THE SECRET TO IMPROVING YOUR FINANCES
Looking to make a change in your financial life? Let me tell you what actually worked for me.
For years I struggled to stabilize my financial life. I spent countless hours working just to put that money towards my bills.
At the time I felt like I never could seem to get anywhere. I never had a savings account and never had enough money left each week to even begin to save. I worked multiple jobs at times and often struggled to even make my minimum payments. I did not understand how anyone ever could pay off their debt or even start to build an emergency fund.
I read finance books aimed at people like me and soaked up all the advice. They suggested that you build an emergency fund preferably six months of living expenses. Many of these books also suggested what they called the snow ball method or even the debt avalanche when paying down debt. I would read these things and I guess it just never clicked for me why I could not seem to make this work. I wanted to try and follow the suggestions in these books but I just never felt like I could. No matter how much money I made I never had any money left to make a difference.
Constantly frustrated working every week and having nothing to really show for it. I wanted to put aside money in savings and pay off my debt but did not know where that money would come from. Then one day I guess it just clicked. The problem was not the amount of money that I was making or even my bills. The problem was me.
Consistency and self-discipline
One day I decided to try a savings plan that had been recommended by a girl that I worked with at the hospital. She told me she had done this plan the year before and this was the first time she had a savings account. I was skeptical and then she mentioned that it started with a $1 - $2 a week at first building up over a period of time.
I went to Pinterest as she suggested and located the 52 week money challenge. I decided that this would be the year that I finally started a savings account. That savings plan went with me to my desk at work the year I began. I printed and hung it beside me in my cubicle where I could see it every day. At that time I had committed myself to at least giving it a try. That was the first year I had a savings account and I now know that it will not be my last. I now realize how important consistency is in managing your personal finances.
How to stop making excuses and start that savings account
I discovered a lot about myself that year as I began that savings plan and committed to making it work. That was when I discovered the most important steps for me in making a difference in my debt. The way to finally prioritize and take action on starting a savings account is to ....
1. Exercising self-discipline.
2. Developing a consistent plan and behaviors that are aligned with that plan
3. Remember the amount you save does not always matter just make sure you start
What I finally learned about my choices and about managing my finances
The biggest thing I discovered that year is that a little bit every week can make huge difference. Saving $1 the first week $2 the second week seemed like nothing but after 52 weeks I had enough to pay off $1,378 of debt. That made a tremendous difference in my life at that time. That first year I actually chose to do just that and the second year I placed it in savings and left it there. Each year afterwards I have used this same savings plan and have built an emergency fund that this year finally reached a milestone in my savings account that I will never forget and never want to go backwards on if possible. I am so proud of the difference it has made in my life.
The lessons that I learned regarding consistency in managing your personal finances and in building a savings account do not just apply to saving money. They apply in so many areas of your financial life. Paying down debt and Investing can both be affected greatly by these principles. What people do not always realize is that the small consistent behaviors are often what makes all the difference in our finances.
How these principles apply to paying down debt?
Just like saving money the same principles can make a huge difference in debt payoff. We always think what good will it do to pay an extra $50 onto our debt every month? $50 a month will barely make a dent and that $50 might make a huge difference in our present situation. Or does it? Often if we are not disciplined $50 a month can be gone in no time and be wasted and you are left with nothing really to show for it. While in reality $50 times 12 months accumulates into $600 which can definitely make a difference in your current debt.
How this applies to Investing?
I started Investing in my 401k at the age of 29 after choosing to delay it for the very same reasons. I had made the same decision based on the same feelings for many years. I always felt like I was constantly broke and At that time I believed that even 1% - 3% from my paycheck would hurt too badly in my present situation. When in reality I now realize that the few dollars that I would barely have missed could have made a huge difference. The difference was not only in the few dollars that would be deducted from my paycheck but also in the few dollars matched by my company up to 3%.
I started a job with my current company appropriately 17 years ago today. A company that offered up to a 3% match out of each paycheck and has continued to do so over the years. If I would have started with just $10 - $20 a paycheck 17 years ago I now realize this consistent behavior would have made a massive difference in my retirement savings. This would have been possible in the amount saved over the time period of 17 years, the company match, plus the Interest earned on my Investments over 17 years time. Not to mention the compound interest that could have been earned for many years to come.
What I have learned about my finances and how I am making a change for good
Today I choose to learn from my past and the many poor financial choices that I have made. I choose to speak out and help others hopefully make smarter and better financial choices than I did. I can be grateful for the lessons learned from the mistakes I made and move forward making small changes in my own financial life. I realize today that those many choices I made over the years were choices to keep me a prisoner of my debt and my bad financial situation longer. Because I do not want to return to this lifestyle of debt I am now committed to consistent financial choices everyday going forward.
My financial goals currently include
1. Saving every year using the 52 week money challenge (often saving more whenever possible)
2. Investing in my 401k as well as additional Investing on my own (small amounts saved using my Stash Investing account)
3. Eliminating a little at a time the only debt that I have remaining today (My student loans and a small hospital bill)
I now realize that my future financial situation is greatly affected by what I chose to do with any remaining money I have from each paycheck. Consistently saving even a few dollars a week or investing a few dollars a week can seem like nothing but over even a year it really can make a huge difference.