“Things do not happen. Things are made to happen.”-John F. Kennedy
One of the most wonderful elements of being human is that we have the power of conscious choice. By not using that power, we limit our potential in countless ways. It seems that many people do not realize that they are choosing to live life in a way that is more stressful than it should be. It seems that most people function at a constant level of baseline stress caused by financial issues. For all of the stress that we have to deal with on a day-to-day basis, a huge improvement to our lives can be achieved by shifting this baseline stress level down to the lowest point possible. Here are a few quick tricks that you can use to improve your baseline stress levels today.
Categorize your spending and set up your banking system to work for you.
Most people dump their earnings into a checking account at the bank, then proceed to spend that money on their bills and daily wants and needs. Then, at the end of the month, they look at their account to see what they have left to “save” and usually there is nothing left. This becomes a backwards form of “proof” that they are not making enough money to save anything. This “system” of spending money is NOT designed to get you to a better position in life. This is the treadmill of living paycheck to paycheck, and it is incredibly stressful. Instead, take some time to design a spending system that WILL bring you to a better place in life.
Start by deciding how much you would like to save each pay period. For this example, we will consider 10% of your income should be saved (maybe towards a down-payment on a house, purchasing a better car, building your emergency fund, or whatever next step will bring joy into your life). Treat this money like a BILL instead of as an afterthought. When your paycheck goes into your checking account, you must pay THAT BILL FIRST!
Now that you have paid the most important bill first, you should separate the remaining funds into two categories, money for bills and money for living. The easiest way to differentiate these funds is by having TWO checking accounts… one that has an ATM card attached to it and one that does NOT have an ATM card attached. (While bank cards are not ideal, they will limit your spending to what you have earned as long as you tell your bank to refuse over-drafting the account. This is better, by far, than spending on a credit card before you have complete control of your finances.) The account that has NO ATM card is your major bills account. Deposit into that account the exact amount of funds that you spend on your monthly bills. (Not having the ATM card will mean that you cannot accidentally spend the money set aside for bills for any reason.) For example, if your rent is $1000 per month and you are paid twice per month, each payday you would transfer $500 to your bills checking account in order to satisfy the rent for the month. Do this calculation with each major bill (auto insurance, car payment, telephone bill, child care costs, etc, etc.) and do one transfer to the bills checking account for that amount each pay day. Since these expenses stay consistent in most cases, you can set up an automatic transfer of these amounts on payday. The amount that is left after the bill funds are sent is the amount that you can spend. (Remember, you saved for yourself FIRST, so there is no stress with spending what remains.) If there isn’t a lot left, start looking at where you can make adjustments in those major bills (like maybe you can cut the cable bill, find a better phone deal, trade your car for something that doesn’t need a payment or full coverage insurance) and that will free up more cash for groceries, gas, and other things you would like to buy
Spend only what you can afford (the money you have already earned.)
Once you have the system working in your favor, you will find that your needs have been prioritized over the needs of the rest of the world. You are choosing to take care of yourself. In order to get ahead in life, it is necessary to put your financial life first. Now you are saving for your future goals. Make sure you are not spending money on credit cards and running up a balance! If you do not make enough money to live on right now, your options are either to earn more money or to cut your spending. There is no option of putting your wants and needs on a credit card when you cannot afford them. You will have to practice delayed gratification instead, saving money to get what you want. It is usually possible to get creative when you really want something specific (maybe a night out at a restaurant) but you don’t have the money for it. You can sell something you don’t need anymore, work some overtime, find a temporary part-time gig, or wait until the next pay period when you will have enough funds. If you give in to your wants without funding them first, you will always be digging a deeper financial hole that causes stress. You can choose to avoid this hole completely by only spending what you have already earned
Choose an internal dialog that supports your future goals.
You are making a choice to improve your future. This is a life goal and you should be very proud of your choice! Sometimes it can be hard when you see how the rest of the world lives by getting everything they want instantly. Remember, almost all of those people are living with a terrible baseline level of stress because of the financial hole they are digging. You are making a better choice. You will live in a more relaxed state of mind when you have control over where your funds are. You are saving for yourself because you are a priority. You may come across some moments that try to derail this plan… Maybe all of your friends are talking about the new tech gadget they just bought and you are feeling sorry for yourself because you don’t have the cash leftover to get it right now. Remember, when these moments come up, you can rephrase the issue… You deserve to have less financial stress in your life. You deserve to have your own future in mind. You deserve to feel the accomplishment of reaching your life’s bigger goals. You don’t deserve stress and anxiety about how you are going to pay your bills. You don’t deserve the physical manifestations and ailments that come with stress (like hypertension and illness). You don’t deserve to be worried about small emergencies. Making choices like not having the latest gadgets gives you what you deserve, and avoids the pitfalls of what you do not deserve. It gives you control.
All of this is already within your power. You don’t need to buy anything or wait for anything. Set up your accounts to work for you now. Set up your life to get you where you are going. Set your mind to rephrase any negativity that harnessing this new power might create. You will be proud of your choices. When your friends are stressed out about small emergencies, like having their car breakdown suddenly, you will know that if the same thing happened to you, you would have it covered! And you won’t be digging yourself any deeper or adding any stress to your life by going into debt.