Tag Archives: Budget

Stop Money Fights With This Simple Solution

This post, “Stop Money Fights With This Simple Solution,” was updated on February 16, 2017.

Over 70 percent of couples report fighting about money over anything else. You can stop money fights by following this one simple recommendation!

Like many people, I lived in the dorms back in my college days. After surviving one semester with The World’s Worst Roommate™, I was fortunate to be granted a housing change. My new roommate, Erik, was everything one could hope for in a roommate: he picked up after himself, showered daily, loved to play table tennis until all hours of the night, and could binge watch TV like a pro.

Among the many shows Erik and I binged on, Married With Children was our favorite. Can you blame us? Ed O’Neill played the role of Al Bundy, a henpecked husband, broke shoe salesman, and father of two, to perfection.

Over 70 percent of couples report fighting about money over anything else. You can stop money fights by following this one simple recommendation.Brief digression: It is a crime that O’Neill never won a Golden Globe for his performance as Al Bundy, though his career has been unquestionably validated by countless nominations and awards for his performance as Jay Pritchett in Modern Family.

In one memorable scene, Al’s wife, Peggy, has just returned home from a lavish shopping spree. Al takes a look at the bills and delivers a typical, priceless line:

I hope one of these bills is for a coffin, because your shopping is killing me.

While MWC was a slapstick, controversial comedy which often crossed the line, this particular money fight between Al and Peggy hit the nail on the head in terms of its value as a social commentary.

Research supports my assertion. According to a Huffington Post article from 2014, a survey showed “that 70 percent of couples argued about money more than household chores, togetherness, sex, snoring and what’s for dinner.” Furthermore, survey records that the focus of 46% of all money fights was “frivolous purchases.”

I suspect that 54% of surveyed couples were not being entirely honest.

Over 70 percent of couples report fighting about money over anything else. You can stop money fights by following this one simple recommendation.
Graph credits to Huffington Post and Money.com

Mission: Stop Money Fights in Marriage

Last fall, I volunteered as a co-facilitator for a popular personal finance course. I have always enjoyed engaging in financial discussions with others, despite the general unwillingness to do so in most people, and serving as a group leader satisfied that urge while also providing a platform to help people and sharpen my own knowledge.

During our session on purchasing, a student in my group shared that she and her husband had previously been through several fights about spending over the years. I braced myself for a plea for advice, but what she said next surprised me.

“We found a solution that has stopped most of our money fights.”

Chatter among the group instantly ceased. Each group member, including me, was eager to learn this couple’s secret to stop money fights?

Solution: The Thirty Day List

In the moments which followed, we learned a lot about this couple’s experiences. Throughout their marriage and subsequent ushering of two children into the world, this couple had fought about many purchases: vehicles, clothing, electronics, and even groceries. Matters were not made any easier when the couple encountered financial hardships. In order to reduce and stop money fights specifically related to purchases, this couple implemented a procedure that they called “The Thirty Day List.”

They outlined the rules as follows:

  1. When considering a purchase over $50, write the item and cost down on the list and date the entry.

  2. Provide a brief rationale regarding the item’s utility and importance.

  3. Revisit the rationale in 30 days. If it still sounds like a good idea at that time, purchase the item.

Naturally, many students (budget nerds) were in favor of this approach, while other students (free spirit spenders) were against the restriction associated with this process. However, as the couple explained how it worked for them, the tone of the room shifted toward acceptance of this uncommon procedure. Some people even expressed hope that use of The List could stop money fights in their marriage.

Why The List Works

Among the benefits of the list which were described that day include the following:

  • The List often prevents unnecessary purchases. Sometimes you don’t buy the item because you realize don’t really need it.
  • The List eliminates susceptibility to high-pressure sales techniques. When a smooth talking salesman is rolling out every tactic in his arsenal to get you to purchase that new refrigerator with built-in social media access, you don’t even have to feel bad saying “no” because you are acting on a matter of principle.
  • The List causes you to wait, and sometimes this nets you a better deal. Patience puts you in a position to negotiate a great price. This extra time also allows you to thoroughly research a product, weigh the pros and cons of the purchase, and make a careful evaluation.
  • Similarly, after waiting 30 days, you retain the willpower to reject a bad deal. What is a few more days? You are in control and have the power to walk away.

Why The List Works

The Thirty Day List works in many situations because it leads to communication. When a couple collaborates to generate a unified position, a meeting of the minds and melding of ideas is often the result. However, this does not always happen quickly.

In such cases, a couple must take a step back and view the possible purchase from a wider perspective. By considering the purpose of the purchase from a variety of perspectives, the tone of communication shifts from one which is adversarial to one which is inclusive of both partners’ values.

Related Posts: See Values and Budgeting Part One and Values and Budgeting Part Two

Finally, the List provides accountability for larger purchases. It provides a framework and protocol which eliminates one partner from “going rogue.”

Downsides to The List

While the Thirty Day List may seem faultless in theory, it can be more difficult to implement in actual practice. After all, we live in a society in which it is easier and (often preferred) to ask for forgiveness after the fact rather than seek permission in advance. Many people would agree that this is a terrible way to act within your marriage or other committed relationship, yet that doesn’t stop some people. If this is your preferred practice, the List won’t work well for you.

The List is also not a good idea when you find yourself in a housing search, especially in a seller’s market. Often times, you will need to be poised to make quick decisions. This shouldn’t be a surprise, however, as when you are in the midst of such a search, you know the rationale and utility for the purchase.

Make the List Work For You

Perhaps the greatest feature of the List is that it can be modified to fit your circumstances. A high school student with a part-time job and an annual income of $1,200 and a married couple with a combined annual income of $500,000 can successfully use the List to their respective advantages. The figures may need to be modified, but at the end of the day, the principles remain the same whether zeros are added or removed.

If thirty days is too cumbersome for you, modify the procedure to fit your needs. You know yourself better than anyone, and using this knowledge is the best course of action when designing a List which will work for you to stop money fights and support wise purchases.

Further Recommended Reading: 

Money and Marriage: How to Talk About Money With Your Spouse

Want To Be Rich? Maintain Great Relationships


Readers, do you have a procedure similar to The List in place to assist when making significant purchases? Do you and your spouse or significant other routinely fight about purchases? What do you do to stop money fights?

Dining Out On a Dime – 10 Money-Saving Tips

TDining out at restaurants is a quick way to bust your household budget. Follow these 10 tips and you can enjoy a night out without breaking the bank!oday’s post is a collaborative effort between me, FinanceSuperhero, and my talented wife, Mrs. Superhero. In case you missed her recent article, 10 Tips for Self-Starter Entrepreneurs, I highly recommend it, as it remains one of the most-viewed articles on this website.

Within the article below, my thoughts and comments will be denoted by my traditional Gravatar, while Mrs. Superhero’s thoughts will be denoted by a similar Gravatar, as seen below.

 

 

Now, onto today’s post. Take it away, Mrs. Superhero!

Mrs. Superhero GravatarOkay, I am just going to say it: adulting is hard! For most people, a big part of adulting is sticking to a budget. However, a budget shouldn’t mean that you can’t go out or you can’t have fun; a budget simply requires that you plan for these events.

As you grow in managing your finances, you will still want to go out on dates and have fun with your spouse or significant other! I am definitely the “deal finder” of the family and have enjoyed this skill since I was a young child. Finding a good bargain feels so good and rewarding. I absolutely LOVE that feeling!

FinanceSuperhero GravatarI, too, happen to love that feeling, but Mrs. Superhero is almost certainly a better bargainer. She manages to find great deals on a monthly basis, which allows us to satisfy our urge to dine out semi-frequently without breaking the bank.

An example of Mrs. Superhero’s bargaining ability: As a college junior, Mrs. Superhero negotiated $1,000 off the sale price of a used vehicle by playing hard ball in negotiations with the seller. I thought for sure that she would lose the vehicle entirely, but the owner relented.

Mrs. Superhero GravatarHere are some tips Mr. Superhero and I use for dining out:

1. Make the Most of Gift Cards – Aren’t they the best? Because we are both teachers, we are fortunate to receive many gift cards throughout the school year, particularly in December. We save these gift cards for months in which we are surprised by unexpected expenses. By shifting our budgeted dining funds to cover those unexpected expenses and using gift cards, we are able to avoid tapping into our emergency fund.

Panera's Greek Goddess Salad, Mrs. Superhero's favorite (Credit: Mrs. Superhero)
Panera’s Greek Goddess Salad, Mrs. Superhero’s favorite (Credit: Mrs. Superhero)

For example,  today I actually used a gift card at Panera and had a wonderful Greek Goddess Salad – if you haven’t tried it, stop what you are doing, get in the car and go to Panera!

FinanceSuperhero Gravatar

Mrs. Superhero and I have also had good experiences converting our credit card reward points into restaurant gift cards. I am careful to wait until a specific discount on desirable gift cards is offered before I redeem points.

 

 

Mrs. Superhero Gravatar2. Value Quality Over Quantity – Our favorite restaurant in the world (no exaggeration) is Montarra Grill in Algonquin, Illinois. It has been rated the number one non-Chicago restaurant in Illinois. Needless to say, Montarra is amazing but pricey.

When we dine here, we are making a choice. If we choose to open up the pursue strings and spend a significant sum on one meal, that means no more dinner dates for the rest of the month. Typically, we save dates like this for a special occasion like a birthday or anniversary.

Always save money in your budget to splurge for special occasions.  Life is too short not to celebrate special occasions with your loved ones.

FinanceSuperhero GravatarBe sure to inquire about possible deals and discounts when planning meals for special occasions. Because I made a reservation via e-mail for our recent anniversary dinner, Montarra provided a complimentary small plate.

Similarly, another local restaurant offers complimentary entrees to all members of their e-mail list during the two weeks before and after a member’s birthday. This is a great value which we took advantage of on the eve of my 30th birthday last month!

