Take Charge of Your Money Through a Few Easy Steps
By: Jim Katzaman - Get Out Of Debt
Tags: Money, Budget, Entrepreneurship, Finance, Retirement

Money moves have been top of mind as the world tries to get its emotional and fiscal feet back on steady ground. Those who can afford to pop their heads up and look around face a host of challenges.

Among the advance scouts are “wealth whisperer” Winnie Sun and marketing and brand strategist Chelsea Krost. During Krost’s #MillennialTalk Twitter chat, they discussed how those able to do so can put their funds in the best position to ride out the coming months and beyond.

Amid uncertainties, financial stability is relative. Those in essential services might be financially stable but perhaps burnt out nervous wrecks. Those in a service industry are just wrecks.

“Focus on what you can control when it comes to your money,” said Krost, who cut her teeth as a millennial expert. She gave these tips:

Get clear on your monthly overhead.

Get realistic on where you can cut back.

Spend less and stash more — mindset shift.

Avoid your spending triggers.

Look for savings before you buy.

“Most of us don’t have an emergency fund in place,” Krost said. “That makes it even more difficult when something totally unexpected strikes.”

Calamities out of the blue can be real attention-getters.

“These unprecedented times have certainly been a wake-up call for many of us,” Sun said. “You can still find financial stability by taking steps toward building your financial independence.

“Feeling overwhelmed about your finances is normal, which is why learning financial literacy can be very empowering,” she said. “It’s about tweaking how you spend, how you save, how you invest and more importantly, understanding how money makes you feel.”

Sun contributes regularly to CNBC, Forbes and Good Day LA.

Unforeseen Adventures

“You can map out your financial plan,” she said. “It’s much like making a list of what to pack for a vacation. You don’t want to overthink it, but you have to start and you have to see it through. Plan for the unexpected.

“Most of all, focus energy on making more money,” Sun said. “This builds up your financial freedom and creates allowances for minor mistakes, tweaks and unexpected financial emergencies.”

Creating a monthly budget is essential even with inconsistent income.

For any budget, be realistic. It’s hard enough to stick to a budget, but it’s tough to keep a grip on a fantasy.

Krost suggests taking these steps:

Determine your income and how much money you make after taxes.

Calculate expenses. Know your monthly nut.

Schedule monthly bills. Pay on time because interest adds up.

Have a savings plan.

Make budgeting a habit.

“In most cases it’s easier to reduce spending versus making more money,” Krost said. “Look back at your budget and determine what can be reduced. It may be time to break up with your barista.

“Interest fees are brutal,” she said. “If you don’t chip away at credit card debt, you will be continuously throwing money at it without paying it down.”

Monthly Budgeting Exercises

Sun Group Wealth Partners has a free budget worksheet to help people get off to a quick start.

“Begin with the household budget worksheet,” Sun said. “That will help give you an idea of how much you spend each month.

“Repeat your budgeting exercise for a couple months each year,” she said. “It’s sort of like a financial detox exercise where you figure out where all your money is going and areas that you can cut back.”

Budgets need not be permanent, but maintaining one is a good habit.

“Many of my clients now have an internal wallet that knows when it’s time to hold off spending,” Sun said. “They keep in line without even keeping tabs and use a credit card to keep track of monthly expenses.

“Credit card debt can have no place in your beautiful life,” she said. “Don’t start investing until you’re done paying them off. It’s like swimming with a broken leg.”

Money management starts with having a serious talk between your wants and needs. There will be time later to relax and have a few treats again.

“I have truly leaned into the money mindset — ‘Lower overhead means less stress on monthly income,’” Krost said. “Do what you can to cut the fat where you can and manage your spending — especially for independent contractors who eat what you kill.”

Collect Bars of Soap

Sun recommends investing in yourself.

“Write down areas you’d like to improve upon and what skills you’d like to learn,” she said. “Consider adding a new skill, new course, building out your network and collecting soap.

“Yes, there’s a saying in the financial industry that money is like a bar of soap,” Sun said. “The more you overthink it, the more you touch it, the smaller it gets. So, I always believe we should be out there looking for ways to collect more soap. Viva side hustle. Many people have found their side hustles help them make ends meet.”

