May is money month at JDS Financial Planning Inc for 2 reasons:
- Summer is coming and tends to be when our finances take a bath
- I like alliteration
The first thing we need to learn about money is that it is in fact a game. One thing that we all know is that the person who hates the game (whether that’s monopoly, risk or poker) is often the one that is losing the game. So don’t hate the game!
Once you have understood that it is a game, and one you have to participate in, the better you will play the game.
Now that we’ve established that we are playing a game, you need to get strategic. Strategy number 1 is simple in theory but sometimes harder to accomplish: Spend less money than you make. Strategy number 2 of the money game is to make a budget. Cue the eye roll and deep sigh, I know that it’s tough, but it can be easy if you start small.
Start by taking control of the game. How do you do this? You get to $1,000 of cash as fast as you can without borrowing any more money to get there. This is a mini game itself. Get creative. Take on an extra job, start a rigid schedule of $100/week for 10 weeks. Or sell some of the stuff wasting space in your house. Doesn’t matter how you get there, just accumulate $1,000 as fast as you can.
How fast can you get to $1,000 in cash?
Once you have done this, you have proven to your brain that you can plan this game. It’s like getting back to the gym, you don’t need a full training program, you just need to show up for 3 weeks straight and develop the habit. Now that you have $1,000 saved up, this will be your emergency fund. Use it in emergencies only and keep this in cash so that you can pay the plumber or right away when your tab explodes and you don’t need to rely on credit cards.
Take a minute and think about how you would accumulate $1,000 as quick as possible.
Maybe another minute, I don’t believe you thought hard enough.
What did you come up with to get to $1,000? Did you take a new job or start a side hustle? Did you cancel HBO and other channels you don’t watch or need? Did you sell some stuff lying around the house? Whatever it is that you did, keep it going. Sock that $1,000 away, but keep the process going.
You have now shown sacrifice to the money game, and the money game rewards sacrifice. Just so you know, you have just created a simple budget in your head and it wasn’t all that difficult, was it? As you get a more detailed budget, you will find that there are plenty more dollars that are wasting on things you don’t even want, let alone need.
Budgeting is less excel spreadsheets and more mindset. (I can hear accountants yelling at me). Now you have some momentum going and your brain believes you can play the money game. The next step in article 2 of May Money Month will guide you through utilizing that momentum to the best of your ability.