Mr. and Mrs. FinanceSuperhero Anniversary Collage
A collage of photos from our recent anniversary dinner (Credit: Mrs. Superhero)
Happy Anniversary
English Toffee Sticky Pudding, our traditional anniversary dessert at Montarra (Credit: Mrs. Superhero)

Mrs. Superhero Gravatar3. Enjoy a Coffee Date – Sticking to an agreed-upon budget can be difficult, especially when you have spent that allotted figure early in the month. When that happens, we resort to inexpensive coffee dates, as the next best thing to food is coffee.

Let’s just be real. Especially if you are a parent or work with children, coffee is a necessity in life.  From 3-5 PM it is Happy Hour at Dunkin’ Donuts here in Chicagoland, and during this time, you can get an iced coffee or iced tea for only a dollar! (Mrs. Superhero is currently enjoying this deal!)

Not to be outdone, Starbucks is the mecca of coffee shops. I have never had a Starbucks mess up my order. So yes, they are more expensive than other places, but they provide much better service. Starbucks often offers half-priced Frappuccinos from 3-5 PM; unfortunately, they have not found a way to make them with half of the calories though! To figure out when the next deal will occur, you can sign up on Starbucks’ website to be ensured that you are receiving updates on the next deal.

4. Kids Eat Free – While Mr. Superhero and I are proud MINKs, we recognize that our friends who have children still enjoy dining out from time to time. Below you will find a list of kids-related dining deals (highly-discounted or free meals) sorted by day of the week.

*Please be sure to check with your local establishment, as there may be restrictions on some of these deals.*

MONDAY
Red Robin (kids 10 and under eat free)
TGI Fridays
Fuddruckers (4-9 PM – Kids 12 and under eat for $.99)
Applebees

TUESDAY
Chilis
UNO Chicago Grill (One free kids meal with purchase of an adult entrée)
Denny’s
Chic-Fil-A (5:30-7:30 PM – Kids receive a free kids meal)

WEDNESDAY
Qdoba Grill (All Day – Kids receive a free kids meal)
IHOP
Jason’s Deli
Firehouse Subs

THURSDAY
Carrow’s Restaurants
Salsarita’s Fresh Cantina

FRIDAY
No deals to report – let us know in the comments below if you know of a great Friday deal!

SATURDAY
Steak and Shake

SUNDAY
No deals to report

DAILY DEALS
On the Border
Cici’s Pizza

For more deals in your area, we recommend consulting KidsMealsDeals. If you live in Chicagoland, check out Kidwinks.

FinanceSuperhero GravatarWith all these great kids meal deals, I’m not sure what we’re waiting for in the family department, Mrs. Superhero!

Editorial note: I may or may not get smacked for this comment!

 

Mrs. Superhero Gravatar5. Look for Local Deals – I am constantly amazed by the number and variety of local deals which pop up during the week. One of my favorites is Mandiles in nearby Algonquin. On Tuesday’s, Mandile’s offers a great entrée for only $10: chicken parmesan, a side of pasta, and bread. The deal is available via dine-in or carry-out.

I recommend asking your friends and family about similar deals in your area. I’m the type of person who tells people in line about deals so they can get their meal cheaper. The last time I did this, the manager shot me a funny look, but that doesn’t deter me from helping others.

6. To Go Deals When In a Pinch – When time is precious or plans change in a hurry, pizza is our go-to meal.

For only $5, the Little Caesar’s Hot-N-Ready Pizza represents one of the best values on the market. My mom, who is the ultimate bargain hunter, can make amazing food on a low budget, but she calculated that it is cheaper to order a Hot-N-Ready Pizza than it is to bake her own at home.

Similarly, Domino’s currently offers three medium pizzas for $5.99 each. Despite Mr. Superhero’s nearly-insatiable appetite, we are able to order three pizzas and freeze several left over portions for days in which we don’t feel like cooking. This also saves us time, and as we all know, time is money!

7. Get Your Groupon – All of my friends know I have a slight obsession with Groupon, but it has saved us lots of money and has allowed us to do things that we normally would not have the money to do in our budget.

Within Groupon, you are able to search for restaurant deals in your particular location. However, always read the fine print; recently, I purchased a deal only to find out you could only use it on weekends. Fortunately, we still had a lovely night out during the week!

If you haven’t signed-up for Groupon yet, please sign-up using our referral link.

Love to dine out at restaurants but hate overpaying? These 10 tips will help you eat out on a dime and save major money!

8. Utilize Restaurant.com This amazing website helps you find deals for restaurants in your local area. Their app is very user-friendly, which eliminates the need to print certificates. By using this app, we have found fabulous deals at local steakhouses and other fine dining establishments, allowing us to dine like kings while paying pauper-like prices. The most common Restaurant.com offer is $10 for a $25 gift certificate. Check out the Restaurant.com offerings in your area by following the link and entering your zip code.

9. Ask About Specials – When arriving at a restaurant or calling in a carry out order, always be sure to ask about specials. Servers often forget to mention specials, and you may miss out on a great deal if you don’t ask.

10. Share, Share, Share – Mr. Superhero is not a big fan of sharing his food, but many of our couple friends go to Panera, order the Take Two option, and share their meal as a couple. We definitely did this at times during college when we were young and broke.

FinanceSuperhero GravatarSpecial thanks to Mrs. Superhero for putting together these 10 tips for dining on a dime, allowing me to order my own meals, and making sure I don’t starve!

If you missed Mrs. Superhero’s last post, be sure to check out 10 Tips for Self-Starter Entrepreneurs.

Note: This article contains affiliate links.

 


What tips do you have for saving money when dining out? Did we miss any deals? Do you use Groupon and Restaurant.com?

Checking Up On My Goals

One month ago, I turned 30. Much to my surprise, I didn’t wake up the next day feeling like a stiff old man. In fact, I didn’t feel a day older than 20.

A day prior to this milestone birthday, I published a list of 30 goals I hope to achieve in the next year. Yesterday on Twitter, Staci – @Streamline365 – checked-in and inquired about my progress, which made me very happy. As I have written in the past, I have a strong desire to both help others with my blog while also seeking accountability for my actions and pursuit of my goals. So, thank you, Staci, for calling me out!

With that said, I offer a quick check-in on the progress toward goal achievement one month into my 30s.

INVESTMENT GOALS
1 – Max out both of our IRAs for 2016. $11,000 total investment.
PROGRESS: None to report, but that will change in September.
2 – Invest a minimum of $2,000 with Fundrise.
PROGRESS: I am going back and forth on which Fundrise option I wish to pursue, the Income or Growth eREIT. Both options, though different, are enticing. I had planned to dive in during the month of July, but a few unexpected medical and personal expenses proved to set us back in this regard. The current plan is to make a decision and pull the trigger in late August or early September.

Related Post: The Fundrise eREIT: Accessible Real Estate Investing for the Average Investor

3 – Grow my overall account value with Betterment.
PROGRESS: None to report.
4 – Increase our overall net worth by 50%.
PROGRESS: I have begun tracking our net worth on a more regular basis, so that counts as progress, I suppose. According to Personal Capital, our net worth rose by 1% in the past 30 days. Ho hum.
5 – Set a target date for early retirement and formulate a plan to get there.
PROGRESS: Mrs. Superhero and I have had several discussions about our retirement options and plans. More specifically, we have defined our vision of what early retirement will look like for us. I intend to write about this in the future. With any luck, we may be able to narrow down a specific target date in the next few months.

HEALTH GOALS 
7- Lose 10 pounds by September 1, 2016.
PROGRESS: In the midst of birthday and anniversary celebrations, I gained 4 pounds. Oops!
8- Run at least four times per week.
PROGRESS: I’ve been consistently running twice per week. Time to step it up!
9- Weight lift at least twice per week.
PROGRESS: None to report.
10- Implement Meatless Mondays on a regular basis. This will represent a health goal as well as a budgetary goal (decreasing our grocery budget).
PROGRESS: Success! I miss meat every Monday, but this goal has been a good one.

FITNESS/RUNNING GOALS
11 – Run an unsanctioned half marathon in the month of July. This will help me to have a target for getting myself back in excellent running shape after a year of inconsistent training.
PROGRESS: I have one more week to achieve this one. Chicagoland has been an inferno lately, so I might not be able to squeeze this one in.
12 – Run a sanctioned or unsanctioned marathon in August.
PROGRESS: This remains a big stretch goal. Time will tell
13 – Run a sanctioned marathon in October.
PROGRESS: I have looked into a few options and am narrowing them down based on my calendar.
14 – Begin training for and compete in the Artic Frog 50K scheduled for December 2016; definitely a stretch goal!
PROGRESS: Remains a big stretch goal.
15 – Run a 5:30 mile. I haven’t been able to do this since I was 18; my best has been hovering around 6:05 for  while now. Nothing like jumping in the time machine to prove I’ve still got it!
PROGRESS: Also a stretch goal.
16 – Shoot hoops in the driveway at least three times per week. Mrs. Superhero surprised me by taking me out to pick out a basketball hoop for our driveway as my birthday gift a few weeks ago. I intend to put it to great use.
PROGRESS: The basketball hoop has been my favorite birthday gift in years. I love getting out and shooting around, even if for a few minutes, as a break and a means to clear my head.

BLOG GOALS
17 – Reach 15,000 Twitter followers prior to turning 31.
PROGRESS: As of today, I have 4,177 followers.
18 – Boost my Alexa ranking into the top 200,000 globally. This is part of the Yakezie Challenge.
PROGRESS: As of 7/24/2016 – Global: 628,956. US: 80,587. I’m thrilled with this progress!
19 – Break into the top 100 on the Modest Money Top Finance Blogs List prior to turning 31.
PROGRESS: Currently sitting at 271.
20 – Continue to publish 2-3 new articles per week while also pursuing additional guest posting opportunities.
PROGRESS: Success. In the past few weeks I have been fortunate to guest post on Budgets Are Sexy and Distilled Dollar, and I have another guest post slated on Millennial Moola this week. Thank you to J. Money, Matt, and Travis for these great opportunities!