Side hustles create independent contractors who need smart ways to go about setting up their Solo 401(k) and retirement savings.

“For independent contractors, setting up your own retirement plan is one of those superhero moves,” Sun said. “Unlike your W2 friends, you can have a lot of say on how you invest for your future. Tax-sheltered is your friend, but what plan?

“The Solo 401k has no age or income restrictions,” she said. “Your contributions must come from self-employment income in that year.”

Many of the plans’ criteria are similar.

“As with a SEP IRA, you do not need to be full-time self-employed in order to be eligible,” Sun said. “You could be part-time self-employed or earn a side income from a second job.

“Which plan to select, how to invest?” she said. “Make sure you make the right decision. Set up a consultation with someone who has been a financial advisor for more than 10 years. Experience counts.”

Get Timely with Bills

For those whose credit score has taken a hit, now is the time to rebuild, starting with paying bills on time. At least make minimum payments. Also, you might be surprised that many bills are negotiable, even utilities. You won’t know if you don’t ask.

“Limit the amount of credit cards you use,” Krost said. “Consider consolidating your cards. Only spend what you have — don’t let interest add up. Pay your bills on time.”

Sun gave tips to maintain a healthy FICO score, which is essential in credit ratings:

AutoPay your heart out.

Pay your balances in full each month.

Don’t charge or invest more if you have credit card debt.

For credit history, keep your first credit card that doesn’t have an annual fee.

“If you have credit card debt, keep the information on a spreadsheet,” Sun said. “Rank your debt from the highest ‘interest rate’ to the lowest. Start paying them off one by one.”

During challenging and uncertain times, she said it’s important to stay financially motivated.

“Find a financial buddy,” Sun said. “This could be your partner, your bestie, but better — if not best — have a really awesome financial advisor.

“Staying motivated is never easy, but imagine if your finances weren’t such a big part of your stresses,” she said. “Friends don’t let friends get overwhelmed by money.”

Many people spend their lives learning lessons that were never taught.

“Don’t you wish personal finance was a mandatory course we all had to take in school?” Krost said. “Knowledge is power. Do what you can to educate yourself on money management to ease the stress where you can.”

Reality-Based Finances

Make an honest list of your income and expenses. If you’re true to yourself, you might be surprised how much money slips through your fingertips.

“Think of spending like clutter,” Sun said. “Do you really need more stuff? Or instead, would you rather get to financial independence? Get into the habit of ‘collecting money’ versus new XYZ. That can help you save and invest for your future.

“Get really comfortable with yourself,” she said. “Replace experiences with material possessions. Celebrate your victories along the way — every week.”

Without the help of a winning lottery ticket, good financial habits are not rewarded overnight. Compound interest is the legendary eighth wonder of the world, but it takes time to build, especially in the early years. That means having patience and persistence.

“We all want a lot of money, but first we should want to learn how to manage what we have,” Krost said.

Liberating Money Discussions

One of the first steps of money management is having the gumption to talk about it.

“Money conversations are power,” Sun said. “We need to get over the uncomfortableness of discussing money, debt, student loans — the whole bit. Coming clean is empowering and gives you an honest place to build from. Everyone needs a money buddy.

“Learn to love yourself a bit more, own your value, and recognize that money shouldn’t dictate your happiness,” she said. “Put emphasis on your productivity, your savings and investing, and focus on being the best version of yourself.”

Individual and financial value are directly related.

“Having self-worth is the first step to having net worth,” Sun said. “Insecurity is the fastest way to blow through your money. Know what matters to you. Aspire to reach your full potential. Set your priorities, create savings, and have aspirational financial goals.

“Be the person you deserve to be,” she said. “Be the person who others can depend on. Be the person who others can emotionally — but also financially — depend on. The student can become the teacher. That’s true financial freedom, and I wish that for everyone.”

That mindset will see people through the bleakest of times.

“Once you know what you have, you know what needs better management,” Sun said. “You’ll have a starting point for real serious discussions of how you can build a true financial future. That’s a very exciting stage in life.”

About the Author

Jim Katzaman is a manager at Largo Financial Services and worked in public affairs for the Air Force and federal government. You can connect with him on Twitter, Facebook and LinkedIn.

Disclaimer

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.