fbpx

Organizing Finances before Organizing Home – Part 2

As an Amazon associate, I earn from qualifying purchases

As I continue to work with my client, now on finances, we go through all the monthly expenses, accounts where money moves, and start reviewing transactions. It is SO important to know where your money is, where it came from, and where it is going. In this instance, All (money) that wanders, is lost!

I start off by asking my clients what a healthy expense for each category is to them. It might be wanting organic groceries but buying high processed instead due to unaffordability, eating out once a week as a family, or a movie night once a month, but it usually isn’t in the category where the majority of their money is going. This can be the biggest eye-opening experience for people. They might think to themselves, I don’t smoke that much, I don’t play games that much on my phone, or my family doesn’t eat out that much, only to find that yes, yes you do. When you put a number to a category, you’re able to fully realize the monetary impact of that choice and then compare it to what the healthy budget for it was.

By reviewing the financial state of this family, we were able to identify:

  • $500 a month was going towards in-app purchases on mobile devices.
  • $200 on smoking and vaping.
  • In addition to the $850 in food stamps, an additional $200 was spent on groceries.
  • Client was paying for a car that was being loaned out to a friend with no reimbursement.

Right there on paper was an easy $500 a month that this client could use to cover living expenses currently overdrawn. Depending on the app the money is being spent on, this “easy $500” might not be as easy as I perceive it to be, but that is because I don’t have an addiction and it could very well be as hard as quitting smoking (which, full disclosure, I’ve never had to go through). But what it does point out is what they’re sacrificing for that addiction. I understand that I can’t make my clients change. They have to want it, and even then, sometimes change still won’t happen. You have to have goals, it has to be easy to succeed and hard to fail, you have to be motivated, you need to be held accountable and often there need to be incentives.

Here are the tips we discussed for focusing on change in the noted 4 areas.

  • Managing a Grocery Budget
    • Goal: Budget only to use the money provided by food stamps
    • How to make it easy to succeed and hard to fail:
      • Make a shopping list. AND STICK TO IT!
      • Order your groceries ahead of time and pick them up – Stores conduct studies on how they can best prompt consumers into an impulse buy (when you buy something not on the list). If you’re not in the store, you’re less likely to fall into their traps.
      • Meal plan – there are great apps out there that will let you pick out the meals you want and then will create a grocery list for you. Emeals will even send it to Walmart so that all you have to do is pick it up. (While Emeals is a paid service, about $10 a month, that cost is covered by what would be saving by sticking to the food stamps allowance)
  • Lending out Car
    • Goal: Earn money for lending out car
    • How to make it easy to succeed and hard to fail:
      • Have a written agreement with friend loaning car. Outline monthly fee, payment date, and consequences of failing to pay (take the car back). Since it’s registered to you, if they fail to return it, call the cops and report it as stolen. Be prepared to potentially pay the towing and storage fee if the car is impounded before being returned to you.
      • Negotiate another form of payment. If your friend can perform an act of service to make your life easier, set up a monthly schedule. Household chores, running errands, etc.

The Motivation, Accountability, and Incentive for each of the above goals could look the same:

  • Motivation: To free up cash flow to catch up on utilities and rent so that I am not putting my family in jeopardy of losing their home.
  • Accountability: Confide in-person close to you what your goal is, how best they can hold you accountable, and how frequently they should check-in. Set an alert on both phones as a reminder.
  • Incentive: Make a bet with this person, loser must do the dishes or laundry, for example. Just make sure it is not something you will enjoy doing and that it is not going to cost you money.

Get creative when taking these steps. The more they are catered to your specific needs and triggers, the easier it should be to follow through. Throughout this process, I highly encourage you to surround yourself with messaging that supports your goals. Listen to podcasts, read books, listen to audiobooks. The more positive messaging you receive, the easier it will be to overcome those temptations.

If you’d like help in your own areas or are looking for an accountability partner, let me know. I find so much joy in helping other people be successful and I would love to help you with your goals!

Resources – Throughout this process, I highly encourage you to surround yourself with messaging that supports your goals. Listen to podcasts, read books, listen to audiobooks. The more positive messaging you receive, the easier it will be to overcome those temptations.

James Clear – Atomic Habits

 

Jen Sicaro

 

Dave Ramsey