the start of the month exactly how much you have to budget with.

    Zero-based budgeting example

    I promise that zero-based budgeting sounds more complicated than it is. I’ll use a real-life example to show you how this type of budget works in practice.

    Let’s say your monthly take-home pay is $3,500. Using a normal budget, it might look something like this:

    Expense CategoryAmount
    Rent$1,200
    Utilities$90
    Insurance$125
    Student loan$250
    Transportation$150
    Cell phone$75
    Cable/internet$80
    Food$400
    Entertainment$125
    Total spending$2,495

    As you can see, this budget leaves a lot of wiggle room. You’d have $1,000 left each month that you could use to build your emergency fund, fund your debt payoff plan, or save for your financial goals.

    Unfortunately, that’s not usually how it works. Often we tell ourselves that we’ll use whatever money we have left at the end of the month to reach our goals.

    But because we weren’t intentional with our spending and didn’t make a plan for that money ahead of time, we simply find other things to spend it on. And then you might be lucky to have $100 left to put toward saving, let alone the full $1,000 you should have left.

    Here’s what a zero-based budget might look like using the same income and expenses:

    Expense CategoryAmount
    Rent$1,200
    Utilities$90
    Insurance$130
    Student loan$250
    Transportation$150
    Cell phone$75
    Cable/internet$80
    Food$400
    Entertainment$125
    Sinking funds$250
    Debt snowball$250
    Savings$500
    Total spending$3,500

    As you can see in the budget above, each budget is accounted for. You can’t impulse-spend a few hundred dollars on Amazon because you’ve already given that money a job.

    Zero-based budgeting with irregular income

    If you have irregular income, you might worry that zero-based budgeting won’t work for your situation. And it’s true that this budgeting style can be more difficult if you don’t know how much money you have available for the month.

    But I actually think this budget is perfect for those with irregular income.

    But here’s the catch.

    It really only works with irregular income if you get one month ahead on your budget. In that case, you can create a customized budget at the start of each month based on the money you earned the previous month.

    The best zero-based budget apps

    When it comes to planning out your zero-based budget, there are two different tools I’d recommend. You can choose the right tool for you based on your budgeting style.

    • You Need a Budget (YNAB): YNAB is hands-down my favorite budgeting app. With this app, you only budget with money you already have and you give every dollar a job. It’s the app I personally use. It completely changes the way you think about budgeting, and really teaches you to be intentional about where your money is going.
    • Spreadsheet: Before I started using YNAB, I spent years using just a simple spreadsheet in Google Drive. It’s definitely more hands-on than an app but perfect for someone really trying to turn their finances around.

    Final Thoughts

    I know how frustrating it can be to put a ton of work into a budget, only to have it fall apart halfway through the month. A zero-based budget is the best way to be intentional about where your money is going and help you reach your financial goals.

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  • Using Debt Consolidation to Pay Off Credit Card Debt

    Using Debt Consolidation to Pay Off Credit Card Debt

     

    The average American family has more than $7,000 in credit card debt, according to recent surveys. And as a nation, we hold roughly $1 million in credit card debt.

    This type of debt can be especially discouraging. The interest rates are notoriously high, meaning we end up paying back far more than we spent.

    Credit card debt can also often be a reminder of decisions that we aren’t particularly proud of, such as poor financial decisions in our younger years.

    While there’s no easy way to get out of credit card debt, a debt consolidation loan provides a way to pay your debt off a bit more quickly and save money in the process.

     

    Using Debt Consolidations to Pay Off Credit Card Debt

     

    What is debt consolidation?

     

    Debt consolidation is the process of taking out one loan to cover the balance of other debts. A debt consolidation loan is typically an unsecured personal loan — in other words, there’s no collateral attached to it. In the case of debt consolidation to pay off credit card debt, you’re using a loan to pay off credit cards.

     

    What is the purpose of debt consolidation?

     

    Debt consolidation is often used for the purpose of credit card debt.

    Credit cards have notoriously high interest rates, especially for younger borrowers. If you have a lot of debt, you might be making sizable monthly payments on multiple cards, all at painfully high interest rates.

    When you consolidate those credit cards into a single debt consolidation loan, you have one monthly payment and one (hopefully) lower interest rate.

     

    How does debt consolidation affect your credit?

     

    Anytime you borrow money, you can expect to see an impact on your credit score. In the case of a credit card debt consolidation loan, you’ll likely see both a positive and negative impact.

    First, you’ll probably see your credit score take a bit of a hit because of the hard inquiry on your credit report and the new debt account.

    But in the long run, it might actually help your credit score. When you consolidate your credit card debt into a single personal loan, you bring your credit card balances down to (hopefully) zero. As a result, your credit utilization goes way down.

    Additionally, as you make on-time payments on your loan, your positive payment history will help to slowly boost your credit score.

     

    Pros and cons of debt consolidation

     

    Debt consolidation comes with its fair share of pros and cons that you should be aware of before taking the leap.

     

    Pros

    • You’ll save money. Ideally, a credit card consolidation loan would have a lower interest rate than your credit cards. As a result, more of your money each month is going toward interest. You’ll save a lot of money in the long-run.
    • You’ll have fewer monthly payments. If you have multiple credit cards with debt, you likely have multiple monthly payments. A debt consolidation loan can help get you down to just one monthly payment.
    • You’ll boost your credit score. As I mentioned above, a debt consolidation loan can help to boost your credit score over the long run.

     

    Cons

    • You may still end up with a high interest rate. Because personal loans are unsecured, they still come with higher interest rates than other loans. And for someone with a low credit score, your rate might be just as high — if not higher — than the rate on a credit card.
    • You could pay fees. Many lenders charge origination fees on personal loans, meaning you’ll end up paying a bit more money.
    • It’s not the most cost-effective option. Depending on your credit score and the amount of debt you have, there might be a better way to pay off your credit card debt, which I’ll talk about in the next section.

     

    Debt consolidation alternatives

     

    A debt consolidation loan can be an effective way to pay off credit card debt faster, but it’s not my favorite option. Depending on your credit score and the amount of debt you have, you might instead consider a balance transfer.

    A balance transfer is when you open a new credit card and transfer your existing credit card balance to the new card. Many credit card companies offer 0% interest from anywhere from 6 to 18 months for a balance transfer.

    With the 0% interest, you have the chance to pay down your credit card debt much more quickly, with none of your money going toward interest.

    To learn more, visit my guide on paying off credit card debt with a balance transfer.

     

    When is debt consolidation a good idea?

