The Connection Between Health and WealthFull Article
People often think of money as a source of stress and anxiety.
And while it’s true that money problems can cause a lot of stress, did you know that financial instability can also lead to health problems?
The research is clear—money woes cause health problems.
Negative wealth shocks (losing 75% of your wealth or more) increase mortality risk over 20 years by 50%.¹
The impact grows more pronounced with age. A Yale study tracked older people recovering from heart attacks. They discovered that heart attack survivors with financial problems were 60% more likely to die within 6 months of leaving the hospital.²
Researchers don’t understand the causal relationship between finances and mortality, but here are a few educated guesses…
Losing money is stressful. And stress has been linked to everything from heart disease to cancer.
Losing money reduces access to medical care. Quality care slips out of financial reach. Even little things like transportation to appointments can become unaffordable.
Losing money can cause a low-quality diet. A combination of stress and living in low-income areas make junk food far more convenient and appealing.
The takeaway? Money problems take a toll on your health. That’s why financial stability should be a top priority for everyone. If you’re struggling to make ends meet, don’t despair. There are steps you can take to get your finances in order. And when you do, you’ll be on your way to better health, too!
¹ “Financial Ruin Can Be Hazardous To Your Health,” Rob Stein, NPR, April 3, 2018, https://www.npr.org/sections/health-shots/2018/04/03/598881797/financial-ruin-can-be-hazardous-to-your-health
² “In Older Adults, Money Problems Linked to Higher Risk of Death Following Heart Attack,” Ashley P. Taylor, Yale School of Medicine, Feb 23, 2022, https://medicine.yale.edu/news-article/in-older-adults-money-problems-linked-to-higher-risk-of-death-following-heart-attack-study/
³ “Stress Can’t Actually Kill You — but How You Deal (or Don’t) Matters,” Lauren Sharkey, Healthline, Apr 28, 2020, https://www.healthline.com/health/mental-health/can-stress-kill-you
The most dangerous money mistakes are the ones you don’t notice.
Are buying cars you can’t afford and living paycheck-to-paycheck dangerous? Of course! But they’re obvious. Hard to miss. They’re like a voice yelling into a megaphone “Hey! Something’s not right.”
But what about money mistakes that aren’t so obvious? Or even worse, money mistakes disguised as money wisdom?
Those may not devastate your bank account in one swoop. But they often go unaddressed. And overtime, they add up.
So here are money mistakes you might not have noticed.
Sure, it sounds like a great idea in theory. But when you’re constantly scrimping and saving, it’s tough to enjoy life. What’s the point of working so hard if you can’t even enjoy your money?
Plus, penny pinching can stop you from taking calculated risks that could save your money from stagnation.
So instead of penny pinching, try moderation instead. You may find yourself far more inspired to budget and save then if you commit to complete frugality.
Under and over filling your emergency fund.
A lot of people make the mistake of not having an emergency fund at all. It leaves them vulnerable to unexpected expenses and financial emergencies.
When you have too much money in your emergency fund, it’s tough to make any real progress on your long-term financial goals. A good chunk of your net worth gets sunk into money that’s not growing.
The solution? Save up 3 to 6 months of income in an easily accessible account, no more. Use that money to cover emergencies. If it runs low, refill it.
Once your emergency fund is full stocked, devote your income to building wealth.
Leaving goals undefined.
It’s tough to achieve a goal you don’t have. And it’s even tougher to achieve a goal that’s fuzzy and undefined.
That uncertainty makes it easy to fudge good financial habits. You don’t see how lapses impact your big picture because you don’t have a big picture,
So when it comes to your money, be specific. Write out your goals and make sure they’re measurable. That way, you can track your progress and ensure you’re on the right track.
Be on the lookout for these dangerous money mistakes. They may seem innocuous, but they can add up over time and stop you from reaching your financial goals. Stay vigilant and steer clear of these traps!
Worried about money? Tell someone.
And that doesn’t mean anxious chit-chat or throwaway lines about how money’s tight. Those are attempts at starting a conversation, hoping that the other person notices how you feel.
What you need is to sit down and talk with someone you trust. Someone you can be honest with. Someone who will listen without judgment.
When it comes to money, most of us are our own worst critic. We’re ashamed to admit that we don’t have enough, or that we’re struggling to make ends meet.
And shame loves silence. That’s because silence keeps you confused. It allows negative thoughts, often unfounded, to bounce around and fester and grow.
But something amazing happens when you talk to someone who listens—as the words leave your mouth, your perspective changes.
Maybe you feel relief. Maybe you feel re-energized. Maybe you see your fears in a different light.
Once you’ve actually brought your worries into the open, you’ll find the clarity you need to make a plan. And that plan further soothes your worries.
Make no mistake—talking honestly is hard. It demands vulnerability. That doesn’t happen with everyone. Only a few people will give you the sense of safety and comfort you need to speak openly.
