This blog features key takeaways from the podcast episode: 4 Money Experts Explain How to Get Your Money Sh*t Together. You can listen to the full episode here
If you’re wondering what do I need to do to get my money sh*t together, you are in the right place. With the help of 4 money experts: Amanda Holden, Rachel Richards, Jacqueline Twillie and Whitney Hansen I’ve created a list of the top 8 ways to get your money shit together this year.
The first step in creating a health money mindset is to debunk old money myths you may have heard:
You have to be obsessed with money to make money. Actually, this can be a deterrent for people. Obsessing over money doesn’t make you more money. Instead focus on how you can use your money as a tool to create the life you want.
Create a retirement nest egg. This is the traditional way the people have been planning for retirement for years. But things have changed and we can no longer live this way. Student loan debt is higher and pensions are a thing of the past. Millennials need to accumulate at least $2M in savings to retire at age 65. Creating passive income streams, which we will discuss later, is the best way to secure your financial future.
A 401k is an investment. It’s not, it is a savings account and so is your Roth IRA.
There’s only one path toward financial independence. That couldn’t be further from the truth. There are many ways to reach financial independence, the key is to find the right approach that works for you.
As we mentioned before, Millenials need to save an average of $2M dollars to retire at 65. Sound impossible? Creating a passive income stream now can help take the worry out of saving for retirement. Instead of just focusing on how we save, let’s create passive income streams that can generate enough monthly income to cover your monthly expenses even after retirement.
Rental properties are a great way to generate passive income but there are a ton of options like receiving royalties from a self-published book or creating an online course.
A common thought is that If I work hard and keep my head down, someone will notice and promote me. That’s just not true! Research shows that women who do not negotiate their salaries starting with their first position stand to lose over half-a-million dollars in potential earnings over the course of their careers. Write down a list of why you are valuable in your position so that you can speak confidently when you approach your manager. We suggest using the LATTE method created by Jacqueline Twillie:
Look at the details. What is the market rate for a similar position in your geographic area, and what value do you add to the position?
Anticipate Challenges: You may get nervous talking about your salary expectations or asking for a raise. Think ahead of any challenges that may come up in the conversation and be prepared for them.
Think about your walk-away point. Be keenly aware of what your non-negotiables are.
Talk it through. If you have never stated what your salary expectations are, practice saying it out loud. It’s essential to ask with confidence, so practice by recording yourself to see how you talk and what movements you make.
Evaluate Options. You always have a choice. Objectively review the things that you want and lay all of the facts on the table.
An easy way to get going is to start tracking your expenses for one month. When you aren’t tracking your expenses, you simply don’t know where your money is going. Bucket into categories and identify the opportunities where you can cut back. Usually, your housing, transportation, and food bill are the largest categories that can make the most impact on your savings.
Companies like Mint offer these services for free. If you don’t like to use apps or complicated spreadsheets, journaling will also work.
Remember: In investing, if it’s boring- that’s a good thing.
Slowly buy assets over time that you think will grow. Don’t get sucked into get-quick-rich schemes and focus instead on a core investing strategy. If you do want to be a bit risky, make it a very minimal portion of your investment portfolio.
Take the thought out of it and set up your bills for automatic payments. Pay off your credit cards every month through this method. Nervous that you will over-withdrawal if you automate your payments? Start by creating a cash cushion to get ahead of payments and then put them on auto.
Remember- we trade our time for money. Understanding this helps you reframe significant purchases you are making in your life. Think about your hourly income and how much in hourly wages each purchase is costing you. For example, if you make $100k a year, you make roughly $50/hr. If going out to dinner that night costs $100 dollars, is it worth it for two hours of work? The answer could be yes, but it’s always good to evaluate.
Don’t judge yourself, but note what emotional triggers cause you to spend money. Is it boredom at work that causes you to start shopping? Write down your emotional money triggers and double-check that a particular emotion isn’t causing you to click that buy button.
Be patient with yourself and the process; getting your money shit together doesn’t happen overnight. For more insightful money conversations, you can check out all episodes of Everyone’s Talkin Money here.