     

    Depending on your situation, a debt consolidation loan might be the right option to help you pay off your credit card debt. Here are a few situations where it’s probably a good idea:

    • You have too much debt for a balance transfer
    • Your credit score doesn’t make you eligible for a good balance transfer offer
    • You know you wouldn’t be able to pay off your debt during the 0% interest promotional period on a balance transfer card

     

    Final Thoughts

     

    As with any financial decision, it’s important to consider your unique circumstances when deciding if a debt consolidation loan is for you. For some people, it’s the perfect solution. But other people might be better served with an alternative.

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  • 14 Good Financial Habits to Adopt in 2021

    14 Financial Habits to Adopt in 2021

     

    More than 97 million people plan to set financial goals for themselves. But without a solid plan in place and the right habits to back it up, it can be challenging to reach those goals.

    In this article, you’ll learn 14 financial habits you can adopt in 2021 to help you reach your financial goals this year and beyond.

     

    14 Financial Habits to Adopt in 2021

     

    Track your spending

     

    To change anything in your finances, you need to know where you are now, including where your money is going.

    I never used to track my spending, yet I’d be confused as to how I ran out of money each month. When I finally sat down and tracked my spending, I was shocked.

    Tracking your spending can open your eyes to where your money is going. It shows you where you’re overspending and can help you set a budget for the future.

     

    Set financial goals

     

    I talk to so many people who tell me that they know they should be spending money, but they don’t know how much to save or how to do it. And even if they did know, they don’t really have the motivation to do so.

    This is what happens when you don’t have specific financial goals. It’s much harder to save when you really don’t know why you’re saving.

    But when you set financial goals, you know exactly why you’re saving and how much you need to save. Plus, the thought of meeting your goal will provide all the motivation you need.

     

    Schedule a weekly money date

     

    Checking in on your finances is so important. I sit down once per week and update my budget, record all of my expenses, and adjust anything I need to. I also sit down monthly to close out my budget for the month and plan the following month’s budget.

    Having a regular money date with yourself is a great way to stay on top of your finances. Put it on the calendar so you never forget. 

    And if you share finances with someone else, you can have a regular money date to talk about your family finances.

     

    Pay yourself first

     

    For years I would tell myself that I would save all the money I had left at the end of each month. But the end of every month would roll around, and I’d somehow never have anything left.

    I finally learned the solution to this problem: paying myself first.

    When you pay yourself first, you decide ahead of time how much you want to save each month, whether it be in your emergency fund, retirement account, or toward a financial goal.

    Then, you transfer that money over to savings as soon as you get paid, before you have a chance to spend the money.

    I’ve found the best way to do this is to automate my savings so that I never have to remember to do it.

     

    Budget one month ahead

     

    One of my favorite budgeting hacks is to be one month ahead with my budget.

    Most people budget with the current month’s income. In other words, they use their January paycheck to pay their January bills.

    But when you’re one month ahead on your budget, you use your January paycheck to pay February’s bills.

    This type of budgeting has tons of benefits. First, this one-month buffer serves as a small emergency fund. It also helps you to avoid timing your bills to your paychecks, as many people have to do.

    If you want to give it a shot, I have an entire guide on how to get one month ahead on your budget.

     

    Use your credit cards responsibly

     

    I love credit cards. I put just about everything on a credit card. The problem is that most people are using credit cards incorrectly.

    First, many people put their expenses on a credit card then pay it off with next month’s income. This means they’re spending money they haven’t even earned yet.

    Another habit people have is to charge things to their credit card, but then not pay off the full balance.

    Here are a few rules of thumb for using credit cards responsibly:

    1. Only spend money you already have in your checking account
    2. Keep your credit card utilization below 30%
    3. Pay your balance off in full every month

     

    Make more than your minimum debt payments

     

    When you have debt, it can be tempting to simply pay the minimum monthly payment the lender requires of you. That way, you have more money each month to spend on other things.

    The problem is that you end up spending way more money in the long run. Depending on the amount of debt you have, paying your debt off faster could save you hundreds, thousands, or even tens of thousands of dollars in interest.

    The sooner you pay your debt off, the sooner you have that money available each month to put somewhere else in your budget.

    And remember there are other downsides to having debt. Suppose you wanted to buy a house. If you have too much debt, a lender is unlikely to approve you for a mortgage.

     

    Avoid monthly payments

     

    Stores try to convince you to spend money by looking at a purchase as a monthly payment rather than as the full purchase price. New financial services allow you to use a monthly payment for just about everything these days, whether it’s a $1,000 computer or a $25 top.

    But remember that payment plans force you to spend more money in the long-run. And you normalize the habit of having monthly payments.

    It’s better to pay for everything you can in full.

    Certainly, there are exceptions. When it comes to buying a house, you’ll almost certainly borrow money and have a monthly payment. But for smaller purchases, avoid monthly payments as much as possible.

     

    Continue to learn about money

     

    Even if you feel like you’ve got your financial shit down, there’s always room to learn more. Even though I have a lot of experience in personal finance and help coach others, I still regularly read personal finance books and listen to personal finance podcasts.

    As you reach certain goals, there’s likely more to learn for the next one. Let’s say you finally paid off all your debt and have learned to stick to your budget. Now it might be time to pick up a book on investing.

     

    Learn your spending triggers

     

    Everyone has their own spending triggers. For some people, a sales email in their inbox is a trigger. For others, it’s walking into Target. For others, it might be having a really bad day.

    One of the best ways to save money is to identify your spending triggers and find ways to combat them.

    Let’s say your spending trigger is sales emails from your favorite store. An easy way to combat this would be to unsubscribe from that store’s emails.

    I used to struggle with emotional shopping, especially as my first marriage was ending. When I was particularly upset, I’d spend money. I overcame that by dealing with my emotions head-on rather than looking for a different outlet.

     

    Maintain an emergency fund

     

    I think 2020 taught everyone the importance of having an emergency fund. Millions of people lost jobs this year, Congress dragged its feet in getting aid to the people who really needed it, and the pandemic resulted in huge medical bills for many families.

    Even if your finances weren’t affected by the pandemic, chances are you’ve had a financial emergency in the past that you struggled to pay.

    If you’re just getting started and have high-interest debt like credit cards to pay off, I recommend saving at least one month’s worth of expenses in your emergency fund. Eventually, you can work your way up to 3-6 months.

    The important piece is replenishing your emergency fund when you use it. Let’s say you’ve got an emergency fund of $5,000 and end up with $1,000 worth of car repairs. Your emergency fund is down to $4,000. Your next financial priority should be replenishing that $1,000 before you start saving for something else.

     

    Meal plan

     

    Meal planning has been the single most effective way for me to cut down on grocery spending.