CAREER GOALS
21 – Decide what I want to do with the next chapter in my life.
PROGRESS: I anticipate completion of my real estate licensure very soon, and the new school year kicks off mid-August.
22 – Join a real estate brokerage and close my first real estate transaction in 2016.
PROGRESS: See above.
23 – Reach my commission goals for my current consulting role.
PROGRESS: None to report.
24 – Begin laying the groundwork for writing my first book.
PROGRESS: I’ve jotted down some foundational ideas.

BUDGET GOALS
25 – Reduce discretionary spending by 10%. We can learn to be happy with less. This will be a primary key to achieving our investment goals.
PROGRESS: We reduced our restaurant allotment for the month of July.
26 – Include Mrs. Superhero more in the formulation of our goals. To her credit, Mrs. Superhero is great at supporting my dreams when they are wise and shooting them down when they are stupid. I would like to be careful to involve her more when strategizing.
PROGRESS: Mrs. Superhero and I have scheduled more frequent budgeting sessions recently.

LIFESTYLE GOALS
27 – Visit Nashville, TN for vacation and do our “Debt Free Scream” on the Dave Ramsey Show.
PROGRESS: Tentatively planned for March 2017.
28 – Go on three vacations – one in the fall (hopefully Las Vegas), one in the spring of 2017 (see Goal 27), and one in the summer of 2017 – and plan them utilizing travel hacks and deal hunting techniques.
PROGRESS: Aiming for Las Vegas in October!

RELATIONSHIP GOALS
29 – Take Mrs. Superhero on one date each week. Sometimes this will be simple, and other times it will be more elaborate.
PROGRESS: Success. It has been the highlight of each week to spend dedicated time with Mrs. Superhero.
30 – Spend more quality time with my two nephews and new niece. Also, call my siblings to catch up on a monthly basis.
PROGRESS: Success. I’ve especially enjoyed bonding with my niece, who has to be the most adorable 4 month-old in the world!

Uncle FinanceSuperhero and Charlotte
Uncle FinanceSuperhero and Charlotte

How has your July progressed? Are you on track to meet your goals?

Overcome FOMO (Fear of Missing Out) in 7 Steps

When I was 14, the band Styx came to town. I didn’t even know who they were until two weeks before the concert, but I quickly fell for their music and its driving rhythms, synthesized sounds, and meaningful lyrics. You might think that you’re not familiar with the band, but you probably are, as almost everyone knows and loves the song “Mr. Roboto.”

But I have a different favorite Styx song, “The Grand Illusion.” It begins:

FOMO - the fear of missing out - has a powerful effect on life and money. You can overcome its effects and boost your happiness in 7 easy steps!Welcome to the Grand Illusion
Come on in and see what’s happening
Pay the price, get your tickets for the show
The stage is set, the band starts playing
Suddenly your heart is pounding
Wishing secretly you were a star. 

But don’t be fooled by the radio
The TV or the magazines
They show you photographs of how your life should be
But they’re just someone else’s fantasy

So if you think your life is complete confusion
Because you never win the game
Just remember that it’s a Grand Illusion
And deep inside we’re all the same.
We’re all the same…

Who knew that Styx wrote the book on FOMO?

 


WHAT IS FOMO?

FOMO, or “the fear of missing out,” was added to the Oxford dictionary in 2013. However, as a phenomenon, it has been a fixture in our culture for far longer than that.

Consider the following examples of FOMO:

  • You invite a friend to a party at your apartment. She says she “might” drop by if time allows. The real reason for her non-committal response? She wants to make sure she doesn’t commit when there might be a better option that evening.
  • You’re scanning through your feed of Instagram photos of your friend’s vacation; everyone appears to be enjoying themselves in the photos, and you start wishing you had gone along. In order to make yourself feel better, you post a picture from your average weekend and use your favorite filter to make it appear glamorous, spreading the FOMO to other unsuspecting friends.
  • While driving home from work, your iPhone buzzes in your pocket. You can’t stand not knowing what your friends are up to, and you begin texting while driving.
  • You and your significant other are enjoying a romantic dinner in celebration of your anniversary. While this is undoubtedly a special time, you cannot stop your compulsion to check your lock screen for new push notifications.
  • After a long week at the office, you feel lucky to have survived and plan to celebrate by ordering takeout and watching Netflix at home. Then your best friend calls and begs you to go out. You ignore your body’s urge to rest because you don’t want to miss out on the fun. Consequently, you get sick.

You certainly can think of countless other examples of FOMO. After all, we live in a wide world of opportunity, so in a sense, you are always missing out on something at any given moment.

The fear of missing out is powerful.
The fear of missing out is powerful.

THE PSYCHOLOGY BEHIND FOMO

Undoubtedly, the fear of missing out causes us to act, often against our inner desires. Yet, this is ironic, as it is human nature to always be missing out on something!

Research by Tversky and Kahneman reveals that FOMO is deeply rooted in people’s strong tendency to want to avoid any losses, a theory referred to as loss aversion. In fact, they discovered that loss aversion is so powerful that it makes losses twice as psychologically-impactful as gains.

Another possible explanation for FOMO is The Paradox of Choice, a theory propagated by Barry Schwartz in The Paradox of Choice: Why More is Less. At a basic level, Schwartz’ theory states that an increased number of choices generally contributes to decreased happiness with our choices. As Schwartz says in the TED Talk video below at the 7:45 time mark, this increased choice has two possible outcomes:

One effect, paradoxically, is that it produces paralysis rather than liberation. With so many options to choose from, people find it very hard to choose at all. . .

The second effect is that even if we manage to overcome the paralysis and make a choice, we end up less satisfied with the choice than we would be if we had fewer options to choose from.

If you haven’t viewed this TED Talk, I highly recommend you view it now, even in lieu of finishing this piece.


FOMO SUSCEPTIBILITY

At a person’s core, susceptibility to the fear of missing out may be traced back to mindset. For example, while innovators and trend setters naturally do not entertain the fear of missing out, followers are prone to dwell on these types of thoughts.

Schwartz theorizes that two prominent mindsets exist: “satisficers,” who settle for “good enough” and are generally happy, and “maximizers,” who focus upon always choosing the “best option.” Generally speaking, maximizers are more likely to experience FOMO and related indecision, both of which can lead to unhappiness and even depression.

On a personal level, I am a maximizer who suffers from an intense desire to always seek the highest and best use of my time. As I’ve written extensively about in the past, I constantly ask myself the question, “What is it time for now?”

When I can quickly ascertain an answer, this question guides my productivity and happiness. On the other hand, when analysis paralysis sets in, I often find myself in a deep funk. Typically, Mrs. Superhero kicks me out of the house and tells me to go for a run when this happens.

FOMO and social media are inextricably connected.
FOMO and social media are inextricably connected.

SOCIAL MEDIA CONNECTION

For many people today, social media is “the new smoking.” Rather than lighting up a cigarette upon waking up, after meals, and right before bed, we check Facebook, Twitter, Instagram, or Snap Chat compulsively. A very non-scientific poll conducted via my personal Facebook account revealed that this compulsion is real; I believe the results speak for themselves.

The results of a non-scientific Facebook poll on social media use.
The results of a non-scientific Facebook poll on social media use.

The connections between social media and the fear of missing out are obvious. A quick scroll through your Facebook News Feed is all that is necessary to stimulate FOMO and related emotions. We see our friends going on vacations, buying huge houses, leasing Audis, and adding to their designer wardrobes.

Seeing it is one thing, and being happy for your friends is another; yet when envy, jealousy, and disbelief set in, it is a problem.


FOMO AND FINANCES

For the person attempting to live frugally or simply adhere to a set of financial goals, the inundation of pictures, statuses, and tweets serve as constant reminders of a lifestyle gap. Over time, they can be too much to bear.

Eventually, enough is enough, and we splurge a little in order to discover whether we really are missing out.

Perhaps the most notable and obvious manner in which FOMO impacts the average person’s finances lies in its impact upon spending. Research conducted by Eventbrite, in conjunction with Harris, shows that approximately 69% of millennials experience FOMO. This phenomenon has led millennials to value experiences more so than the milestones and rites of passage of previous generations. Yet the trend cannot be fully-attributed to this generation; since 1987, consumer spending on experiential events, such as concerts, performing arts, and athletic events, has risen by 70% relative to total United States spending.

American spending on experiences as a percentage of total consumer spending (Credit to Eventbrite and U.S. Department of Commerce, Bureau of Economic Analysis)
American spending on experiences as a percentage of total consumer spending (Credit to Eventbrite and U.S. Department of Commerce, Bureau of Economic Analysis)

FOMO also rears its ugly head among investors. According to Peter DeMarzo, Financial Group Professor of Finance at The Stanford Graduate School of Business, “Investors fear being poor when everyone around them is rich.” DeMarzo and his colleagues conducted research which showed that investors tend to flock toward high-tech investments which promise vast growth potential. “These are typically high-risk stocks that, in seven out of eight cases, are likely to go bust. But people are willing to invest in them in the hopes that they’ll hit that one-in-eight jackpot,” according to DeMarzo.


FIGHT BACK AGAINST FOMO IN 7 STEPS

By now, I hope I have adequately stated my case: the fear of missing out can impact all of us in many ways. However, I believe that self-understanding, accountability, and decisive action can help anyone fight back against FOMO.

Ironically, the fear of missing out can cause you to miss out on what is most important to you if you allow it to control your actions. But if you strive to live with a purpose and seek to do what you value most, you can be confident in all of your decisions, financial or otherwise.

Don’t give up on the thing you want most to get what you want right now; in the heat of the moment, remind yourself that temporary sacrifice for long-term gain is worthwhile.