But once you find those people, they become your rocks. They empower you to conquer your fear. They help you calm your worries and achieve financial peace of mind. And it all starts with talking.
If you need a space to talk about your finances, judgment free, contact me. I’m more than happy to hear your story and help you make a plan for a better future.
Are you one of those people who always seem to be putting off tasks?
It makes sense. Life is hectic. Schedules are full. Sometimes, it seems like you hardly have a second to brush your teeth or have a real conversation. And so important decisions get pushed further and further into the future.
That’s fine in some cases. Do you need to decide how to organize your garage right now, at this very moment? No.
But with your finances, procrastination can cause disaster. Why? Because time is the secret ingredient for building wealth. The sooner you start saving, the greater your money’s growth potential. Likewise, the sooner you get your debt under control, the more manageable it becomes.
And with your money, the stakes couldn’t be higher. After all, it’s your future prosperity and well-being that’s at stake. Procrastination is downright dangerous.
That urgency, however, doesn’t make it easier to start saving. In fact, you may have noticed that finances suffer more from procrastination than anything else.
There’s a very good reason for that. Procrastination is driven, above all else, by perfectionism. Failing feels awful, especially when you know the stakes are high. Your brain sees the discomfort of trying to master your finances and failing, and decides that it would feel safer to not try at all.
It’s a critical miscalculation. Attempting to master your finances at least moves you closer to your goals. Procrastinating doesn’t.
Think of it like this—50% success is infinitely better than 0% success.
The key to beating procrastinating, then, is to conquer the perfectionist mindset and fear of failure. It’s no small feat. Those habits of mind are often deeply ingrained. They won’t vanish overnight. But there are some simple steps you can take, like…
Break big goals down into tiny steps. This relieves the overwhelm that many feel when facing important tasks. As you knock out those small steps, you’ll feel empowered to keep moving forward.
Don’t go it alone. Procrastination thrives in isolation. Seek out a friend, loved one, or co-worker to hold you accountable and share the load—even if it’s just a weekly check-in to see how each other are doing.
Work in short, uninterrupted bursts. Set a timer. Put down the phone. Work. After about 15 minutes, you’ll notice something strange happening. Time starts to either speed up or slow down. Distracting thoughts vanish. The lines between you, your focus, and the task at hand start to evaporate. You feel awesome. This is called a flow state, and it’s the key to productivity. Make it your friend, and you’ll notice that procrastination becomes rarer and rarer.
Now that you know the cause of procrastination, try these tips for yourself. Set a 30 minute timer. Then, break your finances into tiny action steps like checking your bank account, automating saving, and budgeting. Work on each item in a quick burst until you’ve made some progress. Then, talk to a friend about your results!
Just like that, you’ve made serious headway towards beating procrastination and building wealth. Look at you go!
Entrepreneurship demands specific mindsets about money.
Ask a friend this question—“what would you do with $1 million?”
Your friend will pause, look at the ceiling for a moment, repeat the question to themselves, and then say something like…
“Well, first thing I would do is plan a trip to Europe. I’ve always wanted to go, but I’ve never been able to afford it.”
“Downpayment on a new house. Definitely. We’ve outgrown our place and we’re ready for the forever home.”
Or, if they’re really savvy…
“First, I’d knock out all my debt. Then, I’d use half of what’s left to generate compound interest. Then, I’d see about a condo down in Florida.”
These responses are well and good. But they show that your friend is no entrepreneur.
An entrepreneur would instantly respond…
“I’d use it for the business.”
Translation—they’d use the money to make more money
Maybe they’d use the money to hire an ad agency to run a marketing campaign, driving revenue through the roof.
Maybe they’d use the money to hire more workers, exponentially increasing their ability to serve clients.
Maybe they’d use the money to purchase software or hire a third party to streamline their workflow, boosting their efficiency.
Everyone views money as a tool. It solves problems. Living in a house that’s too small? That’s a big problem. And money can easily solve it.
But entrepreneurs see money as a tool to earn even more money.
To start thinking like an entrepreneur, ask yourself this question—how can I use my money to start making more money? There are only a few answers to that question, and the right one will lead you down the path of starting your own business.
It’s simple—workers are quitting because they feel taken advantage of. And it’s no wonder why.
Research from Cengage Group revealed the top three reasons behind the Great Resignation…
1. They want to make more money 2. They’re burned out and they feel unsupported 3. They feel they’re no longer growing in their position
Translation—workers feel underpaid, overworked, and unvalued.
In a word, exploited.
Is it surprising that workers are quitting in droves? Of course not! The real miracle is that people didn’t quit sooner.
So what are workers looking for? Again, it’s no surprise…
They want opportunities where their earnings scale with their effort. The more they work, the more they can earn.