    If I go into the grocery store without a list, it’s pretty much a guarantee that I’m going to overspend. But if I make a meal plan and grocery list ahead of time, I’m good about sticking with it.

    Not only does meal planning help me to only buy the things I really need, but it also allows me to price meals out ahead of time so I know roughly how much I’ll spend.

     

    Give to causes you’re passionate about

     

    For many people, 2020 really showed the importance of financially supporting causes that are important to you. 

    Charitable giving in 2020 increased from the previous year, despite the financial struggles many faced. And a special provision in the tax law has allowed everyone to deduct up to $300 for donations, even if they don’t itemize their deductions.

    Chances are you already know which causes are most important to you, whether it’s combating climate change, protecting animals, promoting diversity, etc.

    Whatever it is, take a look at your budget and see if you can swing a small monthly donation to your favorite causes.

     

    Don’t try to keep up with the Joneses

     

    Everyone has probably heard the phrase “keeping up with the Joneses.” And most people probably brush it off, thinking it doesn’t apply to them.

    But you might be surprised.

    As we earn more money, we tend to subconsciously increase our spending to go with it — aka lifestyle inflation.

    We upgrade apartments or homes. We buy nicer cars. We eat at nicer restaurants than we did when we had our first jobs. We spend more on clothing, home decor, etc.

    There’s nothing inherently wrong with any of these things. In fact, I tell my coaching clients they should identify areas of their lives where they spend guilt-free — for Brandon and I, it’s live music and eating out.

    But it becomes a problem when you spend more in every category.

    A good way to combat this problem is to decide ahead of time how you’ll upgrade your lifestyle. If you get a raise, decide ahead of time which spending categories you’ll increase and which will stay the same. That way they don’t all increase without you noticing.

     

    Final Thoughts

     

    2021 can be the year you finally turn your finances around and reach all of your goals. By implementing just a few of the financial habits on this list (or more than a few), you’ll be amazing at the progress you see.

    CONTINUE READING

  • How to Increase Your Income in 2021

    How to Increase Your Income in 2021

     

    When my husband and I got married, we knew the only way we would be able to pay off our six-figure student loan debt while also saving for our other goals was to increase our income.

    Finding ways to save money is great. But you can only cut so much from your budget. And we knew we wanted to continue to enjoy hobbies like travel, eating out, and seeing live music while paying off our debt.

    More and more often, I hear from other millennials looking to find ways to increase their income to help them reach financial goals.

    In this article, I’m rounding up a few of my favorite tips for how to increase your income in 2021.

     

    How to Increase Your Income in 2021

     

    Ask for a raise

     

    If you love your current job, then asking for a raise is one of the best ways to increase your income while continuing to do what you love. 

    While I know trying to negotiate your salary might sound stressful, look at the positives. Increasing your salary now increases your entire career income projection, meaning you’ll make more money over the course of your working life, AND set aside more for retirement.

    Before you approach your boss about a raise, there’s some prep work you’ll need to do.

    1. Start by making a list of your job responsibilities. Write down everything you do in your job, either on a regular or irregular basis.
    2. Next, collect your recent performance reviews. Chances are, your company has some sort of review process in place. If not, gather other written positive feedback you’ve gotten, both from your boss and others. While you’re at it, make a list of any major accomplishments or successes you’ve had in your job.
    3. Do some research online about the average salary for your position. How much are other people making in the same type of position as yours? Another step I’d recommend is asking your colleagues, especially your male colleagues if you’re a female, how much they make. Bringing this up might sounds scary. But when I finally got up the nerve to speak to a few of my male colleagues about salary, I found that multiple men were making more money than me in similar roles, and I had more responsibility than they did. Even in 2020, the wage gap is still something we’re dealing with.

    Once you’ve done all your prep work, set up a meeting with your boss. I’d recommend telling them upfront that you’d like to meet to discuss a pay raise. That allows both of you to go to the meeting a bit more prepared.

    Once you’re in the meeting, sit down with your boss and tell them that after going through your list of tasks, your reviews, and your accomplishment, you feel confident that you’ve made valuable contributions to the team and would like a raise. 

    Give a specific number of percent increase. Most raises are about 3%, so ask for a little more, like 5%.

    If your boss has hesitations, you can talk about the conversations you had with your coworkers and the research you did online, showing that people in your role are being paid more than you are. 

    You can also ask some follow-up questions, such as what is causing them to hesitate, and how long someone normally works in your role before getting a raise. 

    During this meeting, keep the conversation focused on the job and your accomplishments in it. Don’t bring your personal finances into the mix. Companies don’t give raises because people are trying to pay off debt — they give raises to people who make valuable contributions.

    Ultimately, whatever the final answer is, be gracious and polite and thank them for their time. The worst answer you can get is no. But if you’re rude or don’t take the word no well, then you might damage your reputation with your boss and the company.

     

    Find a new job

     

    Getting a raise in your current job is a great way to increase your income, but it’s not right for everyone. Some people may not be able to earn as much as they’d like in their current company or line of work. And for those who really dislike their job, more money may not be enough to make up for it.

    Instead, you might consider finding a new job altogether. Here are a few steps to take:

    1. Consider the type of job you want. Before you start applying for jobs, spend some time thinking about what you really want. Ask yourself if you want to stay with the same company, and simply apply for a higher-level job. Or maybe you want to switch careers altogether.
    2. Research the job market. Do your homework about the career you want and the current job market. Learn about the types of jobs available, the top companies, and the salary you might expect to get.
    3. Update your resume and LinkedIn profile. Update your LinkedIn resume so it will attract recruiters. When it comes to actually applying for jobs, create one that is tailored to each job you apply for.
    4. Reach out to your network. Once you’re ready to start looking, connect with people in your network. Let people know that you’re in the market for a new job and ask them to keep an eye out for any opportunities.
    5. Talk to recruiters. Depending on your field, there may be plenty of recruiters who specialize in finding candidates for jobs like the ones you want. You can contact recruiters directly, or connect with them on LinkedIn.
    6. Apply consistently. Job hunting can be discouraging, especially if you find that it’s taking longer than you hoped. Find a few job boards that you find the best jobs on, and visit those consistently. Eventually, your hard work will pay off!

    It’s important to note that if you’re applying for jobs during the pandemic, finding a new job may be a bit more challenging. There are fewer jobs being posted, and more people applying for them. 

    But don’t let that discourage you! There are still plenty of opportunities for someone willing to be persistent.

     

    Get a part-time job

     

    A part-time job might not sound like the most glamorous way to make money, but it’s effective and consistent. So many people are on the lookout for the next popular side hustle that they forget that getting a normal part-time job is an option. 

