Earlier this week I posted a short summary of my financial journey on Facebook. A version of that post has been in my head for months, but I didn’t have the words or courage to articulate our story in a way that reflected the enormity of the process…or without sounding like I’m bragging. Luckily my friends, co-workers, and acquaintances truly heard me and I felt seen.
How often do we really feel seen? Thanks, friends.
Real conversations came out of that post and I have many more later this month. This inspired me to start jotting down some of the concepts that we have implemented but mainly what I have been repeating through the conversations.
This is the place where you start. If you do anything this week, know this is enough.
Understand what you earn.
This is simple. Understand your paycheck. My paycheck is pretty easy:
- Total Gross Pay: Pre Tax Earnings (Salary, Commissions, Bonus, etc)
- Benefits: Does your company give you a 401k match? Parking reimbursement? Wellness bucks? Cell Phone reimbursement? How much does this equate to?
- Taxes: Barf. I just look at this number, cry a little bit and move on.
- Other Deductions: I deduct 401k, max out Dependent Care FSA, max out Health Savings Account and normal benefits.
Write down your savings (401k, Dependent Care & HSA) and the benefits your company provides you. Write down how much you bring home (net income). I choose to use an excel doc. These are numbers that often go unnoticed because nobody looks at their paycheck.
In my mid-20s, I never looked at my paycheck and realized they forgot to deduct my 401k for a whole year. A WHOLE YEAR IN THE MOST CRITICAL SAVINGS PERIOD OF MY LIFE. I received an “oops sorry!” in response but it wasn’t their fault. It was my fault for not paying attention.
We will do something with all these numbers later. But for now, just write, know and understand. You might be surprised by what you rediscover.
Track what you spend.
Sign up for Mint, you need a budget or Every Dollar or any sort of money management tool. You can google the differences to find out what is right for you. Mint is free and I’ve been “using” it for probably ten years so I’m familiar with the platform.
Mint wants to be that home for all your finances. Don’t worry about that right now. Just import the accounts where you do the majority of your spending. For us that is:
- Chase Debit: Joint Checking
- Chase Credit: My husband and I both have a Chase credit card
Once the transactions start pouring in, start to categorize them to simply observe your spending.
There are many ways to categorize. You can go super granular or keep it simple. I’ve done both and find keeping it simple is easier to manage. Here are my monthly spending categories in Q4 of 2018:
As a side note, this isn’t a perfect representation of my budget allocations. This chart is serving the purpose of highlighting the categories themselves.
Log in every 2–3 days. Categorize your spending. Every week or so acknowledge where your money is going. Write down your observations. Talk with your partner. Reflect. Don’t take action yet.
Please write questions below and I’ll address directly or in future posts. If you feel so inclined, use the “clap” to give me positive feedback.