If you’d asked me a year ago, I’d NEVER thought I’d be writing a post like this on financial confidence. Money has always intimidated me and stressed me the F out, because I’ve felt so much lack in this realm. I would have thought writing a post on how out of control I felt with money would be more like it. But it’s amazing how quickly you can change your mindset around money.
I’ve really worked on my “money story” and all that jazz for a few years now, but I was still feeling stuck. I declared to myself that this would be the year I would start making big strides to regaining financial confidence and control in my life.
I didn’t exactly know where to start, but I figured that I’d research and figure it out along the way. So I read books, visited blogs, tried out spreadsheets where I planned out my monthly expenses but I still felt financial overwhelm.
Then I discovered an application called YNAB (aka You Need a Budget) that we’ll get to in a sec, and it was a game changer. Budgeting sounded horrible to me, because I was 100% sure I lived paycheck to paycheck. And the idea of a budget felt restrictive, claustrophobic, and a rabbit hole of depression. Okay that’s a bit dramatic, but still, I felt like it would only highlight the things I couldn’t have.
But I found I actually got really excited about looking at my bank account, approved transactions, and budgeting my money. You guys, this is not me or how I have ever felt about money. But somehow YNAB made it really fun and freeing, and all of the sudden I had major financial confidence.
My reality:
Without going on and on in too much detail, I wanted to share my financial story. I figure then you’ll understand how crazy it is that in a matter of a week my money mindset had shifted 100% even though nothing had changed.
I was a girl who went to college taking out massive student loans to pay for 4 years of education and then even larger loans for a year abroad for graduate school. Suddenly at 23 years old, I was making giant student loan payments every month. The instant I entered adulthood I was saddled with debt upon more debt.
And we all know entry level jobs don’t pay well, so trying to pay back these loans on little money and still live is a challenge to say the least.
Then in my 30’s I got a little too friendly with my credit card in an effort to try to grow my side hustle. Suddenly I was also adding credit card debt to my monthly payments. To say I was overwhelmed is an understatement. And my lack of savings was also something that weighed on me.
Now maybe you can’t totally relate, or maybe you can. But either way, you may still relate to the idea of not having financial confidence. After all, you could make serious bank and have no debt but still not feel in control of your finances. We’re all living unique experiences, but money tends to be many people’s biggest stressors.
Why YNAB:
I haven’t read Dave Ramsey’s teachings too much, but YNAB seems to follow his principle: give every dollar a purpose.
Now when I first created my budget in YNAB, you learn the goal is to get your total money balance to $0. As someone living in lack that was hella scary to do. I felt like I should be reserving money. But the fact is that you’re so much more likely to overspend if your money isn’t allocated.
So once I realized that, it was incredibly freeing! I’ve doubled my savings since April, started saving up for car insurance many months in advance, and also saving for programs and courses that I want to do in the future. Um 2017 Kelli could never have figured out how to do that.
I love traveling, so I started a savings category specifically for vacations, and I’m shocked at how much I’ve comfortably allocated there. I’ve also created goals for annual subscriptions, so I can set the money aside each month. That way when the payment comes out, I’ve already planned for it. And I know I’ve got it covered.
And there’s no feeling bad if you overspend somewhere. Maybe you forgot about a birthday or something health related came up you hadn’t budgeted for. You can easily move money around to make it work and stay on track.
THIS CONCEPT IS INSANELY EMPOWERING!!
My 5 Steps to Financial Confidence:
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Know Your Numbers
This might be the most difficult step, but rip off the bandaid and do it. Go log into every credit card, savings, 401K, and loan account you have. Write down the balance, how much you put towards it each month, and when in the month you pay it.
I cringed the first time I thought about doing it. And then I actually started crying like a crazy person when I realized I was 2 payments away from paying off a student loan. I’d literally buried my head in the sand about my student loan balances, and couldn’t believe I’d nearly paid one off.
Holy shit it was like I could finally see a light at the end of the tunnel! Another plus with this is that you can keep tracking it and see those balances go down over time.
