Hello everyone! I am super excited to share with you yet another fantastic episode of Stacks and the City. Each month on the show we'll explore a theme and this month we're tackling Discipline. All month we will explore the relationship between discipline and reaching your personal finance goals. We will explore discipline as we talk about budgeting (dun dun dunnnn). I want to share three high level points with you on how to approach budgeting in your everyday finance:
1) You are the BOSS, CEO, HBIC...whatever floats your boat.
Think of you personal finance as a business. As the CEO of your business, it is your job to control how much money goes in and how. You dictate who gets paid what and how much you pay yourself. Every business strives to have one thing- PROFITS. Does the business of your personal finance net positive every month? Is the balance sheet of your personal finance business faring well? As CEO, you do what you need to do to profit from you hard work every month!
2) Income vs Outcome:
Income: That is money coming IN to your account. Think your paycheck(s), alimony, sugar daddy money, do you! INcome
Outcome: This is money coming OUT of your account. This isn't as fun. Think bills, bills, bills. Think student loan payments, and rent. Also consider going out, online shopping, eating out, uber rides, and grocery shopping. The outcome is what we continually subtract from our account every month.
There are three ways to ensure that you have more INcome than OUTcome each month:
a) Same INcome less OUTcome:
This is the most basic way to start saving coins. You keep the same income and work to decrease the amount of spending. This takes DISCIPLINE. Work to cut corners in your budget. Focus on ways to decrease your discretionary spending- that is- money that isn't allocated to bills. Cash diets are great for staying on track of your monthly discretionary spending.
b) More INcome same OUTcome:
This requires using some free time (weekends, nights) or using any extra income (bonuses, pay raises). With this method, you are still able to live the lifestyle you currently have. Get those nails done. Be a nova babe. Bottomless brunch until you spleen cracks! However, you have a second job with another stream of income coming into your bank account. This allows more money coming in than going out. For this method, I recommend starting a separate bank account dedicated to storing your side hustle income. Make this bank account as inaccessible as possible. Cut up the debit card. Forget the password to the account. Don't download the app. The money to spend does not exist if you don't have the ability to spend it.
c) More INcome Less OUTcome
This method is a combination of the two (and my personal favorite). You work to increase your INcome and lessen your OUTcome. I used this method to get on the fast track for saving and investing. Get that second job, get that side job, and work to decrease every aspect of spending in your life!
3) SET A GOAL
Make a financial goal. Write it and post it somewhere visible. Make a goal that is feasible, attainable, and challenging. What do you want to do with your personal finance? Save for retirement? Save $1,000 for that trip to Paris? Spend $50 more on paying back debt? Creating financial goals makes obtaining them approachable and possible!
Remember, getting your personal finance right takes DISCIPLINE and TIME. You got this!
That's all I got for now. Don't forget to rate, comment, subscribe and share. If you have any questions:
Listen to the episode here and Subscribe on iTunes here!