Financial Freedom: How I Got Here
money can't buy happiness.
got that cliche out of the way. now let's talk.
this is about leveraging what you have, so your money works for you & you can spend more of life just living it.
Personal Capital App: e v e r y o n e should have this app. it tracks your spending and outlines your assets & liabilities: savings, checking, credit card debt, home (if you have one), and investments all in one place. your net worth doesn't define you. (but it does help to know the number, so you can work towards your financial freedom goals.) oh and it's FREE.
- define your new zero: the number you want in your savings account that you never drop below. a good place to start: three months worth of rent/gas/groceries/utilities. set the goal and start setting money aside. my "new zero" is this number + money for a downpayment on a house. it helps to have a big goal like this when saving!
- save a percentage of your income every. single. month. aim for 20% and increase this percentage as you find a rhythm. part of saving money means living below your means, so you can afford to set money aside.
- if you have trouble with saving, there are free ways to automate this. I prefer the satisfaction of doing it myself. it's like a little gift I give to me.
pro tip: put your money in a high yield savings account. I have mine in Ally Bank because it grows at 2.2% apy (annual percentage yield) vs the average .01%. It's not much, but its free money & the more you set aside, the more your money grows with compound interest. Just think of it as a nice lil' incentive to save.
let's talk about credit cards.
I used to fear them. now I love them. If you know how to use them right, you can leverage the spending you'll already be doing for free cash & free flights.
the most important rule: pay your balance in full every month. not the minimum payment...all of it. never spend money you don't have in the bank. avoid cards with annual fees. don't spend money just to meet a signup bonus. that's it.
choose the credit cards that fit your needs best. here are mine if you're curious.
- Alaska Airlines Credit Card for the signup bonus, flight miles, and companion fare. this is the only card I use with an annual fee of $75. otherwise, I stick to a no annual fee policy on any other cards I sign up for.
- Capital One Credit Card: no annual fee, signup bonus of $150 when you spend $500 in the first three months. plus 3% cashback on dining, 2% on groceries & 1% on everything else.
& yeah...there's an app for that. I pay all my credit card bills directly though my phone. takes about 2 min and three clicks. another reason why my credit cards feel like debit cards...with perks. (you could also automate your bill pay, just make sure it's set to pay the full balance and not the minimum payment or you'll accrue interest.)
Here's another great resource if you want to compare options: card ratings
- invest in yourself:
making money is about value. learn how to create value & money will always be available to you. give yourself permission every single day to INVEST in your growth. This looks different for everyone. For you it might include...reading, researching, taking classes, going back to school, traveling, going to therapy, learning a new skill, being vulnerable in your work, creating something, starting a business, working. your. ass. off.
- invest in your future:
if you're not saving for retirement, YOU SHOULD BE. I'm not going to tell you how to do it, I'm just going to say that you should. again, this looks different for everyone. but might include...contributing to a 401k, a roth or traditional IRA. watch this video to learn more about investing. I've also linked some books below that taught me the basics. never invest in something you don't understand.
I invest with a Vanguard Roth IRA, max out my contribution limit per year, and only put money in a handful of low fee index funds. I'm not an expert in this area, but I'm proud of myself for starting.
If you work for a company with a 401k match. please, please use it!
- invest in quality:
invest in high quality & reusables. turns out what's good for the earth is usually good for your wallet too. Purchase goods that are made to last instead of items that you'll replace over and over again. same goes with reusables...you'll save money in the long run with reusable bags, coffee cups, & water bottles.
make space in your life to give back to a cause that speaks to you. the whole point of having money is to live abundantly. If you can't give freely, you aren't living abundantly. Gripping onto every penny means you're living in scarcity mode & sending your subconscious the message that money is not available to you.
"I want people to be inspired to do what's in front of them. If you won't give a dime out of a dollar, don't talk to a billionaire about giving their money away because if you don't give a dime out of a dollar, I can promise you, you're not going to give a 100 million out of a billion. It's a lie" -Tony Robbins
THE SMALL STUFF
1. eliminate autopilot spending: those subscriptions & memberships you pay every month...that's your money on autopilot (and it's draining your bank account)
- this might include...netflix/hulu, spotify, a fancy gym membership, iphone apps, cable tv, monthly gift boxes...you get the idea. you decide what's worth the money & cut out the rest. Start making conscious money choices each month instead.
2. shop secondhand. challenge yourself to move towards majority secondhand consumption. you'll spend less overall & exercise your delayed gratification muscle.
3. create boundaries with yourself. don't let "self-care" become self sabotage. financial self care is about creating healthy habits with money (like saving for a rainy day, paying your bills on time, and making smart choices with your spending)
my personal finance inspiration: I highly recommend these books.