They want flexibility in how long and where they work. No more being tied to toxic workplace environments.
They want mentorship to help their abilities reach the next level.
Translation—workers want to be valued, rewarded, and natured.
In short, they want to be treated like humans, not just cogs in a machine.
Like it or not, this Great Resignation is just the tip of the iceberg. Until employers realize the obvious, expect more and more dissatisfaction, and more and more resignations.
¹ “The Real Reasons Workers Are Leaving in Droves? (Burnout Is on the List, but Not at the Top)” Melissa Angell, Inc., Jan 25, 2022, https://www.inc.com/melissa-angell/great-resignation-burnout-workers-upskilling-career-development.html
Sick and tired of borrowing money from financial institutions? Well, no longer! You can now borrow money directly from your peers.
That’s right—with the magic of the internet, you can be in debt to faceless strangers instead of faceless institutions.
One moment while I get my tongue out of my cheek…
But seriously, peer-to-peer lending—or P2P—is exploding. It’s grown from a $3.5 billion market in 2013 to a $67.93 billion market in 2019.¹
Why? Because P2P lending seems like a decentralized alternative to traditional banks and credit unions.
Here’s how it works…
P2P lending platforms serve as a meeting point for borrowers and lenders.
Lenders give the platform cash that gets loaned out at interest.
Borrowers apply for loans to cover a variety of expenses.
Lenders earn money as borrowers pay back their debt.
No middlemen. Just straightforward lending and borrowing.
Think of it as crowdfunding, but for debt.
And make no mistake—there’s a P2P lending platform for every loan type under the sun, including…
• Wedding loans • Car loans • Business loans • Consolidation loans
But here’s the catch—debt is debt.
The IRS. A bookie. A banker. Your neighbor. It doesn’t matter who you owe (unless they’re criminals). What matters is how much of your cash flow is being consumed by debt.
Can P2P lending platforms offer competitive interest rates? Sure! But they can also offer ridiculous interest rates, just like everyone else.
Can P2P lending platforms offer lenders opportunities to earn compound interest? Of course! But they also come with risks.
In other words, P2P lending is not a revolution in the financial system. In fact, two leading P2P platforms have actually become banks.²
Rather, they’re simply options for borrowing and lending to consider with your financial professional.
¹ “19 P2P Investing Statistics You Need to Know for 2021,” Swaper, Feb 22, 2021 https://swaper.com/blog/p2p-investing-statistics/
² “Peer-to-peer lending’s demise is cautionary tale,” Liam Proud, Reuters, Dec 13, 2021 https://www.reuters.com/markets/asia/peer-to-peer-lendings-demise-is-cautionary-tale-2021-12-13/
Budgeting is essential. But what if you don’t know where to start?
Whether you’re new to the world of budgets or you just want some help, this article will get you started on the right foot. There’s no one way that works for everyone, but these different methods can give you an idea of where to begin.
Method 1: The old fashion way.
First, write down your total monthly take home pay. Next, break down your monthly spending into categories and write down how much you spend on each. Add those numbers together. Then, subtract that number from your take home pay.
The advantage of this method is that it’s rewarding. You get to see your budget grow from the ground up. It connects you to your money like few other projects will.
It can, however, be frustrating. You’ll run into snags, miscalculations, and old fashion human error. And that can nip your budget in the bud.
Method 2: Pre-made spreadsheets.
This is an easy way to create a customized budget. There are countless templates from Google Drive, Microsoft Office, the Federal Trade Commission, Nerdwallet, and more!
Unfortunately, they still require some legwork. You may need to customize your budget to your specific needs. And they don’t sync with your bank account, meaning you’ll need to manually input your monthly spending.
Method 3: Budget apps.
They come in a variety of different flavors, but they all serve a common purpose—make budgeting as simple as possible.
Typically, these apps handle the categorizing and all the math. You simple enter your monthly income, log your spending into categories, and let the app work its magic.
Not all budgeting apps are the same. Some require you to manually enter your spending, while others sync with your bank accounts. Some are free. Some cost money.
Here are a few of the most popular budgeting apps to investigate…
Mint (most popular)
YNAB (You Need a Budget) (Syncs with accounts, cost $84/year)
PocketGuard (Designed for overspenders)
Honeydue (Designed for couples)
There’s not one particular way to begin budgeting. It all depends on your personal needs and what you’re comfortable with.
With so many options, you should be able to find the perfect method for you.
What do you think? Do you have a simple budget? How did you start it?
The Financial Industry loves debt. They love it because it’s how they make money.
And best of all (for them), they use your money to make it happen.
Here’s how it works…
You deposit money at a bank. In return, they pay you interest. It’s just above nothing—the average bank account interest rate is currently 0.06%.¹
But your money doesn’t just sit in the vault. The bank takes your money and loans out in the form of mortgages, auto loans, and credit cards.