7 ACTION STEPS TO OVERCOME THE FEAR OF MISSING OUT

1. Maintain a budget. I know that many people are in favor of tracking savings rate instead, which is a practice I respect. But a budget is a great safeguard against FOMO purchases because it equips you to say “no.”

2. Surround yourself with like-minded people. Admittedly, this can be dangerous sometimes, but it is helpful when you’re trying to break away from FOMO tendencies.

You wouldn’t hang around alcoholics when trying to quit drinking yourself, would you? Stay away from those who enable and encourage your FOMO tendencies.

3. Implement a social media fast. Facebook and Instagram, in particular, have a way of making experiences appear much more exciting than they are, especially when filters are used.

4.Don’t deprive yourself to unreasonable levels. Keep enough fun in your life and be genuinely grateful for blessings and fun opportunities. Gratitude is a formidable power against FOMO.

5. Identify your values to minimize the power of the fear of missing out. When you know what is truly important to you, FOMO will lose its power In your life.

Related:  Values and Budgeting – Part One and Values and Budgeting – Part Two

6. Intentionally disconnect from technology several times throughout the day. As previously mentioned, this could include abstaining or fasting from social media. Fellow bloggers might find it hard to stop the stream of networking, supporting others, and self promotion, but this can be a healthy practice, even if just for a few hours.

This afternoon, I escaped from the rest of the world for two hours while mowing my lawn, tending to my rose garden, and watering my potted plants. A mere two hours helped me to refresh my mind and focus on what is most important to me.

7. When you are with others, put away your phone. Use FOMO to your advantage and don’t let yourself miss out on human interaction. After all, real communication and interaction with others is a central human need; to be loved and understood serves as a bridge between the Love/Belonging and Esteem levels on Maslow’s Hierarchy of Needs. If you have trouble enforcing this, play the Cell Phone Stacking Game: stack your phones in the middle of the table during dinner or happy hour, and whomever checks their phone first pays for dinner or the first round of drinks.

Maslow's Hierarchy Of Needs (Credit: Wikipedia)
Maslow’s Hierarchy Of Needs (Credit: Wikipedia)

Fighting back against FOMO requires dilligence, self-awareness, accountability, and decisive action. However, effort in these areas can contribute to increased happiness, productivity, self-esteem, success, and eventual financial independence.

In closing, I offer more wise words from Styx:

America spells competition, join us in our blind ambition
Get yourself a brand new motor car
Someday soon we’ll stop to ponder what on Earth’s this spell we’re under
We made the grade and still we wonder who the hell we are


Do you struggle with the fear of missing out? Does it cause you to act in ways which do not align with your values? Does it impact your spending habits? What steps have you taken to lessen the impact of FOMO in your life?

20 Budgeting Tips for Singles – A Bachelor’s (or Bachelorette’s) Guide

Last week, the state of Illinois finally passed what I would describe as a “Band-Aid” budget. While politicians largely celebrated this move and patted themselves on the back, their budget does very little to solve the gaping wound that is the state of financial chaos in which Illinois currently finds itself.

As I read the headlines and a few articles, I marveled at the difficulty the legislature faced in passing a budget. As you may or may not know, Illinois recently went an entire fiscal year without a budget. This standoff made previous budget delays (18 days in 1991, multiple delays of several weeks in the 2000s, and the bitter standoffs of recent years) look like small blips on the radar.

While Governor Rauner and Speaker Madigan set aside partisan gridlock long enough to pass a budget, public schools, state universities, and social service agencies are from celebrating. To the detriment of the citizens of Illinois, the finger pointing between Republicans and Democrats will surely resume and intensify in the next months.

Right around the time that Governor Rauner was delivering his press conference regarding the new budget, I sat down to review my planned budget for July 2016. Since September 2009, I have created a unique monthly budget using Gazelle Budget, the online software platform created Dave Ramsey’s team at Ramsey Solutions. That makes 71 unique budgets. It felt good to add yet another accomplishment to the mental list of ways in which I put the state of Illinois to shame.

MY FIRST BUDGET

As I often do when completing a budget, I took a look through the archives to see how Mrs. Superhero and I have come. My trek brought me back to September 2009, the month in which I created my very first budget.

In September 2009, I was a newly-employed, engaged bachelor, living independently for the first time in my life. Less than one week before the new public school year started, I accepted a job offer to teach music about 25 miles away from my university campus. With a week to prepare, I scrambled to locate housing, sign my contract, and prepare for a radical life change.

At the time, I had barely a tiny inkling of how to responsibly manage my money. I had recently read The Total Money Makeover in record speed, but I didn’t know the first thing about budgeting an “adult” paycheck. This was going to be the first time I had ever earned a paycheck which included a comma in the amount field!

After reading about Gazelle Budget (which is being replaced soon by EveryDollar), I purchased an 18 month membership, which included access to all three hours (ad free) of the Dave Ramsey Show podcast, for $89.95. Moments later, I created my first budget.

In all its glory, my very first monthly budget, from September 2009
In all its glory, my very first monthly budget, from September 2009

I began by projecting my total net income for the month, $2,357.29 in total. In that moment, I recall feeling pretty wealthy. I continued by inputting my desired charitable giving ($236 – 10%), rent ($400 – I rented a room in a two-bedroom condo from a friend-of-a-friend), food ($305 – for groceries and restaurants), and my debt obligations ($50 car payment and $200 credit card bill). From that point, I filled out the budget with an estimate of utilities, transportation (gas, car insurance, and routine maintenance), clothing (new work clothes and change for laundry), personal spending (spending money blow money Starbucks fund, books, gifts, hair cut, toiletries, and the Gazelle Budget subscription), and savings (emergency fund and honeymoon fund).

As you can see above, my projections for spending (middle column) were not entirely accurate when compared with my actual spending (leftmost column) at the end of the month. In fact, despite projecting a zero-based budget, I spent more money than I earned in September 2009.

This was hardly a Superhero effort.

On the other hand, the percentages of my categorical spending mimicked responsible spending.

Budget Percentages 1

Budget percentages 8-11
Categorical budgeted spending as a percentage of net income, September 2009

THE TROUBLE WITH PROJECTIONS

For the first full month of living on my own, I updated my budget on a daily basis. I kept a stack of receipts for all cash purchases and utilized internet banking to reconcile all other transactions. Yet despite my diligence, I was still brand-new to the process of budgeting.

As you can see below, I overspent considerably on food and personal spending; I had budgeted a combined $572.29, approximately 24% of my net income, but at the end of the month, I had spent a combined $761.58, approximately 32% of net income.

When I broke these spending figures down further, I discovered that I had spent $156.50 at restaurants and $80.77 at Starbucks.

Ouch.

My First Budget - Spending
20 TIPS FOR THE BACHELOR’S OR BACHELORETTE’S BUDGET

I chose to present the above figures for two primary reasons. First, I wanted to prove that it is possible to build and maintain a monthly budget as a single person. Second, I wanted to be fully transparent about my early mistakes.

Yes, creating a budget is not always easy. It isn’t the cool thing to do, especially as a young 20-something fresh out of college. Even at age 30, I can still recall the temptation to throw caution to the wind and live it up. Heck, I almost went out and leased a car!

However, I still recall one of the most powerful motivators for a 20-something single: the desire to prove one’s independence. Creating a budget is one of the best ways to set out to accomplish this goal and appear to be an adult. If you don’t manage your money responsibly, you will surely appear to be a child to you parents and extended family.

To win with money as a bachelor or bachelorette, follow these 20 tips.

20 BUDGETING TIPS FOR SINGLES - TW

1. Share costs with a roommate.

In my case, I avoided spending $1,000 per month for a one-bedroom apartment and spent $400 to rent a home in a two-bedroom condo. By sharing costs in this manner, I avoided spending 40% of my net income on housing costs.

Housing is by far the biggest budget buster for the average bachelor or bachelorette. Spending within this category can be a difference-maker.

2. Gather an accurate picture of your monthly debt obligations.

When you are just starting out, you will feel the temptation to delay examining your debts, particularly if your student loans are still in deferment. Avoiding your debts will not make them go away, so gather this information, including total principal, interest rates, minimum payments, and loan terms for each debt. If you’re unsure or unclear about any debts, contact the appropriate customer service department right away. Also, you should check your credit report; remember, this can be done free of charge once per year with each of the major credit reporting bureaus.

3. Prepare your own meals and cook at home as much as possible.

As a single young adult, preparing your own meals will accomplish two goals: you will save money, and you will not gain weight eating low nutrition/high calorie fast food. As an added bonus, you will be able to host your dates for dinner and impress them with your fine culinary skills. They’ll expect Ramen, and you’ll blow them away with shrimp creole!

Ladies, don’t forget, the way to a man’s heart is through his stomach.

4. Maintain a college lifestyle, at least in terms of spending.

When your first paycheck rolls in, you will immediately experience the temptation to buy everything in sight. If you establish an unreasonable level of spending out of the gate, you will set yourself up for failure. As much as possible, continue to live a college lifestyle (i.e. behave as if you are poor), within reason, of course.

5. Do not go out and buy a new (or new to you) vehicle.

You need to get used to living on a budget first in order to determine what you can or cannot afford in a new vehicle. Don’t allow pride and vanity to influence your decision-making process. If your current vehicle gets you from point A to B, it’s a keeper – at least for a few months.

6. Invest in a decent coffee maker with a timer function and brew your own coffee at home.

I learned this the hard way when at the end of my first budgeted month I had spent $80.77 on coffee on my way to work. I had a decent Mr. Coffee coffeemaker, but it didn’t have a timer feature. If I happened to be running late to work in the morning, I resorted to a quick Starbucks stop, which cost me significant money without adding any perceived value (neither happiness-wise nor nutritionally speaking).

Nothing beats the sweet aroma of morning coffee, especially when you brew it yourself and save money in the process

Mr. Coffee
Nothing beats the aroma of freshly-brewed coffee in the morning – and it saves you money!

