Reader,
Tired of living paycheck to paycheck?
Do you want to put your family in a better financial position? Me too.
As a child, my parents did the best they could to set me up for success, but conversations about money management were minimal.
As a result, I entered adulthood ill-equipped to properly manage my finances. And due to a lack of financial planning, I have much less money in savings than I would like.
But I am determined to change that! I believe I'm on the right path.
For me, change starts with a mindset shift and a budgeting rule. Watch video
1) Mindset Shift: My Finances Are My Responsibility
This mindset shift is simple, but I believe it is foundational. When I can admit that my current financial status is due to my choices—I am empowered to choose a different path and make better choices.
Blaming my parents, the school system, or the economy will not set my family on a path to financial freedom. Excuses don't break cycles.
Yes, external factors impact our finances. But we need to focus and take ownership of the factors that we can control. One thing you can control is your level of financial education.
Ways to invest in your financial education:
- Take a personal finance class
- Read good financial books (i.e. The Total Money Makeover - Dave Ramsey)
- Listen to good podcasts/YouTube videos
- Invest in a financial planner or coach
2) Apply the 50/30/20 Budgeting Rule
The 50/30/20 rule separates your net income into three categories:
- 50 % Needs (Housing, utilities, groceries, insurance)
- 30 % Wants (Dining out, subscriptions, non-essentials)
- 20 % Savings & Debt (Emergency funds, retirement account, high interest debt, and charitable giving). We tithe 10% to our local church.
The 50/30/20 rule is a rule of thumb that enables you to categorize and understand your spending habits. Realistically, our family of 8 is closer to 60/20/20.
As I compared our family's actual spending habits, I realized that 10% of our income is spent on dining out. I can think of better purposes for our money than dining out! Now that I have this awareness, I can make a course correction and change my spending habits!
Understanding where your money is going empowers you to make decisions that align with your financial goals.
Our children are watching our spending habits. I want to set a good example for my children so that they are better prepared to manage their money in adulthood.
The consequences of poor financial decisions cannot be erased overnight, but we can change our direction today! So take ownership and know that you can leave a strong financial legacy for your children.
Do you need to make a course correction in your finances? What is your first step?
Watch the video here
Feel free to respond to this email. Would like to hear your thoughts and feedback!
Until next time,
Andre
