3 Amazing Resources That Helped Me Get Control of My Finances
Being a blogger who writes about teaching my son personal finance — maybe you think I’ve always been good with money. That’s what gives me the creds, right?
Eh… not exactly.
I’ve never been in a really bad place, but I’ve never felt really good — like I was in control and going in the right direction.
It’s not for lack of trying. I tried for YEARS to get it together and feel good about my state of affairs. I’ve always balanced my checkbook and attempted budgeting at various points in my life (even enlisting my cousin’s help as she learned about it herself). There were homegrown worksheets and an elaborate configuration involving a shoebox and manilla folders with the days of the month for organizing receipts.
But I didn’t have a system that worked. I didn’t have a direction, or goals, or practical steps to take to meet those goals.
Until three years ago.
In 2014, a coworker introduced me to Reddit. (I could write a whole post on how much of an impact Reddit had on me and how amazing it was to find supportive communities for the difficult parts of my life, but this blog is about money!)
Personal finance is a default subreddit, meaning that you can see posts from it on the main page. I saw that people were posting all sorts of details and questions about their finances and reading the responses was super interesting.
Just the fact that people were talking about finances was revolutionary. Money is so taboo that people would rather talk about religion and politics than talk about it.
Religion and politics. Just let that sink in.
And I’ve experienced that in my own life. I don’t have a friend in this world, aside from my significant other, who I would feel free or comfortable having an in-depth conversation about money with.
So being exposed to what was and wasn’t working for people allowed me to take a good look at what was and wasn’t working for me. It allowed me to learn and try out new ideas.
In addition to the postings, I found the wiki, the detailed steps graphic (a flow chart on how you should allocate your money) and started reading through the book list (borrowing them from the library or scouring thrift stores for copies of my own).
I also ran into a lot of posters who recommended something called YNAB. At first I thought it was some kind of scam — how could so many people recommend something so wholeheartedly?
It turns out, it’s because it’s that awesome.
YNAB is short for “You Need a Budget” and is budgeting software based on the envelope system.
There are four rules: give every dollar a job, embrace your true expenses, roll with the punches and age your money. Basically, when you get paid, you divide the income into categories where you think you’ll spend it (until the next pay check). You can adjust during the month, however, you shouldn’t spend more than what came in.
All this is done through the software — available on your computer and smartphone — instead of using old-school envelopes and cash.
I read through their website, signed up for a free trial and attended a few of their webinars. After a false start, I got going and now totally understand what all the other redditors were talking about. It was a game changer for me.
Before YNAB, I couldn’t keep money in my checking account. Any money that I saw in there I would spend.
To save for Christmas and other yearly expenses, I constructed a very intricate system where money was transferred between various accounts. It was tough to keep track of, not streamlined at all and one false move could bring down the whole house of cards.
YNAB resonated with me because one of the aforementioned worksheets was actually taking a stab at this concept. Every two weeks when I got paid, I would break the income into categories of what I thought I’d spend. I’d keep receipts, write the amount in the appropriate column and keep a tally.
As you can guess, this was not only labor-itensive, it wasn’t very convenient. When I was shopping, I never knew what I had left in the category because the worksheet was at home.
I also really struggled with receipts that spanned multiple categories as well as categories that weren’t really well defined — like school pictures and soccer registration.
But I digress.
At this point, I’ve been using YNAB for almost two years! I have a buffer and am able to save like never before.
(Side note: I use YNAB 4. I paid $60 in September 2015. YNAB is now subscription-based — with more bells and whistles — and costs $50/year. Some people may balk at paying money to save money, but it’s been worth it to me. At this point, I can’t see myself NOT using it and I will most likely upgrade to the new version when I am not able to use the existing version any more.)
As I mentioned earlier, I started reading through the Reddit personal finance book list.
The Total Money Makeover
The book is an expansion of Dave Ramsey’s 7 baby steps, which are: Save $1,000. Pay off debts. Save 3-6 months of expenses. Invest 15%. College. Pay off Home. Give.
The planner in me rejoiced. Finally, a plan! And one that seemed feasible.
When I started this blog, I was on step 2. I’m now on step 5.
I Will Teach You To Be Rich
Some might say that books on personal finance are boring or preachy. One thing I like about “I Will Teach You To Be Rich” is Ramit’s writing style. It’s no-nonsense and entertaining.
He tries to appeal to people who don’t want to get into the nitty gritty of things — they don’t want to go full-on-frugal, feel deprived or be overwhelmed.
It’s geared towards millennials and his goal is to get people to start saving young. If you’re older, though, don’t fret. Remember the old Chinese proverb: “The best time to plant a tree was 20 years ago. The second best time is now.”
Ramit breaks the book down into digestible and actionable steps. He advises you to optimize your credit cards (and yes, actually use them — IF you pay them off each month), make sure you have a great bank with no fees, pay attention to how much you are spending (and spend on what matters to you), automate your savings and invest in low-fee index funds.
It’s good stuff.
I think what helped me the most was that I started studying. I could think of ideas in my own little world all day long, but only by increasing my knowledge — finding other people who achieved what I wanted to achieve — was I able to stop treading water and start moving forward.
Jim Rohn has an audiobook called The Art of Exceptional Living. (If you have a chance, listen to it. He’s a phenomenal speaker.)
In it, he says:
“If you wish to be successful, study success. If you wish to be happy, study happiness. If you want to make money, study the acquisition of wealth. Those who achieve these things don’t do it by accident. It’s a matter of studying first and practicing second.”
I still have a ways to go, but I feel confident that I’m making positive progress. I continue to read and try to learn more — for myself, but also because I want J to have a good example in his life. After all, that’s what parenting is about.
What about you? What books or resources or systems do you use that you recommend?