And make no mistake, they charge far greater interest than they give. The average interest rate for a mortgage is 3.56%.² That’s a 5833% increase from what they give you for banking with them! And that’s nothing compared to what they charge for credit cards and personal loans.
So it should be no surprise that financial institutions are doing everything they can to convince you to borrow more money than you can afford.
First, they make sure you never learn how money works. Why? Because if you know something like the Rule of 72, you realize that banks are taking advantage of you. They use your money to build their fortunes and give you almost nothing in return.
Second, they manipulate your insecurities. They show you images and advertisements of bigger houses, faster cars, better vacations. And they strongly imply that if you don’t have these, you’re falling behind. You’re a failure. And you may hear it so much that you start to believe it.
Third, they lock you in a cycle of debt. Those hefty car loan and mortgage payments dry up your cash flow, making it harder to make ends meet. And that forces you to take out other loans like credit cards. It’s just a matter of time before you’re spending all your money servicing debt rather than saving for the future.
So if you feel stuck or burdened by your debt, show yourself some grace. Chances are you’ve been groomed into this position by an industry that sees you as a source of income, not a human.
And take heart. Countless people have stuck it to the financial industry and achieved debt freedom. It just takes a willingness to learn and the courage to change your habits.
¹ “What is the average interest rate for savings accounts?” Matthew Goldberg, Bankrate, Feb 3, 2022 https://www.bankrate.com/banking/savings/average-savings-interest-rates/#:~:text=The%20national%20average%20interest%20rate,higher%20than%20the%20national%20average.
² “Mortgage rates hit 22-month high — here’s how you can get a low rate,” Brett Holzhauer, CNBC Select, Jan 24 2022, https://www.cnbc.com/select/mortgage-rates-hit-high-how-to-lock-a-low-rate/
Every entrepreneur needs a problem to solve.
It’s more important than a business plan (though you need a business plan).
It’s more important than mentorship (though you DEFINITELY need mentorship).
It’s more critical to success than killer products, funding, or even skill.
All of those things are important pieces of the puzzle—some more so than others—but without a problem to solve, none of them matter.
Why? Because if there is no demand for your product, you’re guaranteed to fail. Almost no one will buy a product just to buy it.
In order to have demand, someone has to have a need that’s not being met. That’s why you need a problem.
Even the most outlandish luxury items solve problems—they make customers feel a certain way about themselves. They make people laugh, or feel successful, or feel wanted. And for many, that’s priceless.
Some businesses solve problems that people don’t even know they have. Did anyone before July, 1994 think that going to bookstores was a massive hassle? No! Well, except one person—Jeff Bezos. But it turns out his hunch was right. He solved a problem that no one was aware of, and has profited handsomely for it!
It doesn’t matter if you’re starting a side hustle or launching a startup. You must solve a problem. And the more demand your solution creates, the higher likelihood of success you’ll have.
So what should an entrepreneur do first? Find a problem! Ask yourself—or better yet, ask people around you—what kind of problems they have. What kinds of pains in their life do they wish would just go away? Is there a way to solve that problem with your skills and talents?
If so, congratulations—you’ve found a viable business opportunity.
Are you one of those people who assumes that you’ll never be wealthy?
It’s a common mindset, and it keeps many from reaching their financial goals. But the truth is, anyone can create wealth. You don’t have to be born into money or have some special talent. It all comes down to making a commitment to start building your fortune today.
So why do so many people put off creating wealth until later in life? There are many reasons, but chief among them is fear.
What if, instead of building wealth, you save your money in the wrong place and lose everything?
What if you can’t access money when you need it?
What if I confirm this deep seated suspicion that I don’t know what I’m doing?
But here’s the truth— you’re better positioned to start building wealth today than you ever will again. That’s because your money has more time to grow and compound today than it will in the future.
That’s especially true in your 20s and 30s. But it’s also true if you’re 45 or 55. The best time to build wealth is right now, this very moment.
So what can you do? How can you leverage this moment to start building wealth? Here are a few simple financial concepts you can use right away.
Create an emergency fund. I know it seems counterintuitive, especially if your credit is in shambles or you have many other debts to pay off. But the truth is, building an emergency fund is one of the best ways to begin building wealth, because it gives you a margin of safety. If you have money saved for a rainy day, you won’t have to turn to expensive credit cards or high interest loans when life throws you a curveball. Instead, you can take care of things with your own savings and move on.
Automate saving right now. The best way to start building wealth is to put something away every month. Forget about how much you’re putting away or your interest rate. For now, just put something away, even if it’s just $5. You can work with a financial professional to boost those numbers later on. The important thing is to start now.
If you want to learn more about how to start building wealth today, let’s chat. I’d love to help you set some goals and create a plan for getting there. We all deserve financial security, regardless of our age or income level. So let’s find out how we can get started today.
