Making the Most of $$$
When I graduated college and was released into the Adulting world, I officially became responsible for every aspect of my finances. Investments, savings, taxes, credit scores, loans, interest rates, retirement accounts, the whole shebang. Ack!
I remember receiving my first paycheck and thinking, what is happening?! Where is my money going? How much should I save? Invest? Spend? Donate?
Overwhelmed, I decided I wanted to confront the seemingly complicated and abstract world of budgets and finances straight on.
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Cultivating my Money Mindset…
For the past year, I’ve been asking a lot of questions and seeking answers through print magazines, online articles, podcasts, family members, and even professional financial planners.
Questions that I’ve wondered about:
- If I want to travel, how much can I budget for my adventures?
- If I want to donate to charities and foundations, how do I do this in a tax efficient manner?
- If I’m going to pay taxes, how do I make sure I don’t pay the government one cent more than I owe them? – Overpaying taxes is not a good thing! That’s money that could’ve earned interest for an entire year!
- If I’m going to retire (albeit many years from now), what kind lifestyle and budget did both present and future Tayzau want?
- And finally one day, I will die and then I won’t be able to use my money anymore (as far as I know). If have a family and kids and beneficiaries, and want to leave behind something for them, how does this all work?
- If I don’t want to burden my family and beneficiaries, what papers should I prepare for when I’m dead?
One year post-graduation, I certainly do not have all the answers. However through my research, I quickly realized the following:
My money = my responsibility.
Now that I am earning an income, I want to make sure that I have the knowledge and awareness to make financially smart and savvy decisions.
My cousin, Dave, has been a big part of my financial education growth. According to Dave, financial independence is more than just being responsible with your money, he told me it is also about…
“Self-reliance. I don’t want you to ever be forced to rely on anybody to take care of yourself. When you can support yourself and thrive on your own, you can firmly be in control of your own destiny. It also means you can make your own decisions that benefit whoever and whatever you choose.”
For me, financial independence is my version of the ultimate magical fairytale life goal. It sounds absolutely liberating and awesome.
So here are 5 ways I have improved my relationship with money since graduating college.
5 Simple Ways That I Treat my Money Today:
1. Manually Write Down Transactions
My mom still uses pen and paper to write down her expenses in a checkbook register. She’s been using this method for years, and I used to think it was super annoying and cumbersome.
When I first started creating a real budget, I tried using apps like Mint.com to track my expenses. However, I found that their “automated” categorizations were not as “smart” or “intuitive” as advertised — for some reason my expenses would always be slightly a bit off. Additionally, I didn’t like how these companies were collecting data about my spending habits.
After searching around, I ended up customizing Google Sheet’s “Monthly Budget” sheet template.* Now every time I get a paycheck or make a purchase, I will also update my budget tracker. Each month I create a new spreadsheet and adjust my income and expense categories as needed. This method works well because…
A) I know exactly where each cent is going, and B) I love customizing and color-coding spreadsheets. It’s so much fun!
*I guess technically Google can still track my spending habits, but that is the price I am willing to pay for their “free” app and the convenience of it all.
2. Make a Shopping List before Shopping
There is a whiteboard in my room with a “Wishlist” of items to buy. On my whiteboard, I write down anything that I might need or want or desire… an umbrella, a bike rack, new work shoes… and then use that list to fuel any online shopping trips. To avoid spontaneous purchases, I try to make sure that an item has been on the list for at least 48 hours before I click “Buy”. Currently, I have 7 items on my whiteboard, and I’ve only bought one item out of the seven so far.
I guess these “things” can’t be too important?
3. Cancel Unnecessary Subscriptions
I renewed my yearly Amazon subscription this year because my mom uses it quite frequently and I thought it was something I used quite often too. After reviewing my Order History, I realized I don’t use Amazon as much as I think I do. Additionally, I’ve found that Amazon doesn’t always have the best deals! Since I’m trying to be more mindful about what I buy online, I’ve found that I don’t really need the convenience of 2-day Prime Shipping either. It’s nice to have, but not a life-or-death necessity. I also don’t use any of the other Amazon Prime Services like watching Amazon Prime TV shows… Does anybody even watch Amazon Prime TV anyway?
Next year when I am up for renewal, I will be cancelling my Amazon Prime membership.
4. Automate Payments and Set Up Direct Deposit!
It took a couple of months to figure out how I wanted to split up my check. After setting up Direct Deposit, money is now automatically allocated to the following buckets for each paycheck:
- Retirement Accounts (401k and Roth IRA)
- Health Savings Account (HSA)
- Brokerage Account (for investments)
- Pre-Tax Transportation Commuter Benefits
- Emergency “Rainy Day” Just-in-Case Fund
- Monthly expenses (rent, utilities, basic living needs)
- Discretionary spending “fun” money!
Every month, I re-evaluate my allocations and adjust as needed. The best part of automating payments is that I don’t have to think about whether or not I’m contributing to my short and long-term goals — I always am!
One of the most important categories to budget for is the “Fun” category. Budgeting should never feel like a punishment — depriving oneself from joy and pleasure. By having a “Fun” category, I can put aside money every month and spend it guilt-free because I’ve planned to do so. It affords me the flexibility to spend AND also the peace of mind knowing that I can afford to do so — A win-win situation all-around.
5. “You don’t need to spend to have a good time”
I don’t buy the idea that you have to spend a lot of money to have a good time. This is especially applied to dining out at restaurants. Have you ever ordered a dish and then received an unexpectedly small portion size?
This is me all the time! (A few weeks ago, I ordered a ravioli dish with only three raviolis!!! Granted, I was at a fairly nice restaurant, but a measly three?!?)
Yes, I understand that eating out is about the “experience” and the “quality” and the “ambiance” and the “prestige” and the “number of Michelin stars” and stuff. But I don’t care for most of these qualities.
Personally, I enjoy shareable platters and large quantities.
I love to eat. And I love to eat inhale large amounts of tasty food.
For instance, I could eat 7 pieces of yummy coconut shrimp at a seafood restaurant OR I can buy a jumbo bag at the supermarket and eat 20 pieces and basically be in Coconut Shrimp Heaven.
Rarely, will I initiate eating out at a fancy restaurant because it is just not worth my time or money. However, I will make the effort to go out for friends and family — It’s all in moderation.
At the end of the day, I would much rather…
- Gather ingredients at the supermarket and go for a picnic outside somewhere nice and casual where I don’t feel rushed by the waitstaff
- Eat a fast-casual dining establishment because A) Large quantities and B) I am a Millennial after all
- Drink alcohol at home – You get to consume much larger quantities for much less.
- Cook my own quirky dishes (like pineapple and mac and cheese, which is delicious!!! I have not found a restaurant that serves this combination to date.)