The emergency fund: simultaneously the most useful and least descriptive financial tool there is.
We all know emergency funds are meant to handle life’s curve balls. But the term “emergency fund” is so broad that it leaves us pondering:
What constitutes an emergency – and what illustrates a pattern that could actually be planned for?
Most financial advice that broaches the topic of emergency funds fails to address this important question. The result? We build up our emergency funds only to dip into them more frequently than planned – and for “unexpected expenses” that were actually quite predictable.
If all we ever do is use our emergency funds and then rush to rebuild them again, then there’s no way we can get ahead financially. An emergency fund is just the first of many important financial goals, so anytime we ping pong on our progress, we’re getting set back on all of our financial potential. That’s why it’s so important to understand what an emergency fund is really for.
Continue reading “What An Emergency Fund Is Really For”
When it comes to achieving personal finance goals, 90% of the work is emotional.
From a logical perspective we know what to do. Spend less than we earn. Save for the future. Avoid debt; pay debt off if we have it. Figuring out how to do all of this is a bit more challenging, but it’s not impossible (and there’s a lot of advice out there and professionals available to help).
The challenges we face when striving for financial goals aren’t tactical, they’re emotional. And these challenges can be overcome – with a growth mindset.
Continue reading “How to Switch Your Money Mindset from “Fixed” to “Growth””
A few years ago, I was given the worst financial advice I could have been given – and I took it.
To be clear, the advice I was given wasn’t objectively bad. In fact, for someone else it could have worked very well. But for my goal and where I was emotionally at the time, it was terrible advice. And I paid for it in years worth of credit card debt.
Had I taken a minute to relate the advice back to my specific situation (in other words, my goal and the emotional blocks I was dealing with), then I would have known it wasn’t going to work for me at that time. Instead, I looked at it objectively. Since it made more sense objectively, I went with it.
That was when I learned the importance of asking “why” every time someone gives financial advice. Because, if we don’t do that, we could end up in situations far worse than the ones we started with.
Continue reading “Why You Should Ask “Why” When You Receive Financial Advice”
Have you ever written out what seemed like the best budget ever – only to find that a month goes by and, like all the months before, you have no clue what happened to your money?
This is where budgets and intentions can get in the way of actual progress. If this has ever happened to you, then there is more than likely one key thing you were forgetting to add to your budget. And that key thing is the biggest mistake you can make in personal finance.
Continue reading “The Biggest Money Mistake You Can Make”
There’s a real problem with today’s approach to goal setting. In our way too busy for anything but need to “have it all” culture, we’ve been forced to relegate major life goals into tasks, line items to be crossed off a list.
- Lose x pounds
- Save up x amount of dollars
- Buy a house in x years
- Get happy
The list goes on and on. And while I strongly believe in goal setting (you can’t accomplish that which you don’t set out to do), viewing goals as something to be achieved once and then crossed off a list forces us into a narrow point of view.
This limited point of view places arbitrary constraints and pressure around our goal. Those constraints (that didn’t need to exist in the first place) then make us feel bad about ourselves when we don’t achieve within them fast enough. And that loss of self worth makes it even harder to continue pushing forward to achieve.
When we relegate major life goals to simple to-do lists, we lose sight of the big picture, we make it arbitrarily harder to reach our goals, and we set ourselves up for failure.
This practice applies to any life goal you can think of, but it has a major impact specifically on how we budget our money and how we set ourselves up for financial goals. Just like we’ve been looking at our goals all wrong, we’ve been looking at budgets all wrong. So let’s talk about what you can do to fix it.
Continue reading “Are You Looking at Budgets All Wrong?”
At first glance, personal finance is a numbers game.
Write a spending plan. Pay off debt so your net worth doesn’t decrease. Try to increase your net worth through investments.
But when you dig deeper, personal finance is also an emotions game.
Writing a spending plan only works if you’re motivated enough to stick to it. Paying off debt is hard to do because it can cause feelings of shame, it’s frustrating, and it’s often part of a long-haul strategy. Increasing your net worth through investments can be hard when you realize the market fluctuates (and sometimes crashes).
The point is, if you want to win the money game, you have to strike a balance between numbers and emotions. It’s two sides of the same coin. Here’s how you can work both sides and reach your financial goals.
Continue reading “How to Strike a Balance with Emotions and Numbers in Money”
Are you ready to take your finances to the next level and invest your money? Fantastic! Investing is the best way to build your nest egg and beat the insatiable inflation monster. But before you get started with investing, there are a few things to take care of first…
Continue reading “Ready to Invest Your Money? Do This First”
Have you ever heard of shiny object syndrome?
The phrase can be used in many ways, but for me it’s how easily I can be distracted by new tools and ideas that promise to improve my life.
An app that will help me improve my budget? I must try it immediately- even though doing my budget on paper has always worked better for me.
A way to overcome a negative financial mindset? That must be my solution – even though I know every solution requires more work than a quick change.
You get the idea. Even though every “shiny object” proves to be interesting but never the be-all/end-all solution I expect, I fill with renewed hope every time. And hope is good! But throwing all your eggs into a new basket is not so good.
In order to prevent shiny object syndrome from taking me off track in my finances, I’ve learned to create a framework to filter the idea through. That framework enables me to closely examine the new idea or tool. It slows me down and helps me build good ideas into my plan without replacing the parts of my plan that have been working well.
Everyone should have a framework through which to make their best financial decisions. Here’s how you can make your own.
Continue reading “How to Build a Framework to Make Your Best Money Choices”
The other day, my husband asked me if he could take some money out of our savings to put into a new investment account he wanted to try. The investment is riskier than a mutual fund, but it has a known maximum loss so we could mitigate that risk.
My first response was one of fear.
“I’m not sure. How much could we potentially lose?”
His answer was one I could live with. There was no good reason not to try it.
I knew that was why we had money in that particular savings account. And I knew that just letting it sit there without investing it would mean a depletion of value over time due to inflation.
But I was scared.
Continue reading “Are You Allowing Fear to Rule Your Financial Decisions?”
It’s really easy to look at the stock market and think you might get lost in the matrix. To the untrained eye, it can look like a sea of numbers and values and ever-changing data that only the most learned experts can understand. So, naturally, those experts know something that most people don’t know, right? Naturally, they must know a way to beat the market and earn returns that spell financial independence. Right?
Continue reading “Don’t Try to Beat the Stock Market (and Why You Won’t Need To)”