You’ve probably heard the phrase “knowledge is power” before. In fact, you may have even said it yourself from time to time.
And it’s true. Knowledge is power because it shows you how to act. The more informed your actions, the more likely they are to be fruitful and effective.
Here’s another quote you’ve probably heard and said a few times—“Know thyself.”
Why? Because there’s no greater power than power over yourself. The more you know yourself, the more able you’ll be to shape your actions, your habits, and your destiny.
This couldn’t be more relevant when it comes to financial matters. The more you know about your financial habits and tendencies, the better equipped you’ll be to control your financial future.
Here are some ways to know thy financial self.
Notice your emotions.
Like any other part of your personality, emotions can affect money. They’re especially important because they can cause you to act in ways that are counterproductive financially.
For example, have you ever felt anxious about checking your bank account?
Or felt a craving to blow money to destress?
Or swelled with pride when you see how much you’ve saved?
Those are all emotions, and they’re all related to money.
So the next time you’re spending money, or checking your bank account, or pinching pennies, take a moment. Breath. Notice how you’re feeling. Those emotions can give you valuable information that will help you make better financial decisions in the future.
Notice your thoughts.
Feelings almost always lead to thoughts. For instance, anxiety about looking at your bank account could lead to thoughts like this…
“Can I afford that? Oh, I bet I can’t. I WAY overspent the other day at… whatever, I never have enough money. I keep meaning to spend less, but I just can’t stop myself. Why do I even bother?”
See what happened? A feeling of anxiety led to a negative thought—that you can’t control your finances.
So what do you think about money? And that doesn’t mean the “opinions” about money that you share when you’re chatting with friends. It means the thoughts that flow through your mind when ever you encounter money in daily life.
Take a few moments right now and notice those thoughts. Are they positive? Are they negative? Are they just neutral?
Notice your actions.
Just like feelings almost always lead to thoughts, so do thoughts almost always lead to action.
Those actions might be to ignore, or repress, or get angry, or give in. But one way or another, thoughts will result in actions.
This is where budgeting helps. It’s like creating a journal of your actions, which are a window into your thoughts, your feelings, and who you are.
Notice lots of stress spending, snack buying, or binge shopping? That can reveal a facet of your financial self—maybe you think that spending will relieve feelings of stress and anxiety.
Or maybe you notice lots of thrifting and penny-pinching. That could reveal either a resourcefulness in hard times, or worry about going without.
Or maybe you notice wild, untamed spending. Perhaps this shows that you don’t prioritize money, and think of it as a tool to make you feel good.
The more you know about your financial self, the better equipped you’ll be to control your finances. You’ll see habits that you need to curb, and habits you need to cultivate.
Simple advice, but it goes a long way. Knowledge is power!
Money comes from solving problems.
Think about any business. It could be a lemonade stand. It could be Amazon.
Each of those businesses solves a problem.
The lemonade stand solves the problem of feeling dehydrated on a hot summer day. How? With a refreshing mix of sugar, citrus, and water. One sip, and you’re a new person. It’s a feeling people will pay big money to achieve.
Amazon solved a problem people didn’t even know existed—the inconvenience of shopping in stores. It turns out that driving from location to location is a time consuming hassle. Amazon eliminated that problem entirely with an all-encompassing online marketplace. And they’ve been richly rewarded—just look at Jeff Bezos’s net worth!
Your current job is likely solving a problem for your boss. You have skills that your boss needs to their business work, but that they don’t have the time to develop or apply. And in return for solving that problem for 40 hours per week, they give you a salary.
The takeaway? Don’t just develop skills—identify problems. Once you see obstacles, you can leverage your skills to overcome them. That’s where money comes from.
Finances are a challenge.
Whether you’re in your 20s and paying off student loans or in your 40s and trying to save for retirement, financial decisions can be complicated.
The good news? There are steps you can take to avoid the most common mistakes so you have more peace of mind when it comes to money management. Here are some of the most common financial mistakes people make, and tips on how to avoid them.
Caring too much about what others think.
This may be the tough love you need to hear. No one judges the car you drive. Or the watch on your wrist. Or the size of your home. And the one-in-a-million person who does? They’re a narcissist with WAY bigger problems than your car.
But that fear is powerful for a reason. It’s been carefully nurtured by TV commercials and Instagram accounts with a singular goal—to make you buy things you don’t need.
Know this—you’ll gain far more respect by attending to your own financial needs than by desperately trying to keep up appearances.
Not asking for help when you need it.
Let’s face it—you’re supposed to know how money works. Mastering your finances is symbolic of becoming an adult. There’s tremendous internal pressure to act like you know what you’re doing.
