Life By the Numbers

Best_Budgeting_Advice_Millennials

Y’all do you ever feel like you’re so clear on something that it’s just your marching orders and your life calling card. The last few months I’ve been feeling like that about our finances. On. A. Mission. Working our butts off to create the future we want. And 6-months or so in to our new regime (we started the beginning of the year), I’m feeling fairly obsessed with our modifications. Have y’all heard of Mr. Money Mustache? He’s a fairly famous lad with the frugal nuts of the world and his personal tale is one where he saved a significant portion of his income and essentially retired after 10 years of working.

So literally, my new {personal} life mission is to create a life where we can be on our own watch as soon as possible. IE not working for the man, unless we feel like it. 🙂 Frankly, I love my job, so I’m not in a huge hurry to trade in my cards in life. But then, I love my bambino, and I think he’s pretty awesome as well – so, it’s all about finding that balance right?

I’ve been feeling inspired by some of the changes we’ve been making here around our house that are (hopefully) setting us up for a really solid financial future, and I wanted to share a few things with y’all that we’ve found really have been game changers for us. So starting January 1, we started making sure we had atleast half of our income, 50% of it, going straight into retirement account. We’ve always tried to be really good about saving our money, but when I sat down late last year and did the math, I realized we were only saving about 15% of our income, and the more I read blogs like Mr. Money Mustache, I started to realize that was whoafully insignificant for what our financial goals are.

I think different seasons of your life, have different needs. Our first 6 or 7 years as a married couple we were all star savers in many respects, but the money was always going toward saving up for a house, or buying a car, etc. Now that we’ve got those things – ie house, car – we feel like those boxes have been checked for us and we’re able to move on to different things.

So there are some upsides to aggressively saving for retirement, namely the ability to use all the contributions made to a 401k, 457 plan and IRA as tax deductions. So for every $1 you put into these accounts, you’re off the hook on that amount of taxes each year. So that’s sweet (basically brings your tax bracket down). The downside (IMO) is that almost all this money is not truly utilizable until you’re 65, or 62 or like – when you’re OLD basically. It will be a long while before we can touch that moola. I’m lucky at my work that I have something called a 457 plan, which enables you to use those funds as soon as you leave your place of employment – ie, if I “retire” from my current job at 40, we could start drawing down from that fund as an income supplement. But even with traditional retirement assets (if your employer doesn’t offer a 457) there are ways to diversify your retirement savings so that you have liquid assets to grab when you want or need. For us, that’s our Roth IRA, which is the retirement account we’ve been contributing to since we were married. At any point you can use your principal from that account for anything – since it’s put in post tax, the principal is your money to use whenever you want it.

So anyway, blah, blah, blah – woo hoo, saving money is great. But how in bloody hell do you get to a point where you can save 50% of your income, you ask. Extremely valid question, and grasshopper, I’ll tell you, I think it took me a solid 7 years to get to this point, but the basic premise is don’t buy stuff you don’t need. Patent pending on that nugget of life advice, but you guys, sometimes the simplest answer is all there is to it. Some tools I’ve found pretty helpful for our household.

  • Create some type of budget or expectation of where you want your money to go, and stick to it by allocating the remainder into your savings account. 

Not particularly revolutionary or sexy, but y’all, if you don’t have an idea of where your money is going, I can guarantee you, it’s not going to the right places.

Anything that doesn’t go toward our monthly expenses and retirement goes into short term emergency fund – which right now is only like a hundred bucks each month, so all and all we keep things pretty tight (purposefully) which keeps us as accountable as possible. So I actually don’t track against what we spend each month in each category – persay – I just know each dollar we spend since in all honesty, we don’t spend all that many. Like our grocery shopping is done once a week – I know if I stay under $100, we’ll be on track for my (general) goal of $400 a month. So I don’t obsess over it, but I am very aware of it.

  • Autodraft money to go straight into your savings accounts (ie retirement, stocks, bonds, wherever).

Treat that money like it was never yours to spend – and you’ll never miss it. In fact, you’ll gleefully watch as it turns into more and more money – much better than spending it! 🙂

  • Identify triggers that you know are going to mess with your budget.

Going back to the grocery shopping example, I try to meal plan and only run to the grocery store once per week. I find it easier to track the expense that way and we don’t get nickle and dimed with this and that and the other thing. $20 here and $30 there adds up quick and will blow your “$400” grocery line pretty quick.

  • Buy EVERYTHING used

In all honesty, I could get better in this category but I’ve found that there is virtually no reason to buy 99% of what we use new. Other than food (obviously) our clothes, furniture, bikes, cars, house – all used with very few exceptions. It encourages you to be more methodical about your spending and also makes me wait for stuff I really don’t need. Things I know we will need (like 4T clothes for my 2T tyke) are always things I buy as far in advance as possible. So plan ahead for necessities and everything else you just got to wait for 🙂

  • Be easy on yourself

Set manageable goals and don’t beat yourself up when you screw something up. Y’all, I remember the first year of our marriage – ya know zero money saved up, student loans coming from every angle and just the stress of a brand new marriage – I lost it over forgetting to use a coupon at the check out lane. I like thought the world was going to end. But you know, it didn’t, and I was out like a dollar. Maybe even fifty cents 😉 I wanted so much to be able to stick with my plan that I lost it over that slight deviation. But you guys – the thing is about this frugal path Jay and I chose is that it’s about the long view man. I didn’t know that when I was 22, but that’s the truth. You can’t fret about small blimps along the way, you just get true to that path and you’re fine. Things happen with finances – you have good days and bad days, more abundant years and really tight ones. It’s all about laying the groundwork with the right mentality and a solid foundation.

Whew – so that was sorta long, but I hope a smidge helpful to at least one person out there! I’m curious to hear what others do to keep their financial goals on track. Do you guys have any nuggets of information that y’all have found really helpful for your household in making the numbers work each month, or different strategies you’ve used to save more? Would love to hear!

There are some really great blogs if you want to start to fine tune your finances – my two current faves are Frugal Woods and Mr. Money Mustache.