    While my husband and I were starting our debt payoff journey and saving for our RV, I was working full-time in politics while working on my business as a side hustle. My husband, in the mean-time, worked as a bartender a couple of nights per week. It was a fairly easy job, and one that he liked, and he was able to make an extra $1,000 per month.

    There are plenty of part-time jobs available in food service and retail. Depending on your skill set, you might also be able to find something more specific to your career and earn even more money.

     

    Join the gig economy

     

    While there’s no technical definition here, the Bureau of Labor Statistics describes a gig as, “a single project or task for which a worker is hired, often through a digital marketplace, to work on demand.”

    These types of jobs are contract positions, and most allow you to work whenever you’re available, rather than abiding by a schedule like a part-time job would require. 

    Examples of gig jobs would include:

    • Rideshare opportunities like Uber and Lyft
    • Grocery shopping and delivery through companies like Instacart
    • Food delivery with Doordash, Postmates, UberEats, etc.
    • Pet sitting and walking with Rover or Wag
    • Tackling specific tasks with sites like Fiverr or TaskRabbit

    These side hustles can be great for anyone who wants to be able to make extra money on demand. With a part-time, you’re usually subject to a set schedule. But these apps allow you to work and make money when it fits with your schedule.

     

    Start a business

     

    The final strategy I want to talk about for making extra money (and my personal favorite) is to start an online business.

    Now let me preface this by saying that if you’re just interested in picking up some extra income right now to help you on your debt payoff or savings journey, then this probably isn’t the right choice for you.

    Depending on the type of business you want to start, there are likely going to be some start-up costs. Plus, it could be a while before you really start making money.

    I can tell you that I put hundreds of hours of work into my business before I made money. At the same time, if you’re looking for something sustainable that you can build over many years, I love this idea. 

    Starting a business involves selling something, whether you’re selling a physical product, a digital product, or a service. I run a service-based business. I provide money coaching to clients and provide freelance writing services to financial companies. 

     

    Service-based business

    Starting a service-based business is fairly low-cost, and doesn’t require a lot of upfront work. What it does require is for you to have a specific skill that you’re offering to your clients.

    Here are the steps you can follow to start your own service-based business:

    1. Step one pick a skill. For me, it’s writing and coaching. For others, it’s social media management, photography, ad management, web design, editing, or a million other options.
    2. Step two is to hone your skill. Depending on the skill you chose, this might be a little or a lot of work. When I decided to become a freelance writer, I already had a degree in journalism and had been writing on my own blog for years. There wasn’t a huge learning curve. But I did have to learn how to freelance write for other sites. But some people might decide to start a service-based business doing something they’ve never done or haven’t done in years. In that case, you may want to take an online course or find an online certification to help boost your skills.
    3. Step three is to build your portfolio. Once you’ve honed your skills, start putting together work to show potential clients. This might require doing a bit of free work. If you’re starting a business as a social media manager, you could reach out to friends or family members who own businesses and ask if you can manage their social media for a while in exchange for testimonials. When I was starting to freelance write, I was able to use my blog as my portfolio. The bottom line is that you need to find a way to display your work and prove to potential clients that you can do the job.
    4. Step four is to start marketing your business. You can do this through social media or by directly reaching out to potential clients. When I started freelance writing, I just started emailing sites I wanted to write for and asking them if they needed more writers. It was surprisingly effective. For my coaching business, I do things differently. I don’t just email women and ask if they want a money coach. Instead, I share value on social media by offering personal finance tips and then share information about my program for people who want to work together one on one.

    So that’s how you can get started with a service-based business. I’ve found that’s the type of business that was the best fit for me. It’s my favorite way to make money.

     

    Product-based business

    If that’s what you’d like to pursue, start by considering what product you’d like to sell. Maybe you’re good with crafts and want to handmake something to sell. Or maybe you’re good with graphic design and want to start selling printables.

    Once you figure out what you want to sell, figure out where you’d like to sell it. Etsy is a great marketplace for both physical and digital products. You can also decide to sell your product on your own website using a program like Shopify or WooCommerce. 

    And just like with starting a service-based business, the final step is to start marketing your product online.

    Now, this is obviously a simplistic explanation for how to start a business. There’s so much more that goes into it. If you’re serious about doing this, I recommend seeking out an online course to help you get started.

     

    What to do after you increase your income

     

    Once you actually take steps to increase your income, I encourage you to think about what you’ll do with that extra money.

    When your income increases, it can be tempting to spend all of that money. But chances are you’ve got some financial goals you want to save for. Deciding ahead of time how you’ll use the best way to ensure you don’t waste it.

    And once you start bringing in money, follow through on your plan. You’ll be happy that you did!

     

    Final Thoughts

     

    Increasing my income has been one of my favorite ways to reach my financial goals even faster. It helps me to save more without necessarily having to cut everything I love from my budget.

    CONTINUE READING

  • Traditional IRA vs. Roth IRA: Which is Better?

    Traditional IRA vs. Roth IRA: Which is Better?

     

    One of the most common questions I get from people who are ready to get serious about investing is whether they should use a traditional IRA vs. Roth IRA.

    Both of these accounts allow people to invest for retirement outside of their employer-sponsored plan. And both come with their own tax benefits.

    In this article, I’ll explain the differences between the two types of retirement accounts and how to choose the right one for you.

     

    Traditional IRA vs. Roth IRA: Which is Better?

     

    What is an IRA?

     

    An IRA (which stands for individual retirement account) is a tax-advantaged investment account to help you save for retirement. Unlike 401(k) plans, which are offered through an employer, IRAs are for individuals to invest on their own.

    You can open an IRA at just about any brokerage firm. Once you open the account and start contributing money, you can decide how you want to invest the money within the account.

     

    Why open an IRA

     

    If you already have a 401(k) through your employer, you might be wondering why an IRA is necessary at all. There are a few reasons why I recommend everyone open an IRA, even if you have an employer-sponsored retirement plan:

    1. An IRA allows you to invest above and beyond the 401(k) contribution limits
    2. An IRA allows you to diversify your tax advantages — If you have a traditional 401(k), you can open a Roth IRA, and vice versa
    3. An IRA gives you more control over your investment decisions

     

    What is a Traditional IRA?

     

    A traditional IRA is similar to a 401(k). You can contribute to the account throughout the year, and then take a tax deduction for your contributions. Contributing to a traditional IRA reduces the amount of taxes you owe in that year.

    The money grows in the account. Once it comes time to take money out during retirement, you’ll pay income taxes on your withdrawals.

     

    What is a Roth IRA?

     

    A Roth IRA is also a tax-advantaged retirement account, but you get the tax advantage at a different time.

