Five Steps to Improving Your Financial Situation: A Guest Post by Caroline

Howdy!

I hope you are all doing swell! Things are going well here! Spouse Unit is rocking school. I have a fun new calling at church! I'm now serving in Young Women as an advisor with the oldest group of girls. I have been babysitting up a storm, I'm going to start cleaning a lady's house once a week and she has cute kids my girls can play with. Lil Spits turned one! Yay! And I get to do a butt ton of baking this week. I'm so pumped. Also. Still potty training. This is taking for-err.

There's your update on me, and now, I am so excited to introduce a new guest writer on my blog today! This fine woman is Caroline! 

She and I have known each other since 6th or 7th grade when we used to stir up trouble at the amusement park by hitting on unsuspecting prepubescent boys. Good times. She's a great friend and has the cutest family and clothing business, Poplolly Clothing, which you can find on Instagram and Facebook if you please!

But today, she's not sharing clothing stuff with you. She's going to share with us some awesome tips for improving your financial situation! Hurray! Without further ado, here's Caroline's "Five Steps to Improving your Financial Situation!"

FIVE STEPS TO IMPROVING YOUR FINANCIAL SITUATION

By Caroline Peterson

Client Service Manager for Legacy Private Wealth Advisors, Business Owner, Mother, Sister, Aunt and Friend

You know how you look on Facebook and see all of the wonderful places people are traveling to? You see a friend who just got a new car, a new puppy, new clothes, a new hairdo, etc… and you think to yourself “How do they afford all of that?” Well the answer is… they don’t. 

Okay…so there may be a small percentage of people who actually can afford those things, but I don’t know of very many.  Now before I start, I should say that I am not a financial expert, and I didn’t get my degree in finance, I just happen to work for a financial advising company and have been fortunate enough to pick up a few things. 

There is a report by the Pew Charitable Trusts finding that 8 in 10 Americans are in debt. When it comes to millennial and the Gen X generation (18-35 year olds) they are racking up debt and falling behind because they have distrust for the market and lack financial knowledge.  

I don’t know about you but I still don’t fully understand stocks, bonds, CD’s, etc… but going through college, having  a family, buying a home, financing a car, and enduring multiple financial emergencies,  I have decided to create a list of steps that encourage a healthy financial lifestyle. They will SAVE your life! And BUY you more time! Haha… See what I did there… Okay let’s get to it.

STEP ONE:  SIX MONTHS RESERVE

I don’t care who you are! You have to make it a priority to save six months worth of income. You cannot predict the future. As much as you like to plan, you also understand that nothing goes according to plan. You never know if you are going to lose a job, have unexpected car problems, go to the doctor's, etc…  I didn’t think having a reserve was that important until Stewart and I went from making $1200 a month to $600 a month right after getting married! AND… our apartment was $525 a month. We literally had $75 to buy gas, groceries, pay for utilities, tithing, etc… We wouldn’t have survived the next few months without savings. Now a lot of you might be thinking, “But how can I build savings when I live paycheck to paycheck?" 43% of Americans are living paycheck to paycheck. If this is you, I have a recommendation, but first let me say this: “The problem is not how much we earn, but how much we spend.”  

How many times have you heard somebody say, “If only I could make more money,” How many times have you said it yourself? Well, it simply isn’t true. Ask anyone who got a raise last year if their savings increased. In almost every case, the answer will be no. –The Automatic Millionaire

So what do we do? In the book Automatic Millionaire by David Bach (seriously one of the best books I’ve ever read) his first recommendation is to PAY YOURSELF FIRST! So I want you to think of an amount or a goal of what you could realistically set aside or save each month. I don’t care if its $100 dollars or $5 you are at least saving something.  People say to me… “But it’s so hard… it’s right there in my savings account and then I end up transferring it to my checking because I overspent or something came up and my savings never really grows… it just stays where it is at.” This leads me right into my next step. 

STEP TWO: OUT OF SIGHT, OUT OF MIND

Your savings account should be something that isn’t easily accessible. The best thing that worked for my husband and me was automatically contributing to an E-trade account. Some of you might be thinking, “What’s that? Or isn’t that when you want to buy stock?” 

An E-trade account is an account you can use to buy stocks, but you don’t have to. You can open a trading account and transfer money into it and not invest it if that’s what you want. The best part is it takes two to three days to transfer back into your banking account (six if you have to sell stock). 

When you go to the furniture store and you say, “Look honey! This table is only $300 dollars! I’ve been wanting a new table,” and your spouse says, “We can’t afford a new table!! What am I? Daddy Warbucks!?" Just kidding. They will really say, “Well, let’s go home and look at our savings account and see if it’s something we really want to do.” By the time you go home, watch a show, clean a room, cook a meal, and then eat at the table you think, “Well maybe I don’t really need a new table.”  OUT OF SIGHT, OUT OF MIND! 

