Imagine sitting down with a sheet of paper and listing all your assets and debts. Does that stress you out? If you are like many people your financial life is lived by chance. You secure a good paying position, CHECK. You have a comfortable home, CHECK. You have several credit cards, CHECK. You earn enough to cover your expenses, just barely, CHECK. You look back on how you could possible have come to this point of living paycheck to paycheck and discover you have been on auto pilot for years and years, CHECK.
Personal finance is a skill. I like living a frugal life. That is a skill that works for me, my lifestyle and my income. You are reading this because you are at least frugal curious. I encourage you to decide today that becoming the master of your finances is a goal you will achieve in 2023.
Becoming financially literate is a skill that should be taught to all children when in high school. We should all have a minimal understanding of income and debt, assets versus liabilities.
A while back I was enjoying a YouTube video posted by Prepper Princess titled “Let the Jones’s Kiss Your Assets”. It’s a great video that reviews her frugal life and how she has assets versus liabilities and although her lifestyle isn’t grandiose, she is an example of a person who isn’t making a massive income but lives a financially independent life. Let me be clear by independent I mean she is not beholden to a credit card, a mortgage or a car loan.
The reality for most of us is that we won’t have incomes like Beyonce or Oprah, and we won’t have the kind of wealth they have. But we can have control over how we spend. It’s important to recognize that you (more likely than not) will have an income that will be within a range of middle class. That’s where most Americans land. Right now in 2023 I’ve seen articles of people lamenting that they live paycheck to paycheck even though they are making very good wages, some near $200,000 annually. That amount of annual earnings should make for a comfortable lifestyle with few debts. Unfortunately we often increase our output as our wages increase.
Why does this happen? I believe as we earn more we tend to associate with higher income people. Higher income people have more disposable income and tend to spend more on everything. In a phrase we attempt to “keep up with the Jones’s”.
Of course income to expense ratios are relative. If you live in the San Francisco bay area, Los Angeles, or New York, your income better be high. Those areas have some of the highest cost of living in the nation. Conversely of you are living in Mississippi, you won’t have a very high cost of living, but you may have difficulty finding a good paying job. The key is to find the best pay in the most affordable location that meets you lifestyle needs. Easy right? HAHA.
If you feel unsure about abruptly changing your entire life, consider at least gaining control over your debt load this year. Without question lowering or eliminating debt can be the most powerful tool you have to manage your finances. Sadly many Americans who found themselves with a lot more in savings over the years of peak pandemic now find they have a large debt load again and much of that due to credit card debt.
It’s understandable after a couple of years being locked inside with few travel and entertainment options most of us feel the pull to splurge. I feel the urge to travel again. I’m a world traveler having visited over 20 countries. When the pandemic first happened in 2020 I was busy planning a visit to Portugal and Spain with my spouse. We hadn’t totally locked down our plan but it was going to happen in late March or early April of that year. Of course that vacation didn’t happen and we haven’t vacationed much since with the exception of a couple of road trips. Naturally this has saved me a lot of money, which is nice and I didn’t find other ways to spend like online shopping or meal delivery, therefore I have a reserve built up. But when the time is right I will get on a plane and head off to a new and unexplored destination.
How can you gain control over your finances? First you have to be honest with yourself. Evaluate all of your expenses; evaluate your take home income. Burying your head in the sand won’t work, that will only lead to the same result. Here are some steps you can take right now to gain control over your finances
Find a free downloadable spreadsheet to honestly document your income and expenses. Google sheets has a nice workbook with instructions and that auto completes on a summary tab. It’s called “Annual Budget”.
Identify and eliminate all areas of waste.
Provide your preteens and teens with an allowance versus having an open pocketbook policy. Be realistic, helping your children understand finances is a gift that will last them a lifetime, not a punishment.
Identify one credit card you will pay off in 2023.
Stop using all other credit cards.
Identify ways to earn more money, find a higher paying job, take on side jobs, or ask for a well deserved raise.
If you don’t think you can get a raise, or find a better job, consider increasing your value in the work place by learning and mastering a new valuable skill, then find a way to earn more with a raise or new job.
Have a garage sale or plan to go to a local flea market to get rid of stuff you no longer need and to earn a bit of money.
Understand that you may have to adapt how you entertain yourself for a while by finding free forms of joy.
Recognize that change is hard, but with persistence you will adapt and it will become second nature to pay cash for items you would normally charge on a credit card.
There are a lot more tips you can use to get control over your output, but the first step will be to understand where you are now and to set a concrete and achievable goal.
I’m so excited for 2023. I plan to have more freedom of movement now that the pandemic is more understandable. I’m launching my new career as a writer. I plan to have optimal health and to engage with my family and friends in meaningful ways that improve our relationships. That’s not too much to expect for the New Year is it?
If you need more ideas about frugal living you can pre-order my book “Never Worry About Money Again: Gain Financial Freedom by Becoming Better at Managing the Money You Have” due out in print and eBook February 2023. If you aren’t ready to commit to reading my book keep learning more about my experience, and how you can become a ‘frugalite’. You can check out my podcast on Spotify “Paige Power”
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