    When you contribute to a Roth IRA, you do so with after-tax money. There’s no tax break in the year you contribute the money. The money grows in your IRA, and then you can withdraw it tax-free during retirement.

     

    Similarities and differences

     

    Traditional IRAs and Roth IRAs have a lot in common, but there are also some key differences you need to know. Here’s a table to explain all of the similarities and differences:



     

    Traditional IRA

    Roth IRA

    Contribution Limit

    $6,000

    $6,000

    Eligibility Requirement

    Available to anyone

    Available to individuals with income $139,000 or lower (single filers) or $206,000 (joint filers)

    Tax-Deductible Contributions

    Yes

    No

    Tax-Free Withdrawals

    No

    Yes

    Withdrawal Penalties

    Early withdrawals on contributions and earnings taxed at 10%

    Early withdrawals on earnings taxed at 10%; No penalties for early withdrawals of contributions

    Withdrawal Requirements

    No required withdrawals

    Required minimum distributions starting at age 72

    Best For

    People who expect to be in a lower tax bracket when they retire

    People who expect to be in a higher tax bracket when they retire



    Should I choose a Traditional IRA or Roth IRA?

     

    Plenty of people find themselves overwhelmed when choosing between the traditional IRA and the Roth IRA. It ultimately comes down to your personal financial and tax situation.

    A Roth IRA is the best option for most people for a few different reasons:

    1. If you have a traditional 401(k), you can diversify your tax benefit
    2. You can withdraw your contributions without early withdrawal fees
    3. Most people will end up with more retirement savings with a Roth IRA

    There are some caveats to this advice though. First, many of us will be in a lower tax bracket when we retire. As a result, the traditional IRA would really make the most financial sense.

    But here’s the thing…

    Many people aren’t going to use the tax deduction to contribute more money to retirement. Instead, they’re likely to spend their tax return. The tax savings isn’t going toward retirement.

    But with a Roth IRA, you get the tax advantage when you withdraw the money during retirement, which means that’s when you get the benefit.

    The other thing to keep in mind is that not everyone can contribute to a Roth IRA. Because of the income limits, only individuals earning less than $139,000 and couples making less than $206,000 can contribute to this type of account.

    To learn more about the features of the different types of IRAs, visit the IRS guide.

     

    Final Thoughts

     

    Choosing the right type of retirement account can be overwhelming. Hopefully, this explanation of the differences between the traditional IRA and Roth IRA will help you find the right account for you.

    And remember — both of these accounts help you to save for retirement in a tax-advantaged way. As long as you’re setting money aside for the future, you’re on the right track.

     

    CONTINUE READING

  • Creating a Monthly Budget: A Step by Step Guide

    Creating a Monthly Budget: A Step by Step Guide

    I was in my mid-twenties before I created my first budget.

    I was out of college and had my first full-time job. I made decent money, but I never seemed to have any left at the end of each month. And I couldn’t seem to figure out where all my money was going.

    When I finally sat down to track my recent spending, it was an eye-opening experience.

    I realized I was spending way more than I wanted to on eating out and ordering take-out.

    That’s when I created my first budget. It hasn’t been entirely smooth sailing since then. But I can tell you that the times of my life I’ve been most diligent about budgeting are the times when I’ve seen the most success!

    When I budget consistently, I reach my financial goals, feel confident in my financial situation, and have money left over at the end of each month.

    Creating and sticking to a budget does not have to be overwhelming. It doesn’t have to be scary. It is 100% doable.

    In this post, I’m walking you through how to create a monthly budget, even if you’re a beginner or hate budgeting.

     

    Creating a Monthly Budget: A Step by Step Guide

     

    Determine Your Income

     

    In order to create your monthly budget, you first need to figure out what your monthly income is.

    For some of you, this will be easy. Maybe you’re a salaried employee without any side income, in which case your income is the same every month.

    But if you’re an hourly employee, a tipped employee (such as a server or bartender), or are self-employed, this will be a little more difficult.

    If you have an irregular income, look at the average amount you bring home each month. This will help you identify which number to build your budget around.

    Read: How to Budget With an Irregular Income

    If you’re married and have joint finances with your spouse, make sure to incorporate their monthly income into your calculation as well.

     

    Make a List of Your Fixed Expenses

     

    Next up, make a list of your fixed monthly expenses. Fixed expenses are those that are the same every month. This would include rent or mortgage, insurance, cable and internet, student loan, car payment, etc.

    It’s important to plan for these expenses first because then you’ll have a better idea of how much money you have to allocate for the rest of your expenses.

     

    Track Your Spending for the Past Three (or Six) Months

     

    Once you’ve figured out your income and fixed expenses, you know how much money is left to put toward variable expenses.

    In order to really figure out how much you want to spend in each budget category, I think it first makes sense to figure out how much you’re currently spending in each category.

    Go through your bank statements for the past three months and track where your money has gone. I would break your spending up into categories and determine how much you’ve spent monthly in each category. Here are some categories you may want have:

    • Utilities
    • Transportation (gas, car maintenance)
    • Groceries
    • Eating Out
    • Shopping
    • Household Items
    • Personal Care
    • Entertainment
    • Hobbies

    These are just some examples of categories you might have in your budget. You can customize them to fit your lifestyle.

    By doing this, you’ll get a good idea of where your money has been going, and which categories you spend the most on.

    I recommend going back at least three months to really get an idea of what an average month looks like.

    If you’re feeling really ambitious, go back even further. The first time I put together a monthly budget, I went back six months and it helped me put together a really good picture of my spending habits.

     

    Determine Your Spending Goals

     

    Now that you know how much you are spending, it’s time to figure out how much you want to be spending.

    I’m guessing there are quite a few areas in your budget where you could be spending a lot less than you are.

    If you don’t normally track your spending, chances are that you’re going to be surprised at your spending in some areas, just like I was at my food spending.

    You might realize just how much those weekly Target trips are adding up and decide that you want to set some limits for yourself.

    You can also look for substitutions you can make, such as switching phone companies or getting rid of cable and sticking with Netflix or Hulu.

     

    Prioritize Savings First

     

    There are a lot of people who wait to see how much money they have in the bank at the end of the month, and then decide if they are able to throw a little in savings.

    The problem here is that there might be a lot of months where you aren’t putting any money in savings at all.

    Instead of just saving what you have left at the end of the month, start budgeting the money you’ll save and making that your first payment after you get paid. I have an automatic transfer from my checking account to my savings account the day after I get paid every single month.

    To make your saving even more effective, set specific goals to save for. You can start by building up your emergency fund. Then you can decide what other financial goals you want to save for.