But were you taught how money works? Did a teacher, professor, or mentor ever sit you down and explain the Rule of 72, the Power of Compound Interest, or the Time Value of Money? If you’re like most, the answer is no. It’s a cruel double-bind—to feel good about yourself, you must master skills no one has ever taught you.
And that keeps you from asking for help. You get caught in shame, denial, and confusion. It’s hard to admit that you don’t know something that seems so basic, so essential.
But rest assured—you’re not the only one. And the right mentor or financial professional will listen to your story without judgement and seek to help you.
There are few things more daunting than staring at a pile of bills, an empty bank account, or an intimidating stack of paperwork. You know what you have to do. But it doesn’t happen because you’re so overwhelmed by the task ahead. And it’s especially daunting if you’ve never been how money works—you don’t even know where to start!
But nothing causes financial damage quite like procrastination. That’s because it causes exponential damage. Your bills pile up. Your interest rates rise. Your savings fall drastically behind, and you must save far more to catch up.
The antidote? Break the task down into smaller, manageable steps. Maybe that means signing up for Mint.com or working with a financial professional. That might mean automating $15 per month into an emergency fund, or cooking one dinner at home each week.
It doesn’t matter how small it is, as long as it puts money back in your pocket and stops the scourge of procrastination.
In conclusion, making financial mistakes is something that can happen to anyone. By knowing some of the most common financial mistakes people make and what you can do to avoid them, you’ll have more peace of mind when it comes to money management.
You can’t afford to live in a world of denial.
If you want to maintain your budget and save money, then you need a plan. The first step is understanding the basics—what is a budget? How does it work? What are the benefits of having one?
To effectively manage your monthly budget, you must take certain steps from day one. This article will provide some helpful tips and tricks on how to get started and keep going strong until payday rolls around!
What is a budget?
A budget is a plan. It helps you set limits for your spending, so that you can track your income and expenses. Having a budget is important because it keeps you aware of when you are spending too much or if there are ways your money could be saved.
It can also help you understand your spending habits as well as identify problem areas, such as overspending on credit cards or buying expensive lattes every day. With a clear understanding of how you spend money every month, you can reduce expenses and even start saving for luxuries or emergencies. You can’t have a goal of saving for your next vacation if you don’t know how much money you’re spending every month.
How to create your budget
The first step is to set goals for yourself for income and spending. When it comes to income, you need to consider all the ways you get paid. Do you have a job? Is your employer cutting back your hours? Do you have another source of income such as side jobs or freelance work?
Be completely honest with yourself about how much money you have coming in. Once this figure is known, you can assess your spending and determine how much of your income goes towards them every month.
Next, make a list of all fixed monthly bills, such as rent or loan repayments. Make a list of variable expenses, such as groceries or gas. Lastly, make a list of all your monthly discretionary spending, or ‘fun money’.
If you struggle with this last step, look at your bank statements. It’s the easiest way to find a complete record of your spending. This will help you pinpoint the areas that you could cut down on or even eliminate.
Leverage your budget
Now that you have your budget, you can take action. You can save money by leveraging your budget to meet your monthly goals.
The first way is to leverage your income. If you have a job, talk to your employer about working extra hours, or ask for a raise. This will give you more money without having to spend any more than you already are through increased expenses.
Beyond the extra income from a job, there are many other ways to add to your budget.
You can start small and pick up some side work—babysitting, another job or delivering pizzas etc. If you can turn your free time into money, go for it! This all depends on your financial situation and what you feel comfortable with, so take the time to plan accordingly.
You can also think about reducing your expenses. Cutting back on luxury items can save money every month without having to work an extra job. Just think of all the things you could do with the money that’s currently going towards cable TV or eating out at expensive restaurants!
Don’t forget to have some fun every once in a while. Just find creative ways to have it on a budget. Plan more outings with friends, rather than going out every evening, or go to free local events.
A budget is a way for you to track your expenses and income each month. You can leverage your budget in a number of ways, by increasing income or decreasing expenses. With this knowledge, you’ll be able to save more and plan for the future.
Need an income boost, but not sure where to start? Then you need to encounter the Cash Flow Quadrant.
It’s a concept pioneered by Robert Kiyosaki of Rich Dad Poor Dad fame. And it’s one of the best explanations of creating income around.
The employee and freelancer trade their time for money.
The entrepreneur and investor create or purchase income generating assets.
Think about what an employee does. They show up, punch in, and work for a set number of hours. In exchange, they either get paid by the hour or a set annual salary.
If they’re extra conscientious, they may get a raise or bonus as a reward. But their income is entirely dependent on the good graces and success of their boss. They never directly enjoy the fruits of their labor.
The same is true for the freelancer. Sure, they enjoy greater independence than an employee, but they’re still trading their time for money. Think of them as a mercenary rather than a soldier.
Compare that with the entrepreneur. The entrepreneur creates a system for delivering a service that’s duplicatable.