7. Stay in.

Fortunately, I did a good job of this. My wife-to-be and I enjoyed cooking dinner at my condo and watching reruns of The Office. I know that many single people will feel the temptation and be pulled into the expensive night life scene, but do so within reason. Invite friends or your significant other back to your place, where food and drinks are cheap.

8. Find affordable dates with Groupon and Restaurant.com . I’m not even sure if Groupon and Restaurant.com existed back when I was a bachelor, but taking advantage of them today is a key part of our dining out experience. With either platform, you can purchase certificates for what is usually a fraction of the value, which allows you to realize significant savings and still enjoy a night out. The most common Restaurant.com offer is $10 for a $25 gift certificate. Check out the Restaurant.com offerings in your area by following the link and entering your zip code.

9. Build an emergency fund as quickly as possible.

As a young single person, building an emergency fund is the definition of adulting. Without an emergency fund, you will face unexpected expenses and be forced to swipe your credit card. Or worse yet, you may have to beg your parents for a loan or a gift.

10. Begin charitable giving right away.

While I have always given 10% to charity and missions organizations, I know this isn’t for everyone. If you’re not a natural giver, start small. Even $1 or $10 per month will benefit worthwhile organizations. If you’re not into structured giving, pay it forward and purchase the coffee or meal for the driver of the vehicle behind you in the drive-thru.

I strongly believe that regular, consistent giving is a key to winning with money. The act of giving teaches you that money is not an asset to be horded, stockpiled, wasted, or worshipped, but a tool to help yourself and others.

11. Strive to create a zero-based budget every month.

Remember, you will fail at this at first. Over and over and over. However, I found comfort in a Dave Ramsey quote during my initial months of struggle with my budget:

Adults devise a plan and stick to it. Children do what feels good. -Dave Ramsey

12. Accept that your budget projections will rarely be perfect.

On a related note, embrace your budget mistakes as they occur. Be willing to adjust your budget several times during the first several months.

13. Share your budget with a friend who is wise with his or her finances.

Accountability is helpful for everyone. It is part of the reason why I write this blog. A good budget is not inflexible.

14. Tell yourself every day that instant-gratification isn’t all that gratifying.

A few days ago, I read that the average person only waits 5 seconds for a web page to open before becoming irritated and moving on. Clearly, we live in a culture which embraces speed and instant results over patience.

You will need to learn to delay your desires in order to maintain a successful budget. Make a plan and stick to it.

15. Don’t worry about investing money right out of the gate.

In the personal finance blogging community, the suggestion to delay investing for retirement is utter blasphemy! However, I believe that there are better uses for your first months of pay. Make sure your budget is in order, build an emergency fund, and take time to research your investment options. When the time comes to invest, look into low-cost options through Betterment and Motif Investing. You will be glad that you waited.

16. Identify your values and be sure that your budget follows them.

If you’re not sure where to start with values-based budgeting, check out my two part series on budgeting with values in mind:

Values and Budgeting – Part One

Values and Budgeting – Part Two

17. Once you’ve identified your values, create written goals that you wish to accomplish.

Writing V-SMART Goals is the best way to accomplish your goals.

18. Be transparent with your friends and family about your budget.

It is OK to explain that you are striving to manage your spending responsibly. In fact, if you keep your budget goals a secret, it will be more difficult to stick to your budget, as co-workers will invite you out for happy hour drinks and apps every Friday. Just be up front and honest.

You can still have a social life on a budget. But be willing to say "no."
You can still have a social life on a budget. But be willing to say “no.”

19. As follow-up to number 18, be willing to say “no.”

If you want to live on a budget and win with money, you will likely hurt people’s feelings from time to time.

20. Avoid making any purchases on impulse.

If you are considering a sizeable purchase, write it down and check back again in thirty days. See my recent piece, The Thirty Day List, for a step-by-step process on delaying purchases.

Note: This piece contains affiliate links. FinanceSuperhero only recommends products designed to save readers money.


Readers, what budget tips do you have for singles?

7 Deadly Financial Sins to Avoid At All Costs

This post, “7 Deadly Financial Sins to Avoid At All Costs,” was last updated on February 21, 2017.

As a high school student, I was a bit of a nerd (I still am today!). Though I was well-rounded – a decent athlete and very active in music and student government – I rarely went anywhere without a book in hand. I read a wide variety of authors, including Rand, Twain, Chaucer, Dante, and Steinbeck, among dozens of others. In hindsight, I enjoyed reading so much because of the fascinating characters and moral dilemmas contained in each book. After learning about the Seven Deadly Sins – hubristic pride, greed, lust, malicious envy, gluttony, wrath, and sloth –  in ninth grade honors English, I began to take greater notice of character development and general character flaws. I also began to notice how these flaws manifested themselves in my friends and even my own life.

Everyone wants to be financially secure, but millions of people unwittingly commit financial sins and sabotage their efforts. Dodge these 7 financial sins!

7 DEADLY FINANCIAL SINS

As a financially-conscious adult, I now see that these sins are ever present in the day-to-day financial decisions of the average person. Rather than attempt to isolate direct correlations between the aforementioned Seven Deadly Sins and common financial mistakes, I wish to present seven of the top financial sins which have been on my mind in recent weeks.

1. Payday loans

I grew up in an area of the Midwest which painted an accurate picture of the lives of the “haves” and “have nots.” My family fell somewhere in the middle as an average middle class family. However, the occasional trip through the seedy parts of town provided shocking glimpses of life on the other side: low income housing, gang violence, pawn shops, and payday loan centers.

I am optimistic that predatory payday loans may soon be a thing of the past, given Google’s crackdown on payday loan advertisements. Finally, awareness is growing about this criminal cycle of debt and the outrageous interest rates charged by payday lenders. You can read more about this problem here.

2. Spending more than you earn on a long-term basis

This needs little explanation, as the math is quite simple. Unless you are poised to receive a large inheritance or other similar windfall, a negative savings rate is a sure-fire to place yourself in financial peril.

3. Borrowing money from a retirement account

Unless you are facing bankruptcy or foreclosure, borrowing money from your 401k or other retirement accounts can be disastrous. In doing so, you are failing to make financial progress, continuing to overspend, and weakening one of the greatest partnerships of all: time and compound interest.

4. Failure to have a will in place

I dislike being the bearer of bad news, so I will make this very brief: There is a 100% chance that you will die, and getting a will in place won’t change these odds in any way. Given this undeniable fact, it is borderline inexcusable for anyone with typical assets and liabilities not to have a will.

5. Buying or leasing brand-new vehicles

Unless you are a millionaire or otherwise financially-independent (FI), purchasing a brand-new vehicle represents a significant and immediate loss the moment you drive off the lot. Most new vehicle purchases are motivated by pride or jealousy. There is nothing wrong with purchasing a nice, well-maintained used vehicle.

Related: The Car Lease: A Formidable Villain

6. Whole life insurance

In my opinion, whole life insurance is a scam. On the surface, a slick salesperson can make it sound like a great deal by dropping words and phrases like “cash value” and “guaranteed to remain in force.” However, term life insurance is a much greater value. For most healthy adults, a sizable 20 year term policy is available for little more than the cost of a meal at Applebee’s.

The best part: low monthly premiums will allow you to invest the money you save and become self-insured by the time your term ends.

7. Lack of a financial plan

In many ways, I am an open book when it comes to discussing my finances. Mrs. Superhero and I are believers in stealth wealth, which means you won’t find us disclosing our incomes our value of assets any time soon. However, I am always willing to discuss our financial game plan with others. By being transparent in this way, we have learned a lot from other people, made changes to our plan after careful consideration, and hopefully helped a handful of people be more intentional with their finances.

At the same time, I am continually amazed by the number of people I speak with who do not have a defined financial plan. To make matters worse, these people are typically unaware that this is a problem. With automated tools like Mint and Personal Capital, among countless others, there is no excuse for the failure to have a financial plan in place.


Readers, what other financial sins should be added to this list? Which one do you think is the worst?

Decluttering Your Finances – Five Steps to Simplify Your Money Today

Earlier this week, I published a post about the importance of written financial goals.  Several readers and commenters agreed that the creation of written goals has been one of the largest contributors toward their financial progress. In reading and responding to their comments, it is clear to me that these commenters have detailed plans and have been able to follow them.

I believe their successful planning and subsequent written goals ultimately stem from possessing an accurate understanding of their financial outlook at all times. Furthermore, written goals often provide the added motivation and accountability needed for that final, persevering push toward achievement.

Organization is Vital

Yesterday, I was having one of those mornings. I found myself in a mad scramble to locate a pair of socks which would fit in with the color family of my pants, shirt, and tie. After a few minutes of searching through an unsorted basket of socks, I located a pair. Though this simple search only stole a few minutes of my time, it got me thinking about the perils of my own disorganization.

chaotic desk, covered with all kinds of paper, files and envelops
If your desk looks like this, read on!

When you do not maintain organization, in all areas but specifically your finances, uncertainty lingers in the air like the smell of rotting garbage; it may not bother you much at first, but if it is ignored, the problems will quickly worsen.

Five Steps You Can Take Today

Much like unsorted laundry, your money is helpless without you. If your finances require some decluttering, whether minor or major, now is the time to take control and do what is necessary to be the Superhero that your finances desperately need. You can start by implementing these five easy steps toward decluttering your finances:

1. Automate Your Finances As Much Possible

If you are like me, you value your time just as much as you value money. By automating common expenses, such as mortgage or rent payments, utility bills (such as water, trash, electricity, gas, television/internet, and mobile phone), life insurance and disability monthly premiums, car payments, student loan payments, retirement account contributions, and even savings, you can save yourself significant time, energy, and money. The days of writing countless checks, licking envelopes, and purchasing stamps will be drastically reduced.