STEP THREE: AUTOMATIC PAYMENTS

Now I used the word “automatic” a few times in the previous section. I don’t know about you but I HATE when my husband comes home and he says, “Have you paid the gas bill?” and I say “Yup, I did it today.” (As I frantically log on to my account to submit a payment thinking to myself the whole time, “Oh crap!! How did I forget to do that?” I click submit, “Do you think he noticed? Nope… oh yeah… way to go girl… you are one slick wife.”)  How many of you have forgot to pay a bill and BOOM… you’re hit with a late fee. “Oh but I guess it wasn’t that much?” I don’t care how much it was!  You’re wasting good hard earned money over just being forgetful. That’s why I highly recommend making your bill payments AUTOMATIC. 

I am going to refer to the book the Automatic Millionaire again. I read this book my last year in college and I was hesitant to implement it because I thought, “Well what if they withdraw too much and I am not expecting it? I like knowing what my gas and electric bill is going to be for the month.” But I went ahead and did it. I made our gas automatic, our internet automatic, our savings account deposit, etc. You get the point. AND MAN… it has saved me so much time and stress. 

Now you don’t need to do this if you are one of those amazing people that pay their bills on time every month… but I will say this: “In order for Pay Yourself First to be effective, the process has to be automatic.”—David Bach.  

He goes on to say that having worked with clients as a financial advisor for many years, the only plans that worked were the ones that were automatic. Clients would tell him all the time, “I’m super disciplined. I will write the checks each month, set aside the money for savings, etc…” and he says in nine years, only one client was disciplined enough to stick to it. Long story short: If you decide to do one “automatic” thing from the list of bills, payments, etc., make sure it’s the payment that goes to your savings! 

STEP FOUR: TAKE ADVANTAGE OF WORK BENEFITS 

This includes 401K plans, stocks, HSA accounts, insurance, etc… If you currently are working and your company offers a 401K, Please! Please! Please! I beg of you! Sign up this week and start contributing!! Time Money wrote an article titled “1 in3 Americans Has Saved $0 for retirement!” 
My husband and I say to ourselves all the time, would we rather travel now or later? People say to me, “But I want to do it while I am young and can enjoy it.” Those are also the people who 60 years down the road can’t even fly to Colorado to visit their grandchildren because they can barely scrape by on what they get in social security. YOU HAVE TO START SAVING FOR RETIREMENT TODAY!! 

“So what you are telling me Caroline is that I need to save up six months of income, and save for retirement? But I don’t have money sitting around to do this?” back to the two things I brought up earlier, “out of sight, out of mind” and “The problem is not how much we earn, but how much we spend.”  If it is getting deducted from your paycheck each month I promise you won’t notice. It’s as if this is what you made each paycheck all along, and it is super fun to see your own money grow! You start seeing it build for yourself and now you get excited for all the possibilities! SO PLEASE TAKE ADVANTAGE OF SOME TYPE OF PROGRAM and start preparing for your retirement today.

Here is a "confident retirement check" my financial company offers. It’s super quick.

STEP FIVE:  BE GIVING  

“We make a living by what we earn—we make a life by what we give.” – Winston Churchill 

I talk about this last, but in the end I think it is the most important. There is more to life than money. We all know this, so then why do we spend so much time and energy worrying about it? Because it’s natural to worry, it’s natural to want more financial security, it’s natural to want to afford nice things, but really in the end does it make us happy? Someone once said to me, “Well sure money doesn’t buy happiness, but it buys stuff that makes us happy.” Yes I agree, but to those who feel that way I encourage you to really think about what makes you the happiest. For me, I notice I am happiest when I am around family and serving others. 

The Automatic Millionaire brings up a point that I love: “The more you give, the wealthier you feel. And it’s not just a feeling. As strange as it may seem, the truth is that money often flows faster to those who give. Why? Because givers attract abundance into their lives rather than scarcity.”  I find so much joy by donating to my church. It’s not easy writing a check each month or week, but once I do, I feel like I am ready to conquer the world. I also find so much purpose in serving my family. I would encourage you if you’re not already doing so, to find an organization, family, friend, etc. that you can give to. It doesn’t have to be a lot; just a small act will suffice. Living for a purpose greater than yourself will lead to discovering who you are and who you truly want to be. 

If you enjoyed reading this or have any questions, our financial office would love to be of assistance. We offer free financial consultations.WOO HOO!  If you are interested, just email me and I can help you out!

-Caroline

Email: Caroline.peterson@ampf.com

I read The Automatic Millionaire in school and it really is an awesome book. I love her steps and hope to implement them more deliberately in my finances and life. I wish that we could go back to the days when we bartered for goats with bushels of apples and stuff, but since that's not how things are we need to make the best of it. We need to be good stewards over the money we're given so we can take care of ourselves and help others out. It's important, people.  

Thanks for reading! If you're interested in writing a guest post on my blog, please contact me! I'd love to have you!

See ya on the flip-flop,

Melissa