     

    Decide on a Debt-Payoff Plan

     

    While you’re creating your monthly budget, it’s important to factor in how much money you want to put toward debt.

    It might be tempting to just pay your minimum monthly payments, it will take you a lot longer to pay off that debt, and you’ll be spending a LOT of interest.

    One debt payoff strategy a lot of people use is called the “snowball method”. This means paying your minimum payments on all but your smallest debt, and you put as much money as you can on your smallest debt.

    Once that smallest debt is gone, you take all of that extra money and put it toward the new smallest debt. And then ideally, once you’ve paid off most of the debts, you’ll be able to put really large payments on your largest debt.

    I actually prefer a method called the debt avalanche. Rather than targeting the debt with the lowest balance, you target the one with the highest interest rate.

    The debt snowball is the most cost-effective in the long-run, because you’re saving yourself money in interest.

    Read: Debt Snowball vs. Debt Avalanche: Which Debt Payoff Plan is Right For You?

     

    Track Your Spending

     

    Once you’ve created your monthly budget, it’s important to track your spending to make sure you’re actually staying on track. Otherwise, the budget is useless!

    There are plenty of monthly budgeting apps you can connect to your bank account to track your spending. Many people use an app for this. For many years I just used a spreadsheet and tracked each transaction manually. This is definitely more work, and now I use an app to track my spending.

    You can check out my list of the best budgeting apps to help find the right tool for you.

    As you’re tracking your spending, check in often throughout the month to make sure you’re staying on track with your budget. That way if you get off track with your budget, there’s still time to get back on track.

     

    Reevaluate Your Budget Often

     

    Once you’ve set up your budget once, you’re not done. A lot can change with your finances. You might have new financial goals come up, such as wanted to splurge on a vacation or start saving for a house.

    You also might create a budget and then within a few months, realize there are certain categories that need some tweaking.

     

    Final Thoughts

     

    Creating a monthly budget might seem overwhelming, but I promise it will get easier as you get the hang of it.

    And even more importantly, you will be SO glad you took the time to set up a budget, and you’ll love the financial benefits you start to see.

    Budgeting will go a long way in helping you to start saving money, pay off your debts, and reach your long-term financial goals.

    CONTINUE READING

  • What is Net Worth (And Why You Should Care About It)

    What is Net Worth (And Why You Should Care About It)

    I didn’t start tracking my net worth until I was in my late twenties. If I’m being honest, I didn’t think it was all that important. I thought my income was the metric that really mattered.

    But here’s the problem with that: your income is just a snapshot of your finances. It doesn’t show the big picture.

    And by not paying attention to my net worth, I was able to conveniently ignore my lingering debt and low savings rate.

    But once I started tracking my net worth each month, I really saw my finances start to transform. I felt more motivated to make extra debt payments and move money into my savings account.

    Not sure what net worth is why you should care about it? Stay tuned, because we’re going to cover all of that in this article.

    What is Net Worth (And Why You Should Care About It)

    What is net worth?

    Your net worth is the difference between your assets and your liabilities. It’s one of the most important financial metrics there is. It helps to measure your overall financial picture and track your progress toward meeting your financial goals.

    How do you calculate net worth?

    Your net worth is the difference between what you own and what you owe. And with a little math, it’s easy to figure out on your own. Here’s how to get started.

    1. Add up all of your assets. This includes money in your bank and investment accounts. It also includes the dollar value of any assets you own such as real estate, vehicles, or valuable collectibles.
    2. Add up all of your liabilities. Your liabilities include any money you owe. This could include student loans, credit card debt, car loan, mortgage, medical debt, back taxes, and anything else you owe.
    3. Subtract your liabilities from your assets. The difference between these two numbers is your net worth. The formula looks like this:

    Assets – Liabilities = Net Worth

    Separate your net worth from your self worth

    Thanks to student loans, most people today (nearly 70%) graduate from college with significant debt. And unfortunately, this means they’re also graduating with a negative net worth.

    Adding up your net worth for the first time and finding that it’s negative can be shocking and, frankly, a punch to the gut. Trust me, I went through that feeling myself.

    As you calculate your own net worth, please separate your net worth from your self-worth. Your net worth is just a number. It says nothing about you as a person or your value as a human. About one in five households have a net worth that’s either zero or negative.

    You can take steps to increase your net worth, but don’t wait until you do to value your self-worth.

    Read: How to Develop a Positive Money Mindset

    Why is net worth important?

    You might find yourself wondering why your net worth really matters. That was me for years. I thought that my income level was far more important. After all, it had more of an impact on my day-to-day life.

    But your net worth is actually super important! It represents the big picture of your finances and gives you an idea of how you’re using the money you make.

    Your net worth tells you whether you’re moving in the right direction

    One of the benefits of tracking your net worth every month is that you can start to notice a trend. Does the number get bigger every month? Then you’re moving in the right direction by paying off debt and increasing your savings. But if the number gets smaller each month, it’s time to make some changes.

    It tells you how prepared you are for the future

    People often use income as the most important metric in their finances. But your income isn’t guaranteed. If you lose your job tomorrow, you’ll be stuck relying on your savings to pay the bills. And considering many Americans are living paycheck to paycheck, the amount of money they were making no longer matters when the job is gone. 

    Your net worth gives you an idea of just how prepared you are to deal with a financial emergency like a job loss, as well as how prepared you’ll be for retirement.

    It puts your debt into perspective

    It’s easy to ignore your total debt and just focus on the monthly payment. This might feel better in the moment, but it doesn’t help you to pay it off any faster. By calculating your net worth, you’re forced to come to terms with the impact your debt has on your overall financial picture.

    It may be a factor when you’re applying for a loan

    When you borrow money, lenders want to know you’re going to be able to pay back what you owe. If you already have significant debts and not many assets, then a lender may see you as a bigger risk. You could end up being denied for a loan, or get approved for a loan but have a high interest rate.

    How to grow your net worth

    You might be a little discouraged seeing your net worth for the first time — I know I was! For those of us graduating from college with debt, it can be discouraging to start adulthood with a negative net worth. But there are plenty of ways to boost it!

    • Pay off debt. All of your debt counts as a liability in your net worth. The fewer liabilities you have, the higher your net worth is. As you pay down your debt, you’ll see your net worth increase.
    • Automate your savings. I used to struggle so much with saving. I’d tell myself that I’d save whatever I had left at the end of the month, but then there would never be anything left when that time came. The easy solution? Automation. Set up an automatic transfer from your checking account to your savings account right after payday and you never have to worry about spending that money on something else first.
    • Start investing. Investing is a great way to boost your net worth even faster than just saving. Because rather than just having your money sitting there and adding a bit to it each month, it’s growing without you having to do anything. 
    • Cut your expenses. One of the reasons people don’t see their net worth grow each month is that, even though they make good money, they spend it all each month. By reducing your expenses each month, you can start to see your net worth grow.
    • Increase your income. Cutting expenses is great and all, but you can only do it to a point. You still have bills to pay. Plus, you don’t want to cut everything you enjoy from your budget. Instead, you can increase your income to start saving more.

