Finance 101

You can’t underestimate the basics when it comes to your finances. Yes, the planners and excel sheets are fun to play around with. But when you get down to it, it will be so beneficial to be proficient in financial literacy if you want to grow your wealth.

Let’s focus on the fundamentals to getting started on your personal finance journey. Assuming you don’t know a lick about personal finance, here are the basics.

Websites like Investopedia and Harvard Business provide a much more in depth list but I started with one below. Feel free to dive deep once you get more comfortable.

Income: can be a fixed or variable method of money stream coming into your bank account for spending on bills, lifestyle, and enjoyment

Paystub: lesser used term but it is a document you should receive or be able to download from every check you receive from employer that shows a breakdown of salary year to date (YTD) and items removed from paycheck (taxes, social security, 401k, HSA, etc)

Budget: a plan/map for how to use your money that can be adjusted over time

Variable expense: expenses that should be considered in your budget and aren’t the same price each time (gas, groceries, certain bills like energy or gas)

Fixed expenses: expenses that should be considered in your budget that are the same each month (gym membership, rent, subscriptions)

Sinking fund: this is sort of a made up term by some popular programs but it’s often used to refer to a specific savings category for life events to plan ahead (car registration, holidays, pet)

HYSA: stands for high-yield savings account; research which savings account has a high interest rate of return so that your money is earning compound interest while it sits in the bank rather than earning minimal while in your checking account

The good news is you really don’t need fancy apps or tools to get your finances in control. The most you need is a pen and paper. If you want to level up you can use excel (my favorite) or a wealth planner. One of the biggest traps you can fall into is thinking you need to spend money to make money.

First Step

If you read the financial literacy article then you know the first step is to acknowledge where you stand with your finances. Take a minute to go back and read that one before continuing here if you need to.

Once you have your monthly calendar listed out, you are honestly halfway there. This visual resource will do wonders for you in helping to stay current on bills and set aside money for future expenses, so you don’t overspend.

Relationship Status

Now we need to check your mental attitude towards wealth. Some could argue this is the most important part to your wealth journey. It’s incredibly important to be in a healthy headspace for abundance and opportunity when it comes to money.

There are so many ways to do this, it’s not just one way. Don’t think you need to make a vision board to manifest your way to being a millionaire. You can if you want!

Affirmations, visualization, positive self-talk, meditation, walking meditation, journaling, workshops, writing a letter, writing a check, are all examples of how you can welcome positive money energy into your life.

If you’re looking to improve your relationship with money there are other exercises you can do to heal your relationship. Practice releasing the negative thoughts you have around money (it takes hard work to make money, you can only make so much, wealthy people are bad people). Replace them with positive ones (there’s plenty of money to go around, I am open to all opportunities for wealth no matter how it may come, money is there for me to find).

Budget

Now that you are in a space of abundance you can begin to take an analytical approach towards your money. When you break it down, budget is extremely basic. Yet, we can make it very complicating by adding in all the different areas of life.

One way to look at budgeting is by approaching something you want to purchase in the future. Pick a due date for when you want to purchase the item. Back into the date and the total purchase price. Then you can determine how much you need to save, in what increments, in the amount of time that you have. For example:

I want to save $100 in ten days. That means I need to save $10 per day.

I want to save $200 in 30 days. I have two pay checks in 30 days. I need to save $100 per paycheck.

The other primary way to consider a budget in personal finance is how to budget your income and expenses. The broadest way to think about this is to look at your net income and subtract your expenses (bills + costs), savings, etc. Leftover is whatever spending money you have until your next pay check.

By using a budget, you bring light to your entire inflow and outflow of money. You’ll be able to assign your money to variable categories and start saving, applying money to debt, and control some of the categories that can get out of hand (I see you Amazon…)

Debt

If you’re in a situation where you’re needing to reduce debt there are many different approaches. There is no one way to do it and you can even apply multiple theories to find success.

There are more posts on debt reduction theories and strategies to help you decide what’s best for you. What you need to determine is, when are you ready? When have you decided you’re ready to make a difference in your wealth status? What is your approach to debt and what amount are you comfortable keeping?

Savings

Like debt reduction, there are loads of different theories on how much savings is the perfect amount. The answer is, there is no perfect amount. It’s whatever amount you feel comfortable with.

There are different kinds of savings accounts to help accelerate your growth so that your money works for you rather than staying stagnant. The strategy behind this goes back to your budget. Assign your money a task – spend, save short term, save long term.

Once you have an idea for where your money is going to serve you, it’s easier to determine where it will sit in your accounts. This will come in most handy for those long term goal where compound interest can help you gain that wealth!

Start Here

If you’re ready to take responsibility of your finances, know exactly where you stand on any given day, and start making your money work for you then let’s go! Head to the Start Here page and we can start your health journey today. I’m right there with you.