Similar to our post on Time Management, another top contender for reasons people don’t get outside often is lack of money. Let me start by saying, “I am NOT a Financial Advisor“! Now that we have that out of the way, have you often found yourself wishing you had more money to do the things you enjoy? I know I sure have. We’ll be discussing some tips to managing your money here. We’ll only be discussion some basic premises, but may elaborate on a few of these items at a later date.
Track Your Spending – Understanding Where it’s Been Going
Tracking your current spending is often times a very enlightening process. Especially, if you haven’t been trying to manage your money at all. I know for me and my family it was. If you’re new to money management, I think everyone needs to start here. It is hard to move forward if you don’t know where you are or where you have been. You will be surprised at the amount of money that goes to forgotten subscriptions, gas, restaurants, etc. that you weren’t aware of before. You’ll also forget about some of those recurring payments when you initially create your budget on the next step if you aren’t aware.
I personally use Mint by Intuit. I have been using this for years. It is budget and user-friendly and is the #1 most downloaded financial app. Of course, you can use your desktop as well. Inside of Mint, you can break down your transactions into predefined categories or create your own. You can even split up a transaction where you may have purchased groceries and prescriptions at the same location. It is important to accurately designate your transactions for the next part, trending.
Using the trending feature, you can get an overview of your top categories, see percentages, and filter by various date ranges. From here, it is easy to see where you need to make cuts. This feature is shown in an easy to view pie chart for interpretation. You can break down each category by the individual transactions and re categorize if needed.
Create a Budget – Plan Where it Will Go
The budget is the most important part of a financial plan in my eyes. If you do not have a budget or don’t stick to it, your money will go to areas that you don’t want. I know, we have all said “If I don’t spend it, it’ll still be there!”. Technically, that may be true, but in all honesty, does it? Creating a budget involves some self-reflection on current spending habits and what your goals are. Most of us can’t spend money like Congress, so you’ll have you decide what stays and what goes to ensure that you don’t have more going out than coming in.
You can create a budget inside of the Mint platform (or many others), using an excel spreadsheet, or if like paper and pencil – try the Quick-Start Budget here. If you do decide to use Mint, you can create one inside of your account that will update automatically as transactions go through and will send you notifications as you approach or exceed an assigned budget amount.
Difficulties
The biggest obstacle that I have seen when it comes to budgeting, is everyone expects to be a professional on their first attempt. As we all know, that is never the case with anything, but it’s what we want. Don’t get frustrated when you blow your budget the first month. You’ll find things that came out that you forgot about, realize you actually spend more in a certain category, or maybe you don’t need as much in a category.
A budget should be somewhat of a living document. No, I don’t mean that you change it every time you want to make a purchase that you didn’t plan for. Once you set your budget for the upcoming month, you should try to stick to it. At the end of the month, you should review, revise and go again. Before you know it, budgeting will be a breeze.
Making a Plan – Your Life Depends on it!
The famous quote “Failing to plan is planning to fail” has been used by many over the years, but it most certainly applicable when it comes to finances. Unfortunately, the majority will not end up where they want to be without planning to get there. I guess there are always the lucky ones. There may be some discussion about which is better on the specifics of his plan, I enjoy and understand the plan of Dave Ramsey.
Coming from a Psychology background, I can understand his reasoning behind his famous Baby Steps. After all, having money problems is hardly ever actually about the money itself, but the psychology behind a persons spending habits. I’ll try to come back another day and talk more about Dave’s methodology, but for now I have listed out Dave’s Baby Steps. If this is something you’re interested in, I suggest listening to his podcasts or beginning with his most famous book, The Total Money Makeover.
Dave Ramsey’s 7 Baby Steps:
1: Save $1,000 in an emergency fund
2: Pay off all debt (except your mortgage) using the debt snowball method
3: Save 3-6 months of expenses in an emergency fund
4: Invest 15% of your household income for retirement
5: Save for your children’s college fund
6: Pay off your home early
7: Build wealth and give
If you don’t like the items I have recommended, by all means, find what works for you. Tons of apps, programs, tracking software are available. Likewise, there are also more “Money Experts” than you can shake a stick at. Some do not agree with all of Dave’s principles, especially when it comes to interest rates, what should come first, etc. For a program that is easy to follow for beginners, sound advice, and solid principles, it is hard to beat.