    Read: How We’re Planning to Pay Off Six Figures of Debt

    Tools to help you track your net worth

    Tracking your net worth regularly is an excellent way to check in on your progress and make sure you’re moving in the wrong direction. But I’m guessing you don’t want to sit down and do the math each month! Here are a few ways you can easily track it:

    1. A net worth spreadsheet: When people join my millennial money coaching program, one of the first tools they get is a pre-made net worth spreadsheet. But even if you don’t join the program, you can make one yourself!
    2. You Need a Budget: My favorite budgeting app also happens to have a reports feature where you can track your net worth. I love watching mine change each month as I increase my savings and pay off debt!
    3. Personal Capital: This digital tool is also great for tracking your net worth. You link all of your bank, debt, and investment accounts. Then your financial dashboard reports your net worth. Plus it’s free so if you aren’t already using a budgeting app like YNAB, then Personal Capital is a great alternative.

    Final Thoughts

    I spent years thinking my net worth wasn’t really important. I focused solely on my income as a measure of my financial success. It wasn’t until I started tracking my net worth that I was able to look at the big picture and start seeing progress in my finances — progress that’s going to serve me in the future.

    CONTINUE READING

  • What is a Money Date + Why You Should Plan One Now

    What is a Money Date + Why You Should Plan One Now

    When Brandon and I got engaged, we had some pretty lofty goals.

    We planned to plan and pay for a wedding in four months, travel to Spain for our honeymoon, pay off our non-student loan debt, and save for an RV to travel the country.

    Oh yeah, and we hoped to do it all within one year.

    While it might sound farfetched, we checked everything off this list within one year of getting engaged. And one of the most important factors I attribute to us reaching all of our goals?

    Money dates. We communicate openly and respectively about money, and we do it often.

    I put together a guide for you answering the questions of what is a money date and why you should plan one now to take your finances to the next level.

    What is a Money Date + Why You Should Plan One Now

    What is a money date?

    A money date is a regularly scheduled conversation between you and your partner where you discuss finances. They’re an opportunity to talk about your day-to-day finances, as well as prepare for any short or long-term financial plans.

    Why plan a money date

    A money date might not exactly be your idea of a romantic evening, but they’re important in maintaining a healthy relationship and healthy finances.

    They teach you to talk about money

    First, having regular money dates gets you in the habit of talking about your finances often. And as with anything else, the more you practice, the better you get.

    Money dates also allow you to be proactive about talking about finances in a confrontation-free way. 

    Here’s how most couples communicate about money:

    They don’t really talk about it until a problem comes up. Maybe one of you overspend, you were late on a bill, or you were hit with an unplanned expense.

    When this is the case, you’re pretty much only talking about money when it’s bad news or you’re fighting. This trains your brain to believe that money is a source of conflict, and talking about money means fighting.

    Then, as your relationship progresses, you both go out of your way to avoid talking about money. This can lead to financial infidelity. It also means you’re unlikely to meet any of your financial goals together because you aren’t setting them in the first place.

    Read: How to Talk to Your Partner About Money Without Fighting

    They help you stay on top of your finances

    Even for couples who can easily talk about money, these money dates are a good way of making sure you’re staying on top of any financial changes. 

    Let’s say you and your partner set up a budget together when you got married. But a few years later, your life might look totally different. Maybe your income has increased or you’ve changed the way you spend your free time. Chances are your budget could use some refreshing. 

    Regular money dates help you to stay on top of those changes so your financial plan always fits with the rest of your life. 

    They ensure everyone has a seat at the table

    Finally, money dates make sure that everyone has a seat at the table. In most relationships where the couple has joint finances, there’s one person who is responsible for managing the finances. It’s also likely that one person makes more money than the other. 

    Both of these factors can cause one or both partners to feel like they don’t have equal say. Money dates can help avoid this.

    How to plan a money date

    Now that we’ve talked about what a money date is and why it’s important that you have them, let’s talk about how to plan one.

    1. Plan your money date in advance

    I promise you that your partner isn’t going to appreciate you springing this on them, especially if you two don’t talk about your finances often. So schedule it in advance and put it on your calendar. 

    If you’re feeling particularly ambitious, you can even come up with a day of the week or month that works for both of you and set this as a recurring event.

    2. Make your money date as date-like as possible

    One of the reasons so many of us hate talking about money is because we have negative memories associated with it. Maybe it’s that we normally only talk about money when we’re fighting, so we associate money with fighting.

    You want to make your money dates a time to enjoy. Throw on your favorite music. Eat your favorite food. Drink your favorite cocktail. If you have a favorite restaurant together, have your money date there. 

    The key is to make this an enjoyable experience so you don’t dread it.

    3. Show up to your money dates prepared

    Finally, show up to your money dates prepared. Have an agenda of things you’ll discuss, and be ready with your laptop or notebook so you can do any budgeting or notetaking that you need to.

    What to talk about on your money date

    Now that I’ve gotten you on board with the idea of a money date, you might be wondering what you should actually plan to talk about. You might even feel like you don’t have enough to discuss to warrant scheduling time. But there are plenty of things you can discuss!

    Start by talking about everything that has happened since your last money date

    First, this means going over last month’s budget and seeing how well you stuck to it. If you didn’t stick to the budget, identify areas where you struggled and what changes you can make to ensure you’ll stick to the budget next month.

    You can also talk about other things that have happened

    Maybe one of you got a raise, and you want to discuss how you’ll allocate that new money in your budget. Or maybe one of you is feeling particularly burned out in your business and you want to figure out if you can still meet all your financial obligations if you pull back at work a little. 

    You want to make sure you’re covering everything happening in your finances right now.

    Check-in on your progress for your financial goals and debt payoff plan

    You can use a digital or printable tracker to monitor this. On the topic of financial goals, you can also use your money date to talk about new financial goals. 

    You aren’t going to have new goals to discuss at every money date, but this is the perfect time to talk about anything new you’d like to start setting aside money for.

    Be prepared to have tough conversations

    Now whether you’re married or dating, I’d be lying if I said that money dates won’t sometimes lead to arguments. Money can be an incredibly sensitive topic, and it’s likely that you and your partner won’t see eye to eye on anything. Be sure to come to these dates with an open mind.

