What’s your relationship with money like? Does it limit you or free you?

There are different ways of approaching money matters, but the spectrum is bookended by those who have full control over their finances and those who’ve ended up in a dysfunctional relationship with their money. If you fall into the former category, congrats! Keep doing what you’re doing. For everyone else, you’re not alone. The great news is that it’s never too late to embrace better money practices.

Embracing A Better Relationship With Money

As we grow up and become independent adults, we learn how to manage money to the best of our abilities. Some people are lucky to have supportive family members to help them get started. And some people have to start from scratch and build a life without any family support. I was one of them. In either case, if you want to have a strong and reciprocal relationship with money (as in, your money decisions are working for you, not against you), at some point everyone has to take responsibility for their own finances—or as I like to think of it, everyone needs to embrace their relationship with money.

What do I mean by embrace? To embrace your relationship with money means you:

• have a good understanding of what you make;
• know how your income is spent each month;
• set aside a portion of your earnings as savings;
• and understand what types of expenditures are most important to you. (Is having a high-end lifestyle more important than retiring at an early age, for example?)

From the moment we enter adulthood, life starts to come at us with some expensive choices. Is completing a 4-year degree realistic if it means racking up student loan debt? If so, how much? Is a bigger wedding worth the expense or would it be better to keep it simple with a ceremony on the beach? What about buying a home? Is a single-family house you can grow into the right choice if it comes with a higher monthly mortgage? How about transportation? A sporty, luxury car or a used but inexpensive commuter? And what about our eating habits? Going out to dinner a few nights a week can be convenient, but it comes with a cost.

Your Money-Spending Decisions Add Up

With each big and small decision, we choose how to spend our hard-earned money. I say “hard-earned” because many people are miserable at work. I was one of them for many years. I made a choice to do a job I didn’t like because I was making good money. My income helped me to afford things that were important to me, like a nice house, new cars, vacations, and education for daughters. But despite financial gains, I remained unhappy. Eventually, I switched my career and found a path that was more fulfilling and enjoyable. This is why it’s important to understand your specific financial priorities, so you can gauge what sacrifices you’re willing to make to meet your goals.

When it comes to spending, the key elements are: 1) monthly expenses, 2) spending trends, and 3) savings, if any. Your level of income determines how much you can spend and save. The big elephant in the room is your lifestyle. Lots of splurges add up.

When I graduated from San Jose State University, the economy was in bad shape and interest rates were in the two digits. I had a rundown car with a broken AC and an engine that overheated nearly every time I drove. When I hit 275,000 miles, I knew it was time to let this car go. I was commuting a long distance so I needed something reliable, but I wanted to get the cheapest option possible. I found a Toyota Tercel on sale for $67 a month (total of $6,888), a bright blue base model without AC. It was a tin can, but it got me where I needed to go and allowed me to keep my budget in check. Eventually, I was able to save the money to buy a home in a location I loved.

I had to ask myself what I was willing to give up in the short-term to benefit my future self. I pose this same question to you: What are you willing to give up now to gain in the long-term?

8 Important Money Strategies to Help You Save

Below are a few steps I found out to be helpful to track and save my hard-earned money.

1. Know exactly how your money is being spent at any given time. There are so many apps to help you track expenses. You can also create your own monthly expense report (rent/mortgage, food, car payment, insurance, etc.) in a spreadsheet. Google “monthly expense templates” or “monthly budget templates” for inspiration.

2. Monitor your monthly expense report to find a pattern of spending that can be reduced or eliminated. Minimizing your expenses will allow you to save money.

3. When you want to buy a large ticket item, add it to your budget as a “future want" and save for it as much as you can. A large down payment helps to save a ton of money in interest rates. Set up monthly transfers from your checking account to savings once you determine a figure that works for your budget.

4. Always pay your bills on-time to build good credit. Consider setting up automated payments if you haven’t already. This is one of the easiest things anyone can do to build a strong credit report.

5. Avoid unnecessary charges as much as possible. Things like parking tickets, Starbucks, and lunches out add up.

6. Always check for a better price. Do your homework. Big ticket items often go on sale around major holidays. Even if you can’t take advantage of a sale, prices can still be negotiated. Bargaining is a skill that can be honed! Ask for a 5-10% discount for any large transaction, including things like major car repairs. Remember: it can’t hurt to ask.

7. Learn the difference between needs and wants. There’s nothing wrong with wanting nice things, but if you’re trying to improve your finances or save money, it’s important to focus on wants instead.

8. Determine what kind of lifestyle you’d like to have when you retire and make a realistic plan to get there. You can’t start planning too soon. It may be the most important financial plan you make.

I wish I’d had a Professional Coach to talk to when I was going through my career crisis and trying to figure out how to better manage my finances. I had to learn the hard way without a coach, but you don't. Make an appointment for a 30-minute free consultation, and let’s discuss if I can help!

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