Who wants to be a millionaire? Or a better question is, who doesn’t? Do we need to have a million dollars to be happy? Probably not, although it wouldn’t hurt either. I knew that this title would catch your attention, but our real goal here is to be adventurers, right? And trying to go on adventures when we are burdened by debt is kind of like trying to row a drift boat down the river with the anchor down. You can row your heart out every single month and never make any progress. And how much more fun would it be to adventure without having to worry about how to pay for it? But how can you get there from here? Especially if your “here” feels like a desolate place that barely covers the bills now? How can you even think of getting to a place of financial freedom if you’re just scraping by paycheck to paycheck?
This isn’t an article about starting a new business, or getting a new job. This is an article about using the resources you have now. Once you have your finances under control, you will have the freedom to change jobs or go back to school or start a new business. But for right now we’re going to concentrate on making your life better the way it is. This is a story from someone who started out just like other normal Americans. We weren’t given any kind of inheritance, starved (literally) through college, work somewhat normal jobs, and still managed to pay off all our debt, house included, and are now free to choose our adventure almost every day. So when I say I know where you’re coming from, I really do. In my previous article on living debt free, I talked about some of the reasons that we should live that way. Now let’s talk about the how.
Sometimes the hardest part of any new plan is knowing how to get started. I don’t consider myself an expert, but I can tell you how we did it, and add to it an Accountant’s perspective. Most articles you read will tell you that the first step to gaining control over your money is to live by a budget. I agree, but this isn’t something typically taught in school, so the average person has no idea how to begin. That’s where we’re going to start today, with the very basics.
When I was teaching Accounting at our local community college, I would have students set up a budget for themself as if they were an actual company. I would first have them keep track of their expenses for a whole month, and then they would classify these expenses and make up financial statements for themselves. Inevitably, almost every student would put in their narrative that they were surprised that they spent as much money as they did eating out, or at Starbucks, or on basics. The point was that they really underestimated what they were spending. I know that I am always surprised at how much money seems to just “seep” out, without my knowing exactly where it is going. And it is surprising how much it costs for groceries, or kid’s activities, or fuel. But the only way to really see that is by tracking your expenses.
What I want you to do for a full month is to track every dime you spend, whether it be for groceries, clothing, housing, insurance, utilities, or even the quick trip to the convenience store on your way to work. Every. Single. Dime. At the end of the month you will have a better idea of what it costs for you to live, along with being able to see where you might be able to cut back a bit. Once you are armed with that information you will be ready to construct a realistic, livable budget.
While you are tracking those expenses, there are a few websites to visit that give tips on budgeting, especially budgeting for different stages of life, because honestly a college student has different goals than a family, or a retired couple. There are sites that will give you sample budgets, and there are apps that let you enter your budget then track your spending to make sure you are spending within your budget. Look around; see what format fits your lifestyle, what feels comfortable. If you have any questions you can post them in the comments below, or DM me. And remember what your motivation is. We want to be free from financial burdens, be able to go and do what we want, when we want. We want to be free to live our own adventures. I want you to own your adventure, in the sense that you can choose your lifestyle without having a big heavy credit card balance dragging you back. The time to do it is now!
www.mint.com For info on setting up a budget, paying bills, and more. Also offers an app.
www.everydollar.com Budgeting tools, tracks spending, also has an app.
www.feedthepig.org Tips on saving, budgeting, and investing. Lots of different articles that pertain to different stages of life.
Microsoft Excel also has several different budgeting templates