    Additionally, be solution-focused. Let’s say that you and your partner have a money date and discover that they overspent last month. 

    Judging or berating them isn’t going to change what happened. Rather than focusing on the problem (your partner overspending) focus on possible solutions.

    End your money dates on a happy note

    As I said earlier, you want to make sure that these dates create positive associations around money. If they always end with fighting, you probably aren’t going to stick with them very long. 

    End the date by celebrating your financial wins or talking about what you’re most excited about for the upcoming month. This is a great way to end the date in a good mood.

    Should you have money dates if you’re not married?

    Now you might be wondering whether a money date is still necessary if you’re not married. After all, if you don’t have a joint budget or shared debt payoff plan, then you might think you won’t have anything to talk about.

    Here’s my general rule of thumb — If you’re planning on spending your lives together, incorporate money dates into your month. Topics you can talk about if you’re not married include:

    • How you split expenses and whether this system still works. 
    • Progress you’ve each made on your individual financial goals and debt payoff plan
    • Progress you’ve made on shared financial goals
    • Ideas you might have for future financial goals

    Another really great way you can use these money days if you don’t share finances yet but plan to someday is to talk about what that might look like. Talk about how you’ll handle certain situations, like debt you each brought into the relationship.

    Talk about who will be responsible for managing the money, or if you’ll always do it together. Consider making mock budgets to see what joint finances might look like for you.

    Final Thoughts

    Finances can be one of the most significant sources of conflict in any relationship. If you’re married or have been with your partner long enough to tackle financial topics, I’m sure you can relate.

    Regular money dates are one of the best ways to take the conflict out of talking about money — and you might even start enjoying it!

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  • Should You Save For Retirement While Paying Off Debt?

    Should You Save For Retirement While Paying Off Debt?

    When Brandon and I got married, we had more than six-figures of debt between the two of us. We both had student loans, and I was still paying off the credit card debt from my divorce.

    One of the very first things I did after our wedding day was sit down and make a list of all of our debts. I wanted to put together a debt payoff plan ASAP.

    One of the questions I struggled with was how much, if any, we should continue to put toward retirement while paying off debt.

    Working for the state government, I was required to put at least 6.5% of my income toward my retirement account, and the state would match it. But we also had Brandon’s retirement account to consider. Not to mention, once I left my job to run my business full-time just four months after the wedding, I was on my own for retirement savings.

    I’m not the only one to have struggled with this decision — it’s one of the most common questions I see from those trying to figure out their finances. And considering some personal finance experts still teach that you shouldn’t put a dollar until retirement until you’re debt-free, it’s understandably confusing.

    In this article, I’m going to lay out a few basic guidelines for you to follow when figuring out how to save for retirement while paying off debt. But ultimately, everyone’s situation looks different and you have to do what’s right for you.

    Should You Save For Retirement While Paying Off Debt?

    Contribute enough to get your employer match

    Many employers offer to match up to a particular percentage of your income that you contribute to a company 401(k) plan. For example, your employer might say they’ll match the first 3% or 6% of your salary that you contribute.

    This match is free money and could equate to hundreds — or more likely thousands — of dollars per year.

    If your employer offers a 401(k) match, make this your first priority. Depending on the type and interest rate of your debt, contribute just enough to get the employer match. You can always increase it later when your debt situation is different.

    Pay off high-interest debt

    The interest rate on credit cards is brutal. For millennials, it can be anywhere from 20% to 25%. Interest this high makes it incredibly hard to pay off debt. You find that each month, most of your money is going toward interest, and barely any of it is going toward the principal balance.

    And it’s not just credit cards with high interest. I’ve seen plenty of student loans, car loans, and personal loans with interest rates above 10%.

    If you have high-interest debt (which I’d consider anything above 6 or 7 percent) prioritize that before increasing your retirement savings. With more money available in your monthly budget, you can pay well above the minimum payment and pay it down a lot faster than you otherwise would have.

    The reason to prioritize these debts above saving and investing is that the interest rate on them is higher than the rate of return you’re likely to get in your retirement account. If your retirement account is seeing an 8% return rate and your debt has an interest rate of 20%, you really aren’t making money — you’re losing money.

    Read: How to Pay Off Credit Card Debt Fast

    Consider the interest rate of your debt

    Once your high-interest debt is gone, you’re probably left with student loans, car loans, or a mortgage with rates of anywhere from 3% to 6%.

    Once you get to this point, it’s a good idea to increase the amount you’re contributing to your retirement accounts.

    Why?

    Because at this point, the rate of return you can get on your investments is likely higher than the interest rate you’re paying on your debt. If your retirement account sees an average 8% return and your student loans have a 4% interest rate, you’re making more on your investments than you’re losing on loan interest.

    For each individual debt, consider the interest rate. Is it higher or lower than the average stock market return (which has been about 10% annually over the past century)?

    Another reason to save for retirement if you can — retirement accounts are tax-advantaged. Depending on the type of account, this means that you either aren’t paying taxes on the money you contribute, or you contribute money post-tax and then won’t pay taxes when you withdraw it. 

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

    How to save for retirement while paying off debt

    So you’ve decided that you want to contribute to retirement while paying off debt. Great! But where do you start?

    First, sit down and look at your monthly budget. After you account for your monthly bills, how much is left? Once you know how much money you have to work with, treat both your retirement savings and your debt payoff as a line item in your monthly budget.

    Deciding how much to contribute to each is up to you. But there are a few tools I recommend to find some guidance in this area:

    • Undebt.it: This debt payoff tool allows you to add all of your debt accounts, and then it helps to design a debt payoff plan for you. It helps determine which order to prioritize your debts in, and then shows you how quickly you can be debt-free depending on the amount you put toward debt each month.
    • NerdWallet Retirement Calculator: There are plenty of retirement calculators out there, but this one is my favorite. You input information such as your annual income, current retirement savings, age, and desired income during retirement. Then it tells you whether you’re on track to reaching your retirement goals, and how much you should contribute each month to get there.

    Final Thoughts

    One of the reasons it’s so hard to find the perfect personal finance advice is finances are just that — personal. What works for someone else may not exactly work for you, and vice versa.

    That’s why it helps to look for general guidelines, and then you can adapt them to fit your specific situation.

    Debt and retirement, in particular, are some of the more stressful financial topics we all face. You want to make sure you’re putting enough money toward each, while still having money in your budget to enjoy your life.

    Trust me, I understand the struggle!

    I talk to so many people who want to know if they should pay off debt or save for retirement. And as you can see, you can do both!

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