It Starts With Financial Literacy
You’ve just looked at your bank statement and you wonder why you always seem to run out of cash before your next paycheck hits your account. Yes, you have some expenses that only seems to grow year after year, but shouldn’t your income be increasing as well?
Maybe you start looking at higher paying jobs at this point, or find ways to show interest in a promotion at your current job. But before you start brushing off the ol’ resume, I’d recommend you start your journey to higher pay by first taking a look at your full financial picture.
Knowing where you stand financially helps you plan next steps in many ways. If you need to take a course in order to demand more money, you’ll need to know if you can afford it. And seeing how much additional cash you need each month to save towards vacations, larger purchases, and retirement is more easily done with developing a budget.
We live in a society where the now is boring and thinking about the future let’s us live our reasonable to wildest fantasies. Creating a budget allows you, however, to have an accurate view on your present money picture, which allows you to realistically plan for the future.
Budgeting Tips
Having the right budgeting tools is the first step towards financial literacy. I’m sure you’ve heard this be said, but it really doesn’t matter which tool you choose, as long as it’s the one you stick with. I personally love a color-coded spreadsheet, but there are budgeting templates you can download, apps to use on your phone or tablet, or you can bring it ol’ school and use paper and pencil. Hell, you can even draw it on sketch paper and accompany it with doodles that make your heart sing.
Once you know what works for you, start looking at all of your accounts, your expenses, your pay stubs, and subscriptions to add to your budget. What are the total monthly expenses? What is your total monthly income? If you’re at a net (+), congratulations! You can buy yourself a savings account and stick that leftover money in there until you realize your savings goal(s). If you’re at a loss (-), take a deep breath and curb your spending as you find ways to save money (I’m looking at you, Amazon subscription), increase your pay, or both.
How This Helps With Your Career
There is a miraculous thing that starts to happen; which is the same when you start making lists as well. You start getting more detailed in your plan. What budgeting does is force you to work backwards with your financial needs and career goals.
I’ve been budgeting since I was a preteen. I would take my allowance money, before I had a bank account, and use the cash method of saving/budgeting by separating the cash into envelopes that had savings goals associated with them. One would be for new shoes, another would be for eating out with my homies, and so on. Now my goals are bigger.
I am 35 years old and the thought of retirement has finally invaded my brain. I am a homeowner as well, and I will be renovating certain parts of the house so that I can then rent it out for passive income. I also plan on working solely for myself within five years and I’ve racked up student loan debt in order to get there. Hence, I have a color-coded spreadsheet.
So, you see, creating that budget helped me find passive income sources, develop a plan to working for myself, and make sure I could afford going back to school. And, if I follow these financial goals, then retirement at 70 looks doable to me.
And before I go on, I want to comment on the retirement age I’ve established for myself. I know a lot of these blogs talk about retiring at age 45, but I actually enjoy working. And with the goal to work for myself, following my passions, age 70 seems like a duh to me. And this does not mean I’d necessarily be working 40 hour work weeks until that age. So when you’re planning for retirement, it’s great to have a vision board created and within easy access so you know what’s realistic and desirable for you.
Budgeting is a necessary habit one must make to get to financial freedom and to accomplish career goals. I’ve always advocated for financial literacy to be taught in high schools and would love to see employers create perks surrounding financial literacy in their total rewards package. But, until that day comes, I’d advise you to seek out the resources found in your local neighborhood. From debt counseling services to budgeting workshops at your credit union, there are ways to seek help if this all sounds so overwhelming for you.