Let’s say you start a lemonade stand. You put up a few bucks to buy some lemons, sugar, cups, a cooler, and stand. It’s a risk—there’s no guarantee that’ll find any customers.
Fortunately, it’s a hit—the neighbors line up to enjoy your refreshing beverage!
After a few days, you’re swimming in cash. In fact, you earn enough to open another lemonade stand. So you buy the same supplies, and hire a friend to run the new location. Just like that, you’ve scaled your lemonade business.
Eventually, you have so many lemonade stands that you don’t have to manage one yourself. Instead, through initiative and upfront commitment, you’ve created an income stream. That’s how entrepreneurship works.
But now suppose that a friend comes along. She’s been eyeing your success and wants in. She’ll put up the cash to open another ten lemonade stands across the neighborhood (it’s a BIG neighborhood).
In exchange, she gets a slice of the profits from all the stands. She takes on some risk by giving you money in exchange for some income. In other words, she’s an investor. She’s using her money to earn more money.
There are two critical points to notice about the entrepreneur and the investor.
They take risks.
Starting a business is a risk. Giving money to an entrepreneur is a risk. Being an employee is consistent—you give X amount of time, you get X amount of money. Entrepreneurs and investors commit resources to projects with no guarantee of success.
They have far greater potential.
There are only so many hours you can trade for money. When successful, entrepreneurs and investors have far more resources at their disposal to trade for money.
Simply put, entrepreneurs and investors face greater risks, and greater potential rewards.
Which quadrant generates most of your income? Is there a quadrant you would like to explore further?
Failure is the greatest teacher.
That’s because nothing seizes your attention like failure. It’s hard to look away from a trainwreck. It’s even harder when you’re the one driving the train.
Failure leaves you reeling. It forces you to ask a critical question—”what went wrong?”
And that question can reveal powerful truths.
It reveals truths about your process.
Maybe your strategy for carrying about business is flawed and needs to be retooled.
It reveals truths about your assumptions.
Flawed strategies stem from faulty assumptions. What are you assuming about people or the world that led to your failure?
It reveals truths about your character.
Assumptions don’t appear from nowhere. They’re shaped by experiences and core beliefs about what’s right, wrong, and how the world works. Failure exposes those character forming beliefs like nothing else.
Simply put, failure cuts right to the core of who you are. And that’s a powerful experience, if you’ll listen to it.
So get out there. Drop the ball. Spill some milk. Botch something.
And be afraid to call it like it is—when it’s clear that you’re failing, acknowledge it and jump ship.
Then, ask yourself “what went wrong.” Be brutally honest. Take notes. Adjust as needed. And then get back out there.
You’ll find that you’re far stronger than you’ve been led to believe, and that you grow more resilient the more you attempt.
So here’s to failure. May you have enough that they pave the way to your greatest success.
Let’s face it—a side gig sounds like a dream come true. What’s not to love about being your own boss?
But if working for yourself is so awesome, why do so few take the plunge?
The reason is simple—uncertainty.
It makes sense. School taught you how to scribble notes and pass tests, not start a business.
And that uncertainty creates anxiety.
Picture yourself as a business owner. What would it look like?
If you’re like many, you saw flashes of expensive cars, meetings, and… nothing. Entrepreneurship is such a foreign experience that you don’t even know how to process it.
And that leads to the ultimate uncertainty—what if you fail?
What will others think if your business goes under? How will you feel about yourself? Will you be able to pay the bills?
In short, entrepreneurship feels like a black box of something that’s best left alone.
Sound familiar? There are two antidotes to the uncertainty of entrepreneurship…
1. Embrace uncertainty.
The next time you feel a twinge of fear, pause. What are you afraid of happening? What could go wrong? Maybe it’s something valid. Or likely, it’s something you can overcome. Train yourself to observe and question your fear. You’ll grow more and more confident taking calculated risks. You may even find yourself ready to start a part-time side hustle!
2. Find support.
Facing uncertainty is far easier when you’re surrounded by support. Friends, family, and mentors can provide an emotional safety net should things go south. They can also offer wisdom and counsel that can mean the difference between success and failure.
Where do you stand on entrepreneurship? Do you want to start a business, but can’t see what it would look like?
If so, let’s chat. Consider me your sounding board for your anxieties about the transition from employee to entrepreneur. I can help you process your fears and flesh out a vision for your business.
So you’ve decided to create a retirement strategy. Good for you!
Will your plans be durable enough to withstand your working years and sustain you through your retirement? The answers to the following questions can help give you clarity on if your retirement strategy has what it takes!
How’s it constructed?
Not all savings vehicles are created equal. For instance, stashing all your cash in a mattress until retirement is a great way to torpedo the value of your savings. Why? Because inflation will slowly but surely reduce the value of each dollar you earn today. The same goes for low-interest saving options like CDs, bonds, and checking accounts. Even a 401(k) might not be enough!