Setting Financial Goals – Be Specific! Goals Should Have a Value and Date!
Retirement – We’ll start here because everyone wants to retire one day. When do you want to retire? What do you want life to look like financially when you get to this age? Use this Retirement Calculator to determine what you’ll need to be putting away to make it happen.
Purchasing a Home – You need to be putting money aside for at least the down payment to avoid any additional charges. Try to keep your payment 25% or less of your household income. You don’t want to add undue stress here.
College – Do you have kids and want to plan for their college? Maybe you want to go back to college yourself. Try this calculator to see where you stand.
Would you like to remodel your existing home, buy a new vehicle, vacation of a lifetime; the list can go on and on of things we all want to do. You can always go back and add or takeaway from the plan, but having the plan itself is extremely important. There will also be some surprises along the way. Always expect the unexpected.
Tips That Apply to All – Because it’s Important!
Plenty of options are available when it comes to finance, I can’t cover them all in one post. Below, I have listed some more important factors that need to be considered.
Cash is King
While this is a Dave principle, there are a lot of others who promote this same idea. There is no feeling associated with swiping a card. Try taking out the cash at the beginning of the month for spending money. It is much easier to see where you stand when open your wallet or purse. It’s easier to say “No” when you pull that last $20 or $100 out making a purchase that you really don’t need.
Tackle Larger Finances a Little at a Time
It is much easier to take bite sized pieces when looking at any large task. Breaking into smaller pieces allows you to avoid being overwhelmed, while continuing to make small wins along the way. This is the psychology behind Dave’s “Debt Snowball”. Sure, you could have a $5,000 debt on a 5% rate and a $20,000 debt on a 10% rate. Looking at numbers, most would say the $20,000 because the interest rate is higher. Unfortunately, a lot get bogged down not seeing the needle move and give up. The same can be said for any large obstacle. Take the win!
Don’t Forget About Yourself
Obviously, if you’re paying off debt, you shouldn’t be living a lavish lifestyle. Often times, we get caught up once we start making momentum and we lose the bigger picture. Yes, getting everything paid off and having a nice savings are great. However, it is important to remember why you are doing these things to prevent burnout. After each milestone or goal checked off, treat yourself. It probably shouldn’t be a new house or vehicle, but a reward.
Taking Action
At this point, you know where your money has been going. You have created a budget using the money you have coming in versus the money you have going out. Lastly, you have decided what is important in your future and where you want to be moving forward.
We’re going to assume that there was some money left over on the budget. Now it’s time to put all those numbers to work. Take any surplus from you budget and begin allocating toward your financial goals in order of importance. NOTE: Yes, retirement is a top priority, but you don’t want to only save for retirement. Budget a proportionate amount for each of the items on your goal list to get you where you want to be.
Making the Money Stretch
There is a likely chance that you won’t immediately have all the funds needed to make all your dreams come true. It’s a reality. This is the hard part! Now you’ll have to decide what stays and what goes in your current budget. Maybe you don’t really need four streaming services? Could you cut back on eating out from four nights a week to two? Hopefully, this will get you closer to where you want to be.
Sometimes, there just isn’t enough income. If that’s the case, maybe you could consider picking up a side hustle? Try selling unused items lying around the house. Do you have a hobby or talent that could make you a side income? You could ask for a raise or try for a promotion at work. There are tons of options available to make some extra cash, just stay away from the get-rich-quick schemes. They don’t work!
Conclusion
While all of these tips may not pertain to your particular situation, we tried to stay as general as possible so that it was applicable to most. If you are looking for tips about a particular subject, please leave a comment and we’ll get back to you. As mentioned earlier, the budget is like a living object. It will change. So will your goals, projects, and your outlook on life. Your income should continue increasing as you get older until you are ready to retire.
I hope that some of these tips will help someone out. Maybe you’ll be more financially prepared and are able to get out and enjoy nature a little more often. Again, if you have any comments or suggestions, please leave them below. If you like what you read and are interested in hearing more from us, please subscribe to our weekly newsletter.
Keep Winning Outdoors!