As I’ve mentioned before, I kind of hate the word “budgeting.” (I wrote a whole post about it HERE) I don’t know about you, but it can feel very restrictive.
This is going to be a short post today because I think what I’m about to say is extremely straightforward. I’m going to call it the “2-3 Things Money Mindset.” Here’s how it works:
ALWAYS Pay Yourself First
So many people don’t know what that means, so I’ll tell you! It means to set up automatic payments to your retirement accounts. Don’t have one? Call your local Edward Jones and set up a Roth IRA. Ideally you’ll max that out every year, which is around $6,000. The compound interest will work in your favor and that $6,000 will grow like ca-razy by the time you retire!
Pay Your Essentials
Here is where things can get tricky because “essentials” can mean a lot of different things to a lot of different people. This is where you HAVE to tow a hard line, though. Essentials for the sake of this conversation are: Mortgage/Rent; Gas; Debt Payments; Utilities; Groceries; Healthcare costs; Pet food/Care, etc. You can always shave money here and there with essentials (being better about turning off lights, carpooling, etc.), but generally you’re going to be paying roughly the same amount on these each month.
Choose 2-3 Things You Want to Prioritize Your Spending
Here is where this gets fun. Once all of the non-negotiable things are out of the way (and, yes, saving for retirement IS a non-negotiable), you choose 2-3 things that you want more than anything and prioritize your spending accordingly. For me, it’s: paying off my car, travel and eating out at nicer restaurants. Now here’s what you’re probably thinking–“Brittany, if you’re being financially sound, you can’t be eating out at restaurants.” Notice, however, that I don’t have things like clothes, handbags, shoes, Starbucks, Chick Fil A (see the feature photo.. Sniffle sniffle) or Chipotle on my list. I said nicer restaurants. By default, this is not going to happen as often as (for example) a Starbucks run or a Chipotle run. I’m willing to sacrifice the every so often “I’m too lazy to cook lunch” for a pasta dish and vino at Maggiano’s (don’t judge–that place is delicious). I also know that the interest rate on my car loan isn’t terrible but it also isn’t great. What might not be a priority for one person to pay early (maybe you have a car payment and it doesn’t bother you one iota) drives me absolutely bonkers. I can’t wait for that damn thing to be gone. Finally, travel is my drug. I love it and can’t wait to make up for lost time in 2021. We have a trip to Mexico planned and are also hoping to go to Austria this year too. It’s going to be SO great… But it’s also going to be expensive. So, if that means that I’ll have to sacrifice a Chipotle burrito, not buy new clothes for a while and continue freeloading my parents’ Netflix account (thanks, Mom and Dad!), I’ll gladly do it.
Give yourself a timeline and stick to it.
My timeline for my three things is through the end of March 2021, at which point I’ll reevaluate because, barring some major issue, I’ll have my car paid off by then (YAY!!). Most likely I’ll just take my list down to two things, but maybe there’s something else down the pike that I’m dying to put on my list (now that I think of it, I’m DEFINITELY going to be needing some major Botox at that point..). When you make your list of three things, all of your spending should be by looking through that lense. If a fancy haircut is on your list of three things, that might mean skipping that caramel frap until you’re able to pay for it. Shorter term financial goals should have shorter timelines; longer term financial goals should have longer timelines. HOWEVER, it’s important to be ambitious with your timelines. If you need $40K for a down payment by June 2022, do some basic division and get to it, girl.