Realistically, you want to put your money in a place where it can leverage compound interest. That means the cash you save generates interest, and all the interest you earn also generates interest. Interest earning interest on interest eventually unleashes a huge tidal wave of wealth creation that can help carry you through your final years.
What percent of your income will you live on?
Nobody wants to take a pay cut when they retire. But that’s exactly what people relying on Social Security will do; it’s only designed to replace 40% of your annual income!¹ Instead, it’s better to live off of 80% of your salary.²
So what does that number look like now? Assuming you live 30 years after retiring, how much would you need to save before you hit that goal? If you make $60,000, 80% of your income is $48,000. You would need $1,440,000 saved to maintain your lifestyle for three decades.
Once you have that number estimated, determine how much you’ll need to save starting today. You can use a nifty compound interest calculator like this one to get an idea of how much that will be!
Is it tax efficient?
There are few surprises nastier than saving for decades only to have the government bite a huge chunk out of your nest egg at the finish line. We won’t dive into the details of taxes now, but you need to decide when you’ll pay Uncle Sam his share. You can either:
Pay now. CDs and Roth IRAs are options where you pay your taxes, then save the money. You end up only paying the tax rate of today.
Pay later. You don’t pay any taxes now, but you cough up a percentage of whatever you earn in the long haul at a future rate. This is how a 401(k) works.
Pay never. No, you don’t have to hire a Swiss lawyer and hide your money on an island to do this. Ask a licensed and qualified professional about legal ways to achieve tax free growth.
Whatever option you choose, make sure you understand its implications for how much you’ll have when you need it.
It’s always best to review your strategy with a licensed and qualified professional. They’ll have insights and knowledge to help you achieve the retirement of your dreams.
¹ “How Much Can I Receive From My Social Security Retirement Benefit?,” Wendy Connett, Investopedia, October 14, 2022, https://www.investopedia.com/ask/answers/102814/what-maximum-i-can-receive-my-social-security-retirement-benefit.asp#:~:text=The%20maximum%20monthly%20Social%20Security%20benefit%20that%20an%20individual%20can,the%20maximum%20amount%20is%20%242%2C324
² “How Much Money Do You Need to Retire?,” John Waggoner, AARP, Sep 17, 2020, https://www.aarp.org/retirement/planning-for-retirement/info-2020/how-much-money-do-you-need-to-retire/?cmp=RDRCT-3c5a7391-20200917
Debt is expensive.
Americans spend about 34% of their income on servicing their mortgages, car loans, and, of course, credit cards.¹
Assuming a household income of $68,703, that translates to roughly $23,359 going down the drain each and every year.²
Obviously, converting that money from debt maintenance to wealth building would be a dream come true for most Americans. But there’s more at stake here than retirement strategies.
The true cost of debt is your peace of mind.
Take the example from above. A third of your income is going towards debt and the rest is split up between everyday living and transportation expenses. You feel you can make ends meet as long as the money keeps coming in.
But what happens if a recession causes massive layoffs? Or if a pandemic shuts down the economy for months?
The sad fact is that the hamster wheel of debt prevents a huge chunk of Americans from saving enough to cover even a brief window of unemployment, let alone a shutdown!
That lack of financial security can have serious repercussions, including bankruptcy. And feeling like you’re always one unexpected emergency away from a financial crisis can result in a myriad of mental health issues. Numerous studies have shown that high levels of debt increase anxiety, depression, anger, and even divorce.³
Conquering debt isn’t about changing numbers on a page. It’s about reclaiming your peace. It’s about securing financial stability for you and your family. Your income is a powerful tool if you can protect it from lenders.
If you’re stressed about debt and seeking some relief, let me know. We can review your situation together and come up with a game plan that will recover the financial security that’s rightfully yours.
¹ “Study: Americans Spend One-Third of Their Income on Debt,” Maurie Backman, The Ascent, Mar 6, 2020, https://www.fool.com/the-ascent/credit-cards/articles/study-americans-spend-one-third-of-their-income-on-debt/#:~:text=And%20recent%20data%20from%20Northwestern,feel%20guilty%20about%20their%20predicament
² “Income and Poverty in the United States: 2019,” Jessica Semega, Melissa Kollar, Emily A. Shrider, and John Creamer, United States Census Bureau, Sept 15, 2020, https://www.census.gov/library/publications/2020/demo/p60-270.html#:~:text=Median%20household%20income%20was%20%2468%2C703,and%20Table%20A%2D1)
³ “The Emotional Effects of Debt,” Kristen Kuchar, The Simple Dollar, Oct 28, 2019, https://www.thesimpledollar.com/credit/manage-debt/the-emotional-effects-of-debt/?/186