Most major banks will allow you to set-up auto-pay on these bills with very little effort involved. You can even negotiate with most providers to establish a chosen day of the month for your auto-draft to occur, which will allow you to spread out your payments to align with your pay periods. Lastly, some institutions, particularly student loan servicers, may provide a small APR reduction when you sign-up for auto draft and paperless billing.

Alternatively, you could choose to place these expenses on a credit card each month, leaving yourself with only one condensed bill to be paid. This could be advantageous if you receive rewards.

2. Sign-up for Paperless Billing

When you became an adult, checking the mail each day surely lost its allure. Good news: you can restore fun to the act of walking to the mailbox each day by signing-up for paperless billing with all providers who offer this service. Doing so will literally and figuratively decrease the clutter in your mailbox and your finances. Furthermore, with electronic copies housed by your various institutions on secure servers, your information will be protected, you will be less likely to experience identity theft, and you will not need to fear losing an important document or missing a bill in the mail.

3. Sign-up for an Online Budgeting Tool

When it comes to monthly budgeting, I firmly believe everyone should experience working through the fine details with a legal pad or spreadsheet and a calculator. In the interest of decluttering and saving time, however, the average consumer has plenty of online budgeting tools from which to choose.

After utilizing Gazelle Budget for many years, I am currently transitioning over to a paid subscription version of EveryDollar, a product created by the team at Ramsey Solutions. EveryDollar is a very effective way to create detailed monthly budgets, track spending by linking with all of your financial accounts, and monitor progress on your goals. I particularly enjoy the features which allow users to create sinking funds and budget for irregular (bi-monthly, quarterly, semi-annual, or annual) expenses.

I also utilize Personal Capital to gather a daily snapshot of all of my accounts and to gauge my current net worth. It is the most simple and effective way to monitor all of your accounts, and furthermore, it will be provide a variety of analyses. The best part? It is free!

4. Use Cash Allowances to Pay for Basic Spending

While EveryDollar can certainly ease the burden of tracking a multitude of debit and credit transactions within your monthly budget, I recommend providing cash allowances within basic categories such as groceries, restaurants, gas, and discretionary spending (or what Mrs. Superhero likes to call her Stitchfix Fund). You can include these cash allowances in your budget with one simple transaction on the first day of the budget month and be finished with the category.

If you are like me and Mrs. Superhero, these categories will represent a large percentage of your monthly expenses. By implementing cash allowances, your will provide an additional layer of accountability to stay on budget (you cannot spend more money when the cash is gone) while simultaneously freeing up additional time each week, which you could allocate toward a side hustle or building your own blog.

5. Eliminate Your Debts as Soon as Possible

For many families, debt can represent a significant percentage of their monthly budgeted income. When you shed the shackles of debt, you free up additional streams of income which may be re-allocated as automated contributions toward liquid savings, retirement accounts, non-retirement investments, and savings toward the purchase of rental properties.

Additionally, without multiple debt obligations, the sheer number of your monthly transactions will be reduced. Fewer transactions will lead to even greater simplification. You will also experience the peace that comes with no fear of missing a payment or incurring late fees and interest charges. Lastly, you will not experience guilt each month as financial institutions earn interest on your hard-earned income. Trade monthly debt payments for the joy of watching interest work in your favor as soon as possible!

Final Recommendations

If you are willing to dedicate a few hours this weekend, you can implement the above steps to greatly declutter your finances. The sacrifices you make in doing so will pay great dividends, pun partially-intended, for your financial future. After doing so, you will be free to turn your attention from fretting and worrying about your finances and onto creating a game plan and written goals for your future.


Readers, what steps have you taken to simplify your finances? What recommendations would you suggest, in addition to the above suggestions?

 

Values and Budgeting – Part Two

In my previous post , I proposed that because change is inevitable, we should do anything and everything within our power to take action to create positive changes, thereby pursuing continual growth. In order to effectively pursue this growth, a wise Superhero should create goals. Before we unpack these ideas further in relation to our personal finances, I want to make some important distinctions.


 
Goals Are Empty Without a Foundation of Values

If you think you are motivated by goals and achievement, you are wrong. “But I have achieved a lot in my life,” you say. Congratulations! I want you to achieve all of your goals. I certainly want to achieve all of my own goals. However, the goal itself is not the driving force, as we saw when reflecting upon the rapid rise of a young phenom named Michael Jordan. Values are the driving force for meaningful goals. Show me a significant goal, and I will point out the values that underpin the goal.

Side note: It is possible to achieve a significant goal that is not underpinned by one of your highest values. For example, I could set a goal to complete a triathlon in 2017. Do I think I could complete this goal? Absolutely. Do I have any interest? No. Why? While I value Health and Personal Wellness, the driving value that leads me to exercise is Leisure, believe it or not. Swimming and biking are not nearly as leisurely to me as is running -I know, feel free to groan. However, I think we all can agree I am pretty likely to phone it on the triathlon and end up running a marathon instead.

Discover Your Values

Now that we have seen the importance of our values in relationship to our financial goals, allow me to present a few simple questions which are designed to help you quickly identify your values. All of the following questions are related to the concept of Purpose. Think of Purpose as the reason you wake up in the morning.

  • What or whom do you live for?
  • What activities and experiences provide you with deep fulfillment?
  • How do you best contribute to the world?
  • What kind of legacy do you wish to leave?

Honest and in-depth answers to these questions should point you clearly to  your Purpose and, subsequently, a set of easily identifiable values. Alternatively, values may point to purpose, depending upon how your line of thinking.

Think of Purpose as the reason you wake up in the morning.


 
A Non-Financial Example of Values and Purpose

During a European college band tour in 2005, I met a Pastor in a small Austrian town who clearly understood his life’s purpose, identified his values, and adhered to them by his actions. As he told me his story, I was fascinated by the seemingly-disconnected details of his remarkable life. This was a man who had grown up in the US, yet here he was, complete with a southern drawl and Colonel Sanders beard, leading a flourishing congregation in a picturesque town nestled between snow-capped mountains. Curious, I asked him how he had been called to his position. His response, which puzzled me for years, is much clearer today in light of my understanding of the principles of purpose and connected values:

“Called? I wasn’t called. I had to go.”

This was a man who knew his purpose and acted upon it. I believe he was compelled to do so. He left his comfort zone in order to fulfill his purpose, and at the intersection of purpose, values, and action, he found fulfillment.

What Happens When We Discover Our Values and Purpose?

Like the Pastor above, when we discover our values and purpose, we will naturally shift toward spending the majority of our time and energy on impactful activities. Hint: Highly-successful people do not watch 6 hours of television and compulsively check their Facebook feeds every fifteen minutes. Successful people allow their purpose and values to drive their actions.

Your Financial Values

Armed with knowledge of your personal values, now let us answer the following adapted questions:

What is your primary reason for earning money?

What use of your money do you find most fulfilling?

How do you best contribute to your financial well-being?

What kind of financial legacy do you wish to leave?

I believe the answers to these questions will show you your Financial Values. Here is an example, which utilizes my brief answers to the above questions:

What is your primary reason for earning money?

Living well in the present and the future.

What use of your money do you find most fulfilling?

Giving to others.

How do you best contribute to your financial well-being?

Carefully managing my family’s income to ensure it aligns with your goals and values.

What kind of financial legacy do you wish to leave?

I wish to change my family tree and have an impact that is several generations deep without breeding a sense of entitlement in my children and grandchildren.

Did you notice any themes? My financial values are Moderation, Giving, Stewardship, Order, and Dependability. I craft each monthly budget with these values in mind.

How to Start Values-Based Budgeting

I strongly believe that getting on board with a values-based budgeting approach can be the boost you need to reinvigorate your financial pursuits, expand your horizons, and achieve your dreams. Here are a few examples of how this approach has revolutionized my own budgeting process in the past few months:

  • Mrs. Superhero and I discovered that our spending on restaurants and expensive dinners was far out of alignment with our values. Yes, we value time for relaxation, and spending money on a night out certainly provides that. However, we realized we were not gaining additional relaxation benefits from dining at a local five-star steakhouse versus spending $20 at Red Robin. This freed up a significant percentage of our budget, which we re-dedicated toward toward saving and reducing debt.
  • I am strongly considering reducing or eliminating my cable TV package. Intellectually, I grasp the enormous benefits just waiting to be realized when and if I pull the trigger on this change. For me, cutting the cord will be equivalent to what many people experience when they cut up a credit card they have had for decades. It will be painful, but I am starting to realize I value my financial independence far more than the ability to access hundreds of channels. As a sports fanatic, I will, however, need to ensure that I have alternate systems in place prior to cutting the cord.
  • Mrs. Superhero works extremely hard in her day job as a music teacher and as a self-made entrepreneur with her music lesson studio. After discussing her values, she and I have decided to reinvest more of her income in needed items for the studio in the near future, such as tablets, method books, and an accounting service.

To get started, ask yourself the following questions:

  • How can my values influence my goals and my budget?

Make a list of your values and keep them near by as you assemble your budget.

  • How do my recent actions misalign with my values?

Track your spending actions for one week (or better, one month) and connect them with your associated values. If they do not align, you have discovered an opportunity to improve your budget.

  • How do my recent actions align with my values?

Continue to implement these steps to stay on track.

  • What false values are indicated by the patterns of my actions?

For example, am I spending too much money on restaurants, clothing, or miscellaneous categories, all at the expense of other goals?

 

Build on SMART Goals to Achieve Success

When you have built a successful budget that have been able to adhere to for several months, you are on track to achieve your goals. If you discover that you are not sticking to your budget, I have one final recommendation.

Most people today are familiar with the concept of SMART Goals. Smart goals are intended to be Specific, Measurable, Attainable, Realistic, and Time-Oriented. I would like to propose a simple addition to this concept.

You guessed it: Values.


