This past weekend I was kind of having an intense conversation with a friend & in mid discussion he brought up that he believe it’s people’s fault for being broke. I was sort of taken away. It just reminded me that many people share this belief. People shame broke people for not investing, thinking long term, or having the extra funds to invest in themselves or future or whatever. People are already trying not to be broke, they are already stressing trying to make ends meet. They don’t need anyone yelling at them or aggressively telling them they need to invest. I mean they don’t have food on the table right now, but please do tell them the importance of investing so months or maybe years later down the line they can eat like a king or queen. Because who cares if they are dying of starvation right now. It is hard for people who are barely making it to even THINK about getting ahead. Poverty enforces people to think short term. They should not be shamed. That is why I think it dumb to shove “investing” down people throats without giving them the tools and steps as well to create a plan tailored to their current situation. I am not here to tell you how to spend your stimulus check or what you ought to be doing. That isn’t me. I am just here to give recommendations on how you can “eat” today while following a plan that will allow you to move toward financial freedom.
So how can you rise while being financially challenged?
1. MINDSET a. First and foremost please believe that you are in control of your money! As Ramit Sethi says “You do not have to be an expert to work on your personal finances”. Believe you are disciplined and capable enough to take control and stay in control. You have the power to turn your money story around. Stop thinking you need more income and do what you can with your current income
2. Track your expenses a. As I mentioned in another one of my other blog post, “If you don’t know where your money is going you can’t address it”. Track your expenses. It will tell you two things. What you are spending your money on and how much you are spending. Knowing that you can “plan” your money accordingly and make changes/sacrifices where it’s needed.
3. Create a budget a. Things are not just going to magically turn around. You have to create a plan. Creating a budget is a vital part of that plan. Budgeting allows you to tell your money what it is going do and where it’s going to go. Some people follow the golden 50|20|30 rule, 50 percent of their income go towards necessities, 20 percent go towards wants, and 30 percent go towards savings and investing. BUT your budget should be as you see fit! Even if its 85|10|5, then so be it. DON’T be ashamed. The idea is to start where you are and gradually make changes when you are further in your financial plan. REMEMBER even saving $1 is better than ZERO. Even investing $1 is better than ZERO, I know you are probably thinking it’s comical to invest one dollar, but if all you’re able to invest is a dollar a month then ok, because dollars add up right? If you want to know where you can invest $1 look at my prior blog, “Invest? I’m Broke”.
4. Build an emergency saving fund a. Life happens and the happenings usually cost money. Therefore, an emergency savings fund is a must. I recommend saving at least $1,000 dollars to give yourself that buffer between you and financial surprises. Don’t keep getting pushed back when something pop up. Build that buffer please. If you need help building an emergency fund, please read prior blog, “How to build an emergency fund”.
5. Smash Debt a. Thanks to Dave Ramsey, I learned to prioritize debt by paying off the debt with the highest interest rate not necessarily the smallest amount. Also, put more than the minimum balance towards the debt you are focusing on to pay off. Set a goal, let’s say one of your debts is $2,000 and you want to pay that off within 6 months. You will have to pay approximately $333 dollars a month. You can break it down even more, you get 2 checks every money so each pay period you have to pay around $166. That’s smashing your debt as opposed to managing it by just sending the minimum balance due and wasting money in paying more interest if you would have left the debt lingering. Plus once the debt is paid off, some money is freed up and you can put that money towards saving and investing.
6. Don’t get overwhelmed a. Do not get so wrapped into the fact you are not saving a lot or you’re moving in slow motion. Slow motion is better than no motion. You can put away a few dollars a week or whatever you can afford. If you do that regularly, you will create a buffer that will prove itself useful when an emergency happens
7. Learn and teach yourself a. This is your life. Keep learning and reading about personal finance to become more efficient with your finances to fuel your dreams and accomplish your goals. You watch Youtube, I love the Minority Mindset channel & Investing with Rose. I highly recommend reading “I will teach you to be rich” by Ramit Sethi
These are the first steps I took when I decided to take control of my money when I was financially challenged. As always, these are just recommendations. In no way am I telling you this is what you ought to do or do this list in chronological order, because your financial goals are yours. People are going to give you recommendations, just like I just did lol. BUT Everyone’s route to financial freedom is different & financial freedom look different for everyone. Don’t get so wrapped up if yours don’t look like someone else’s. THIS IS YOUR PATH. In order for any plan to work for you, it have to be comprehensible to you. SO make your plan make sense to you and forget who can't follow. You will have to make sacrifices to get to the finances you desire. Rather that is buying less coffee drinks, so you can have more money to put towards debt or more money to put towards saving or more money to put towards investing. Or picking up a side hustle like door dashing to bring in more money, the choice is yours and yours only. Fredrick Douglas once said, “You may not get in life everything you fight for, but you will have to fight for everything you get. You got this. The goal is live below your means, pay your bills on time, save, invest, and spend unapologetically on things or activities you love to do. I know it seem as mere dream right now, but I promise you it is closer then you think. Hopefully these steps help you. Follow me on snapchat @iamsisidevoe and like our Facebook page,https://www.facebook.com/projectrise18