The following blog post is part of The Road to Financial Wellness Blog Tour. Over a period of 30 days, the Phroogal team will go to 30 locations to raise awareness about financial empowerment. Today they will be in San Francisco! Our goal is to help people learn about money by starting the conversation. We understand that local conversations can help bring about national awareness.
Financial Empowerment – Why and How
Why Seek Financial Empowerment
Don’t get me wrong. I love my parents.
But as a child in a household with two parents who always disagreed about money, I grew up with a confused outlook on personal finance.
While one parent would say we needed to stop spending and start saving money, the other would come home with multiple bags full of goodies from today’s impromptu retail therapy session.
That same parent who went shopping the other day would then tell us that money was tight and that we could barely afford anything, and, almost immediately afterward, the other would literally hand us a bunch of cash.
It wasn’t like one parent was a saver and the other was a spender. They both were spenders who never agreed on anything when it came to money. While my mom would come home with multiple bags full of clothes from Ross or Macy’s, my dad would come home with a Mercedes Benz or two. True story. At least they were used.
You can probably see why I grew up confused about money.
It wasn’t until I got my first job after high school (R.I.P. Anchor Blue) that I really knew the value of a dollar. I finally realized how not-so-easy it was to earn, yet so-damn-easy to spend. My closet was filling up, but my bank account stayed empty. I thought retail therapy would make me feel better, but it only made me feel worse, especially when I saw how much money was in my wallet. (Read: none)
My money confusion from my childhood had a lot to do with how I handled money now as a working adult. I was just like my mom – coming home with tons of clothes and no money to spare. I was just like my dad – splurging on status symbols that cost more than my paycheck.
Once I identified that my actions were almost mirroring my parents, I knew that I had to take control of my money and I had to start now. Here are the steps I took to gain financial empowerment and how you can, too.
How to Achieve Financial Empowerment
Stop Spending More Than You Earn
A couple of years ago, I went on a Spending Fast. I didn’t do it for long, probably only 3 months, but it really helped me in several ways. First of all, my credit card debt didn’t grow as fast since I wasn’t swiping anymore plus I had more money to throw at it. Secondly, the fast really challenged my thoughts on my needs versus wants.
The Spending Fast also made me realize that the act of swiping really does give a temporary high – key word being TEMPORARY. Shopping and getting new things is fun, but after that initial high fades away, you’ll want to do it all again. You’re never completely satisfied. Going on a spending fast will really help you monetarily and even mentally.
Set Up Automatic Savings
The next thing I did was set up an automatic savings transfer from my checking into my savings goals (at the time, it was funding my emergency fund). Now, I still save for my personal escrow account and whenever I have travel coming up. I quickly learned to live without that $100 or so that was automatically being transferred out of my checking account each month.
Most banks offer free transfers between your accounts. If you want to save, automation is the way to go. Not only will it happen without you thinking about it, but automating actually trains you to live on just a little bit less. After the first few months, you won’t even miss that money! And it’s not like that money is simply disappearing, it’s actually going to work for you!
Take Care of Your Future Self
Compound interest is talked about a lot when you go to school to get a business degree. So I knew that, even though I’m young, I needed to start saving for retirement. So, right when I graduated from college, I opened up a Roth IRA and socked money away every single month via automatic transfer.
I knew I didn’t want to be 60 years old and stressing out about whether I had enough money in my retirement. I want to make sure Future Lisa is financially empowered, too!
Check In Regularly
I’ve made it a habit to look at my bank account balances almost everyday. It gives me an idea of how much money I can spend that day. If everything is all good, I might treat myself to a nice lunch. If it’s not looking too good, I’ll pass.
Checking your balances regularly keeps you aware of your financial situation at all times. You can’t hide from the hard numbers. At first, checking in regularly can be daunting and discouraging. But once you really start taking control of your money, this regular balance check is just making sure you’re on the right path.
Ultimately, I think this is what financial empowerment is all about – reevaluating your spending, saving up for splurges, taking care of yourself, and being aware and in control of your money choices.
What caused you to seek financial empowerment? What steps do you take toward financial empowerment?