 
Introducing the V-SMART Goal: Values-based, Specific, Measurable, Attainable, Realistic, and Time-Oriented

I believe that the creation of V-SMART Goals can be the jolt that you may need to finally establish goals and retain the momentum and desire to fully accomplish them. Allow me to provide a simple example:

SMART Goal: I will pay off $5,000 of debt on my MasterCard prior to July 1, 2016, by limiting my discretionary spending in the areas of Clothing and Entertainment.

V-SMART Goal: In order to align with my values of Stewardship and Financial Independence, I will pay off $5,000 of debt on my MasterCard prior to July 1, 2016, by limiting my discretionary spending in the areas of Clothing and Entertainment.

Just by making a simple distinction like you read above and keeping values at the forefront of your mind, I am confident you will increase your success. The consideration of values has added a new depth and breadth to financial planning and budgeting for me and Mrs. Superhero. It is supporting faster achievement of our goals.

To bring this post to its conclusion, I would like to leave you with a profound reminder from Henry David Thoreau:

What you get by achieving your goals is not as important as what you become by achieving your goals.

A Detailed Guide to the Zero-Based Budget

Do you feel hopeless about money? Have you tried to make a budget in the past and bombed big time? In this post, we will take a detailed look at how to create a zero-based budget which will help you take back control of your life and money.

What exactly is a zero-based budget?

 A zero-based budget is a budget in which all income is allocated to a budget category with no remaining unused funds.

At this point, you should realize that you can’t afford to go another month without a budget. It could be the difference between one day reaching financial freedom and remaining in bondage to debt. It could leave you trapped working a job you hate just to pay the bills. It could diminish your happiness. If you don’t feel urgency and understand the importance of a budget, start here.

Methods of Budgeting

Do you feel hopeless about money? Have you tried to make a budget in the past and bombed big time? In this post, we will take a detailed look at how to create a zero-based budget which will help you take back control of your life and money.Depending on your personality and degree of tech-savviness, you may wish to create a budget the old-fashioned paper-and-pencil way. You may prefer using Excel, or even an automated program, such as Mint, YNAB, or EveryDollar.

If you are a budget rookie, I cannot understate the importance of creating a budget and crunching the numbers yourself, at least for your first few budgets. I highly recommend the pencil-and-paper for your first few budgets simply because it will force you to pay attention and be precise.

Budget Basics

Before we get into the specifics of your budget, let’s review some key basics.

  • You need to create a new, unique budget at the beginning of the month, every month. Why? Some expenses occur on a bi-monthly or quarterly basis, and you will want to capture this within each unique budget you create. Remember, some expenses are fixed, while others vary from month to month.
  • Your budget should be based upon your net income (after state and federal taxes, employer deductions, and insurance premiums). Whether you are paid bi-weekly or weekly, this figure, too, will vary from month to month.
  • You should create a budget which utilizes categories. I personally use the following categories, which are recommended by Dave Ramsey. You should use the categories that represent areas of significant expense in your budget, delete those which do not, and add any pertinent categories which may be missing.
Giving/Charity
Saving
Housing
Utilities
Food
Transportation
Clothing
Health/Medical
Personal
Recreation
Debt
  • Within each category, your expenses should fall within the following typical ranges.

 

Category Recommended Percentages
Giving/Charity 0-10%
Saving 5-15%
Housing 25-35%
Utilities 5-10%
Food 5-15%
Transportation 5-15%
Clothing 2-7%
Personal 5-10%
Health/Medical 5-10%
Recreation 5-10%
Debt 0%

Sample Expenses Within Each Category

Giving/Charity: Tithes and offerings to church/religious organization, charitable donations

Saving: Emergency fund savings, retirement savings (401k, 403b, Roth IRA, Traditional IRA), college savings (ESA, 529), vacation savings fund, sinking funds

Housing: Rent, mortgage (including property taxes and insurance in escrow), home maintenance

Utilities: Electric, Gas, Water, Trash, Home/Mobile Phone, Cable/Internet, Home Security

Food: Grocery, restaurants, fast food, coffee and drinks

Transportation: Fuel, auto insurance, auto maintenance, bus passes, train tickets, Uber fares, tolls, miscellaneous transportation costs

Clothing: Includes shoes, outerwear, work wear, accessories
Personal: Discretionary spending, disability/life/identity theft insurance premiums, miscellaneous spending

Health/Medical: Insurance co-pays, prescription co-pays, miscellaneous medicine, gym memberships

Recreation: Movie tickets, concert tickets, sporting events, local/regional travel, miscellaneous recreation

Debt: Student loans, car loans, home equity loans, credit cards

The Specifics of a Budget

Your figures may or may not fall neatly within the categorical ranges above. For example, if your Housing costs represent 24% or 36% of your monthly budget, this is not a serious problem. The percentages above are only suggestions for a healthy budget. Clearly, room exists for give and take, particularly if you are a very low or very high income earner, as long as your percentages add up to 100%.

Some of the categories above cover fixed expenses, such as Housing, Debt, and Utilities. Others address what we will call variable fixed expenses; you will spend money in each of these categories during a typical month, but the amounts may vary slightly from month to month. Variable fixed categories include Food, Transportation, Clothing, and Personal. Finally, the remaining categories, including Giving, Saving, and Recreation, are what we will refer to as discretionary expenses. You may choose to allocate money within these categories, but it is not mandatory for your family’s survival.

I strongly believe that Giving is important, and we choose to include it as a fixed expense within our budget. Your values will dictate how you choose to handle this category in your budget.

Here is a sample zero-based budget based upon a $5,000 monthly income:

Category Dollar Amount Allocated Allocations as Percentage of Budget Recommended Percentages
Giving/Charity $500 10.00% 0-10%
Saving $250 5.00% 5-15%
Housing $1,500 30.00% 25-35%
Utilities $500 10.00% 5-10%
Food $700 14.00% 5-15%
Transportation $400 8.00% 5-15%
Clothing $150 3.00% 2-7%
Personal $500 10.00% 5-10%
Health/Medical $200 4.00% 5-10%
Recreation $150 3.00% 5-10%
Debt $150 3.00% 0%
Totals $5,000 100.00%

As you can see above, the total of all categories combined equals $5,000. This budget adheres closely to the recommended percentages, and it even manages to stay below the recommended percentage ranges in the Health/Medical and Recreation categories.

Creating Your Zero-Based Budget

In the previous section, we allocated targeted spending amounts based on our categories – put simply, we made a plan. Now, we will explore how to reconcile our actual monthly spending with these estimated allocations, or examine how well we are following the plan.

Start by downloading copies of your monthly checking, savings, and credit card statements. If you are doing a paper pencil-and-pencil budget, I recommend adding expenses by category using columns on a legal pad.

Once you have calculated categorical totals for the entire month, the final step is to add all categorical totals and compare the final sum to your allocated final sum. Again, in order to have a zero-based budget, these figures should be identical.

Possible Problems and Trends

As you are doing your first few monthly budgets, you are likely to encounter the following problems or trends:

  • Spending more than the allocated targets in one or more categories
  • Spending less than the allocated targets in one or more categories

Why? A budget is a rough prediction. Think of it as a rough draft of an essay. You will return to it and refine any errors at the end of the month. The previous mistakes you made will influence and impact your thought process as you create later budgets.

Serious Warning Signs and Solutions

The following are two warning signs that your budget is not working:

  • Warning Sign: You consistently spend more than the allocated targets in specific categories.
    Solution: Increase allocated funds for the category if you are within recommended ranges. If you are exceeding recommended ranges, implement measures to reduce spending.
  • Warning Sign: Your spending exceeds your income.
    Solution: Forgive me for shouting, but STOP OVERSPENDING! Stay out of restaurants, learn to like your old clothes, and ride your bike to save on gas. Alternatively, seek alternative streams of income.

Next Steps

Now that you understand the nuances of a zero-based budget, get started on yours today. A budget only takes a few minutes to assemble, but the rewards are potentially without limit. Getting on the right path, understanding your money, and controlling your money are keys to winning with money. A budget doesn’t require sophistication, manipulation, or secret wisdom. It requires patience, intentionality, and a desire to be in control of your money. Even if you suck with money, you can do it!


Readers, how do you plan your monthly budget? Do you create a zero-based budget? Do you use automated software? Excel? Paper and pencil? How much time do you spend on your budget each month? Share your thoughts and burning questions in the comments section below.

Five Reasons Why Everyone Should Have a Budget

A few weeks ago, I was lamenting the cost of graduate school with a friend over coffee. I commented that I had no idea why so many people were willing to go back to school for an MA or MBA and happily load up on debt that would have to be factored into their budget.

Yup, I said the b-word. My friend winced, as if I had just kicked him in the shin under the table.

For reasons I will forever struggle to understand, the word budget is a major taboo in today’s culture. Of course, I have never let that fact deter me in the past, and I wasn’t about to let it in this conversation, either.

“You do have a budget, right?”

“No. . . Budgeting just isn’t my thing. Besides, I’m always going to have debt anyway. What’s the point?”

Sadly, this attitude isn’t all that uncommon today. Chances are, you have also had similar conversations with friends, relatives, co-workers, or maybe even your neighborhood barista.

This, my fellow Superheroes, is a tragedy. With proper budgeting, there is no reason that the average person today cannot retire a millionaire and live a life of financial independence.

Five Reasons to Budget

While there are far more than five reasons everyone should have a budget, today I will present five reasons. My intention is to make you think and simultaneously stir your emotions. After reading this, please do not go another day without having a budget in place for your family.

  1. A Budget is Easy to Create

I am convinced that the average person’s aversion to budgeting stems from the budgetary failures of both federal and state government units. They ask, “If they can’t figure it out, how am I supposed to do it?” In my home state of Illinois, for example, our elected representatives and Governor have consistently demonstrated an inability to play nice and do what is best for their constituents. Ironically, the Illinois General Assembly recently enjoyed a vacation after months of accomplishing nothing.

