JenPlans.com Budgeting Series – Part One

Budgeting Series Part One

 

DO YOU NEED HELP MAKING A BUDGET?
Join me in this JenPlans.com Budgeting Series to gain control of your finances! I’ve done this series in a few private Facebook groups but I wanted to put it on the blog (now that there IS a blog) so that anyone can have access. Part One of the series is tackling the mind game. Will you join me?

YOU’LL NEED:
1. The book Total Money Makeover by Dave Ramsey
2. Access to all of your accounts and debts
3. A way to keep track of your budget (pen and paper, spreadsheet software, etc)

There are a billion ways to do this process, and I’ve formed this series in the way that was most helpful and clear to me. General disclaimer: I’m obviously making some assumptions and that this might not exactly apply to all of you, but there should be pieces that you can take and apply to your situation. I am not a financial expert, I do not have all of the answers. My goal is just to help you take control. Let’s jump in!

This is a mind game, and you’re going to win the game. We aren’t having trouble managing our money because we can’t do math, it’s because of our mind and our behavior. I’m going to ask you to check a few things at the door as we go through this process.

Shame, guilt, and intimidation. Not all of us are here, but a lot of us are. Shame over our current situation, shame over what we may have done to get us here, shame over not pulling ourselves out sooner. Intimidation that you don’t know enough. You know what? Check it at the door. It’s hurting your financial life. I’m not discounting the feeling – it’s *very* real and it’s very impactful, which is why I want to challenge you to let go of it. It gets in the way of progress. No one became good with money overnight. No one was born with it. Just like everything else in life, we have to keep finding ways to learn about it so we get more comfortable with it and get better. Progress! To read more of my thoughts on money and shame, see this blog post.

Getting defensive. Change is tough. It means you have to own up to a lot of behavior you’d probably rather not own up to. Don’t be defensive. Don’t worry about excuses. No one is saying anyone is a bad person. There is ALWAYS more to learn, room to grow, room to get better. You don’t know everything – neither do I. Let’s commit to having the heart of a student and learning as much as we possibly can about personal finances. Owning up to the behavior that got us here is a very important part of this process.

The “keeping up” mentality. You have no idea what everyone else’s financial situation is. Let’s commit to stop paying attention to what everyone else has or gets. Commercialism is trying to teach you that you need what everyone else has – the next thing has to be yours. Consider this; if you didn’t get that thing, and then all year long you didn’t have All The Things, you’d be just fine. In fact, you’d be just fine with a bunch more money in your pocket. So take a moment, step back, and check that at the door. I’m not saying that you shouldn’t have things you want, I’m saying that you shouldn’t be driven by it. We’re going to have to reprogram ourselves to be driven by other more worthy things than Things. Many of us are trying to have the lifestyle of our parents and we aren’t really understanding that for many of them, it took them 20-30 years to get there. If you’re in debt, don’t’ have an emergency savings and retirement contributions, you cannot afford your current lifestyle. You are living beyond your means. That’s a really tough pill to swallow but it will begin your change into a financially healthy person when you acknowledge it.

Anxiety over the planning/procrastinating by planning. Um, let’s just say I’m ultra-guilty of this. If the envelopes and the budget and the notebook aren’t perfect, I might as well quit! That was me for a long time.  If I can’t figure out how to categorize my target purchase, my whole budget is out the window. That was me for a long time. I have two thoughts on this: 1, In the end, it doesn’t matter how you’re doing it as long as you’re doing it, and 2, you’ll figure it out as you go along. It’s not going to be perfect the first few times. But we’re focusing on progress, not on perfection.

SELF-REFLECTION
Now that we’ve checked things at the door and settled in, it’s time to start getting to know ourselves better. Answer these questions for yourself – ON PAPER:

  1. What’s been getting in my way?
    1. For each thing, think of TWO ways you’ll nip it. One isn’t enough sometimes.
  2. What am I willing to give up for a while so that I can accomplish my goals? What behaviors can I change?
  3. When is it going to be the hardest for me to stick with a budget? How can I push through it?
  4. What am I missing out on by not having a solid budget?
    1. Now
    2. 5 years from now
    3. 20 years from now
  5. How will I feel when I have total control over my money?
  6. How much of what I have do I really need? What are ten things around my house I no longer need? Make two columns; item and what to do with it.
  7. Why do I want to do this? Why is this so important?
  8. THE BIG QUESTION: How can I be a good steward of my money? We all have such limited resources in this life and it is a big responsibility to manage them. How can I be a good steward of what I have?

