Hello! My name is Kimberly and I’m a faux financial. Well let me just clean this up a little, I’m pretty responsible when it comes to my necessities but when it comes to my fun! I’m terrible, no discipline what so ever! I’m ashamed because I actually have a BBA in Finance. Although I’m responsible in one area, it’s those other areas that keep me from elevating to the next level of financial freedom. So today I’ve solicited one of the MOST responsible people I know to answer a few questions for us. My best friend Dr. Shawn Stewart is amazing at so many things but I’ve found that she’s transcendent in the financial discipline arena so let’s see what she has to say!
What advice would you give a person on where to begin to get finances in order?
I would write down all the debt/bills in my life (mortgage/rent, car payment, credit cards, student loans, cable, cell, gas for my car, childcare, groceries, etc) to determine how much I need to pay out each month. Honestly, I break my bills down into two cycles because I get paid bimonthly. The ones I need to pay first half of the month and the ones I need to pay the second half of the month. Once that is determined, I would then decide how much I want to save. Then, I would determine what I have left and set a weekly budget for spending based on what’s left. I also include my monthly maintenance (hair, nails, etc) in what I need to pay out each month, FYI. I also listen to podcasts and read books/articles about financial literacy. This has really helped me to get my finances in order, but I still have work to do.
What tips would you provide on how to stay disciplined when it comes to spending?
I don’t allow myself to spend outside of my weekly budget unless it is an emergency. I have a checking account, a savings account, and an emergency fund. I keep my emergency fund separate because I don’t want to allow myself to believe it is dispensable. Therefore, I only transfer money from there as necessary. This fund will allow me to take care of things that come up as “emergencies” without having to deduct from my savings account. I put money into this account every pay period (and no it isn’t an astronomical amount, but it adds up) just as I put into my savings every pay period.
Saving !
My biggest rule is to NEVER TAKE MONEY FROM MY SAVINGS. In the past, I would spend as much as I saved which gave me the exact amount at the end of the year that I had at the beginning, talk about feeling defeated, lol! Creating the emergency account allowed me to keep my savings saved! I automatically get the money drafted (each pay period) from my account so I don’t even see it, but the amount I decided on is a reasonable amount. It won’t impact my way of life by not being available for spending. Don’t put away an unreasonable amount that you will need for day to day life; otherwise, you will end up spending what you are allegedly supposed to be saving.
What are some tips you would give your 20 year old self about finances?
I would not have accrued so much debt! Mainly student loans! I had to borrow money to get through college (and trust me, I went for many, many years) but I didn’t have to borrow an excessive amount to live off of. That’s one of my biggest regrets. I also had lots of credit debt in my early 20s. I learned from that experience to only charge what I can pay off in 3 months. If it’s going to take me longer than 3 months to pay it off, I don’t charge it or I save towards the purchase to prevent from charging so much.
What are some suggestions on how to reduce debt?
I’m still working on this one, lol. I wrote down all of the debt I owe and wrote down a sensible pay off date. I work towards achieving that goal. In the mean time, I don’t add additional debt. I have accepted certain debt (mortgage, car, student loans) but I try really hard not to accrue additional debt. I don’t window shop/internet browse because it will tempt me to splurge/buy things I don’t need but I just want, in turn creating more debt.
Well there you have it! I hope there was something here you can implement to help you on your road to financial freedom. I’m making a promise to myself to get my stuff together!
Until next time,
-K