With a Superhero mindset, you can do much better. Let’s walk through the basics of a simple starter budget:

  • If you have an understanding of addition, subtraction, basic fractions, and can operate a calculator, you can do a budget. Grab a pencil, a legal pad, and get started.
  • List your income from all sources at the top of the page. I recommend using net income, commonly referred to as “take home pay.”
  • Gather information on your fixed necessity expenses: mortgage/rent, utilities, and medications.
  • Gather information on your flexible necessity expenses: food/groceries/toiletries, clothing, and fuel/transportation.
  • Gather information on your discretionary expenses: restaurants, entertainment.
  • Calculate the total of your expenses and subtract this figure from your total net income. If you are spending more than you are earning, something must change.  First of all, aim to reduce unnecessary discretionary spending. Next, explore ways to reduce/eliminate restaurants, save on groceries and toiletries, and formulate a plan to reduce fuel/transportation expenses through well-planned travel. If you have money remaining at the end of your budget, it can be used to build your emergency fund, pay off your debts, and give to organizations/individuals in need.
  • Lastly, examine your fixed expenses and explore all avenues to reduce them. This can be done by paying off debts, thereby reducing your monthly obligations, negotiating rent/refinancing your mortgage (especially if your mortgage is 3-5 years old, you may be missing out on historically low interest rates), and reducing your usage of utilities. Any additional cash you can save is equivalent to receiving a raise.

Note: I realize that this guide to a simple starter budget is basic. We will dive into the nuances of a more detailed budget in a future post. Your starter budget will be approximate. That is OK. The goal is for you to establish a wide lens view of your current income and spending. When assembling future, more detailed budgets, we will use budget software, such as EveryDollar, to add precision to our process. If you prefer, you can jump to this step rather than the old-fashioned paper and pencil method outlined above.

  1. A Budget Puts You in Control of Your Money

Superheroes, you work hard to earn your income. I know I do. Without a budget, it is difficult to keep your income inline. Each dollar you earn in your lifetime is like a tiny employee that is ready to work for you. You wouldn’t hire an employee for your department or business and fail to provide her with a detailed purpose and role. If you did, you would be a poor boss. Employees need guidance and structure to succeed, and your money is no different. Put those dollars to work by assigning them a unique role. That begins and ends with a budget.

  1. A Budget Requires You to Pay Attention to Your Money

With several Mr. Washingtons working for you, suddenly doing exactly what you tell them to do, things begin to change. Suddenly, you notice that your grande non-fat no whip latte costs you $7 each morning. You may even experience a bit of pain upon realizing that this equates to $35 per week and over $1800 per year.

Is this worth $1800 per year?

Noticing details like this is just the beginning when you maintain a monthly budget. And when you start to pay attention, innocent trips to the ATM don’t seem quite so innocent anymore. You begin to think twice before you spend because you understand the ramifications of departing from your plan, a point which segues nicely into the next reason to budget.

  1. Operating Without a Budget is a Missed Opportunity

Though the US government prints money like it is going out of style, you and I know that money is a finite resource. Each of us has a limited number of working years, and logically, our earned income is similarly limited as a result. Do not let any of it go to waste. You must be intentional to be successful.

Today, more and more people strive to out earn their stupid spending. They work long hours to pay for cars, boats, and summer beach homes, yet they are too busy working to enjoy the fruits of their labor. I am not condemning hard work, nor am I saying that you should not have nice things. However, as Chris Hogan puts it, “I don’t want nice things to have you!” If you do not have a budget, your hard-earned money is likely being wasted on buying things you don’t need to impress people you don’t even know. The longer you continue this way, the longer you are missing out on what Albert Einstein dubbed the Eighth Wonder of the World: compound interest. And in this case, being late to the party isn’t fashionable; it’s foolish.

For example, consider the following scenario: Ben and John are both 20 years old. Ben begins investing $250 per month in index funds, and he continues until he is 30 years old, at which time he never invests another cent, allowing compound interest to grow his money until retirement at age 59 ½. John decides to lease a vehicles for $250 per month during this same 10 year window, and wisely snaps out of it when he reaches age 30, at which time he begins investing $250 and continues until age 60. For the sake of argument, let’s assume that both gentlemen invest in similarly-performing index funds, which average a 10% return each year. Surely John must catch up to Ben? Take a look below:

  Ben’s Investments John’s Investments
Age Contribution Interest Balance Contribution Interest Balance
20 $3,000.00 $300.00 $3,300.00 $0.00 $0.00 $0.00
21 $3,000.00 $630.00 $6,930.00 $0.00 $0.00 $0.00
22 $3,000.00 $993.00 $10,923.00 $0.00 $0.00 $0.00
23 $3,000.00 $1,392.30 $15,315.30 $0.00 $0.00 $0.00
24 $3,000.00 $1,831.53 $20,146.83 $0.00 $0.00 $0.00
25 $3,000.00 $2,314.68 $25,461.51 $0.00 $0.00 $0.00
26 $3,000.00 $2,846.15 $31,307.66 $0.00 $0.00 $0.00
27 $3,000.00 $3,430.77 $37,738.43 $0.00 $0.00 $0.00
28 $3,000.00 $4,073.84 $44,812.27 $0.00 $0.00 $0.00
29 $3,000.00 $4,781.23 $52,593.50 $0.00 $0.00 $0.00
30 $0.00 $5,259.35 $57,852.85 $3,000.00 $300.00 $3,300.00
31 $0.00 $5,785.29 $63,638.14 $3,000.00 $630.00 $6,930.00
32 $0.00 $6,363.81 $70,001.95 $3,000.00 $993.00 $10,923.00
33 $0.00 $7,000.20 $77,002.15 $3,000.00 $1,392.30 $15,315.30
34 $0.00 $7,700.22 $84,702.37 $3,000.00 $1,831.53 $20,146.83
35 $0.00 $8,470.24 $93,172.61 $3,000.00 $2,314.68 $25,461.51
36 $0.00 $9,317.26 $102,489.87 $3,000.00 $2,846.15 $31,307.66
37 $0.00 $10,248.99 $112,738.86 $3,000.00 $3,430.77 $37,738.43
38 $0.00 $11,273.89 $124,012.75 $3,000.00 $4,073.84 $44,812.27
39 $0.00 $12,401.28 $136,414.03 $3,000.00 $4,781.23 $52,593.50
40 $0.00 $13,641.40 $150,055.43 $3,000.00 $5,559.35 $61,152.85
41 $0.00 $15,005.54 $165,060.97 $3,000.00 $6,415.29 $70,568.14
42 $0.00 $16,506.10 $181,567.07 $3,000.00 $7,356.81 $80,924.95
43 $0.00 $18,156.71 $199,723.78 $3,000.00 $8,392.50 $92,317.45
44 $0.00 $19,972.38 $219,696.16 $3,000.00 $9,531.75 $104,849.20
45 $0.00 $21,969.62 $241,665.78 $3,000.00 $10,784.92 $118,634.12
46 $0.00 $24,166.58 $265,832.36 $3,000.00 $12,163.41 $133,797.53
47 $0.00 $26,583.24 $292,415.60 $3,000.00 $13,679.75 $150,477.28
48 $0.00 $29,241.56 $321,657.16 $3,000.00 $15,347.73 $168,825.01
49 $0.00 $32,165.72 $353,822.88 $3,000.00 $17,182.50 $189,007.51
50 $0.00 $35,382.29 $389,205.17 $3,000.00 $19,200.75 $211,208.26
51 $0.00 $38,920.52 $428,125.69 $3,000.00 $21,420.83 $235,629.09
52 $0.00 $42,812.57 $470,938.26 $3,000.00 $23,862.91 $262,492.00
53 $0.00 $47,093.83 $518,032.09 $3,000.00 $26,549.20 $292,041.20
54 $0.00 $51,803.21 $569,835.30 $3,000.00 $29,504.12 $324,545.32
55 $0.00 $56,983.53 $626,818.83 $3,000.00 $32,754.53 $360,299.85
56 $0.00 $62,681.88 $689,500.71 $3,000.00 $36,329.99 $399,629.84
57 $0.00 $68,950.07 $758,450.78 $3,000.00 $40,262.98 $442,892.82
58 $0.00 $75,845.08 $834,295.86 $3,000.00 $44,589.28 $490,482.10
59 $0.00 $83,429.59 $917,725.45 $3,000.00 $49,348.21 $542,830.31

At age 59 and approaching retirement, Ben will have invested a total of $30,000 and hold a portfolio valued at $917,725.45. John will invest $90,000 over 30 years -three times what Ben invested-yet he will only hold a portfolio valued at $542,830.31! John never caught up due to the avalanche of compound interest that worked in Ben’s favor.

  1. A Budget is Freeing

When my friend claimed that a budget really wasn’t his thing, I immediately realized that he had never experienced the freedom that results from a fine-tuned budget. When you maintain a budget, you have the benefits of:

  • knowing how much money you have at any given moment
  • knowing you do not have to fear a bounced check or overdraft fees
  • no surprises
  • peace of mind that comes from having budgeted for emergencies (a post on the value of the emergency fund and how much you may need is coming later this week)

Surprisingly, the notion that a budget is restrictive is pure nonsense. As a regular listener of The Dave Ramsey Show, I have heard countless “Debt-Free Screams” in which the callers said that planning a budget felt like they had received a raise.  

Lastly, a budget is freeing because it causes you to think.  Thinking leads to reflection, and reflection leads you to consider your values and decide what is most important to you. Value driven budgeting is the key to seeing beyond the numbers and focusing on the why behind the numbers.

What Are You Waiting For?

A budget only takes a few minutes to assemble, but the rewards are potentially without limit. Getting on the right path, understanding your money, and controlling your money are keys to being a Finance Superhero. A budget doesn’t require sophistication, manipulation, or secret wisdom. It requires patience, intentionality, and a desire to be in control of one’s money.


Do you have a monthly budget? How you maintain it? How much time do you spend on budgeting each month? Please share your thoughts on all things budget-related in the comments section below.