HOMEWORK FOR THE NEXT SESSION
In a few weeks, we’ll move on to the next session. You’ll need these parts completed before moving on:

  1. Read Total Money Makeover, and read it with a pen in your hand to mark up parts that speak to you. If it’s overwhelming to you, make a commitment to just get through the first five chapters.
  2. If you’re married or share finances, ask your spouse complete the above questions and talk together about your answers.
  3. Get rid of the ten things in number 6 above. You need to physically clear things out of your life for two reasons; 1, to show you that you don’t need as much as you have and 2, because when we are continually getting rid of excess, we are less driven to accumulate more.
  4. Get access to all of your accounts and debts. All login information, all balances, all interest rates, all payment information.

See you next time!

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Money and shame

Money and Shame Pic

Money shame is real.

I had outlined this post when a dear friend sent me a text message. “Why do we go to the doctor when we’re sick, bring our car to the mechanic but we aren’t supposed to talk about money or ask for help when we have money questions?”

Money shame. Somewhere along the way, the notion that it is impolite to discuss finances has gone to an extreme where no one talks about money ever. Sure, it’s still impolite to ask someone how much money they make or how much something cost them, but what about the rest? What about those struggling with money? With budgeting? With debt? With savings? With retirement? Money is so complex and emotionally charged, it’s one of the top reasons for conflict in relationships and it causes stress in the lives of countless people. Its management is also critically important to your future and security. I’m going to talk money because I think financial literacy is important.

There are two MBAs living under our roof and neither of us had done a true written budget until last year. No matter how much education you have, there is very little exposure to managing your own personal finances. It’s not that we didn’t want to or that we weren’t smart enough, it was a combination of not knowing how, and for me, some shame. I read Dave Ramsey’s “Total Money Makeover” in three days while my husband was gone on a business trip. I opened my laptop, created our complete budget and when he came home, told him about our new plan. He was totally on board and excited (relieved?) that we had a path. I was so excited that I shared with a few close friends and family members. The responses were so interesting.

“Ohhhh, Jen. I’m so sorry. I thought you guys were doing okay . . . .”

FREEZE. Okay. This response, I will admit, sparked some shame. We WERE doing ok. We could pay all of our bills. We never worried about feeding our family. We were saving some. We were able to give gifts and have fun. We were fine. Why did a budget suddenly mean that we weren’t doing okay? Are budgets only for people who aren’t doing okay financially? “Doesn’t that feel too restrictive?” “Only poor people need to budget.” “Only people with a lot of money can budget.” “You work hard, you DESERVE to get whatever you want.” WOAH. No wonder we have money shame.

For a lot of people, money shame comes when you have to say no, when you limit, when you have to own up to your own financial behavior, when you spend money you know you don’t have, when you know you should be changing your behavior and don’t, or when you ask for help. It also prevents us from change. “I deserve,” “I earned,” “I want.” Disregarding our long-term for short-term gratification. Our focus culturally has shifted from being wise with money to materialism and the price is high. Any of this sound familiar?

I challenge you to let go of the shame. For so many reasons. The biggest is that shame weighs us down and gets in the way of happiness. It gets in the way of actually being able to help ourselves financially. Don’t let your shame rob your future. Saying no is hard, asking for help is hard, owning up to your behavior is hard, but once you do it, you’re free! You can go on the path. You can learn. You can grow. You can pay off debt, save and be financially secure. You can give. You can win.

The single best way to control your finances is to control what goes OUT. Get a written budget. “The Millionaire Next Door” teaches us that most millionaires become millionaires because they control what goes out. They don’t buy things they can’t afford. They save and invest. They are disciplined. They say no. And most of them did that from the ground up – not from inheritances or the lottery. Hard work and smart choices. They aren’t ashamed to limit themselves.

It’s something everyone can do…but you have to let go of the shame.

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