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Forgive Yourself
Especially with my debt, I feel major guilt about letting myself get into these situations. But those decisions were made with the best of intentions, so let the f*ck go of any negativity here. Now you get to pay back on debt that was given to you when you were in need of it.
So look at your lenders as a blessing that they gave you money in advance for your dreams and desires. That’s a tip I got from Kate Northrup in Money: A Love Story, and it’s super empowering.
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What’s Your Cash Flow?
This is where I’ve found YNAB really useful, because I know every month to the penny where my money goes. So get a good idea of what your income is each month (or average if it fluctuates). And then dive into your bank accounts and see what you’re spending your money on – what are the expenses that you’ve had every month? Then subtract your expenses from your income to figure out how much extra (if any) you have each month.
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Start Budgeting
What I found to give me the most financial confidence is the thing I avoided like the plague. When I started budgeting, I made a game changing realization that I DO NOT live paycheck to paycheck. What?!! I swear I did. That’s totally because that was the story I told myself on repeat for 14 years.
But YNAB proved to me that I actually was doing way better than I thought I was. And suddenly you start spending money differently. Rethinking certain purchases or having more clarity about what you should put money towards and what you shouldn’t.
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Setting Financial Goals
Once you get a handle on your finances, then you can really start planning out your goals. You can decide if you want to save up for travel, how you want to pay down your debt, and more.
So maybe you want to figure out a way to bring in more money to pay down your loans or credit cards. Or perhaps you want to cut down spending to use money you already have for decreasing your debts. Or maybe you want to figure out how to invest extra money you have. Now that you have the facts about your finances, you find clarity and empowerment around money.
Game changing Resources for Financial Confidence:
- Obviously YNAB is huge for me, so check it out and get a free month using my affiliate link. It’s the best investment hands down I’ve made all year. (And no, they’re not paying me to say this.)
- Find people with financial backgrounds that inspire you. Whether Kate Northrup or Dave Ramsey or someone else is your style, just find something that resonates with you.
- Books: I love Money: A Love Story for a real, honest look at how to get out of your financial woes. Think and Grow Rich, The Science of Getting Rich, and Rich Dad Poor Dad are all great books to sink your teeth into as well!
- The Money Love Course by Kate Northrup. I just signed up for this and am flying through the course, and it’s an extension of the book. You’ll find updated concepts, exercises and ideas for how you can gain financial confidence.
- Two blogs I follow and their newsletters are Money Bliss and Fortunista. They both have great tips and offer all sorts of ideas for feeling in control of your finances.
- The Secret to Money is my favorite money related app, so definitely get it. I think I paid $2-3 and it’s using the concepts from The Secret but is strictly financial.
Okay I have to chuckle a bit that I’ve written so much here on this topic. But the fact is that my stress around money then means that I know I’m not alone. Whether your story is like mine or totally different, these principles and resources can be a HUGE help.
Also I know I keep talking about YNAB a little obsessively but the fact is that it changed my whole outlook on my finances. And THAT is worth sharing with you every damn day. I’m not saying my debt is paid off, but I know I will pay it off faster thanks to a budgeting tool.
Literally I look at my budget every day checking out my categories and especially my Age of Money. That’s a number that tells you how long you’re essentially keeping your money around before you spend it. So the higher the age, the more you’re planning out your spending in advance. So yeah, I’ve totally become a nerd about budgeting and find myself tweaking categories, creating new ones for areas I want to save.
If you want to check out YNAB, definitely click here for my affiliate link for a free month. The company is great to work with, has amazing resources and videos to help you set up your budget. Plus it also syncs with your various accounts to show your current balances and activity. I’m freaking obsessed!
I’d love to know more about your desires for financial confidence and control. Are you wanting to become better at saving than spending, need to desperately pay down debt like me, or just want to be more in control of where your money goes, for example? Let’s nerd out together over this topic in the comments below!
Stay inspired & let’s all gain some more financial confidence!
~Kelli
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