2955: 5 Questions to Ask Yourself Before You Give Up On Budgeting AND Common Money Mistakes by Philip Dancy

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[00:00:30] [SPEAKER_00]: Das ist Optimal Finance Daily – 5 Questions to Ask Yourself Before You Give Up On Budgeting by Philip Dancy of DancyWithMoney.com

[00:00:40] [SPEAKER_00]: GIVING UP

[00:00:41] [SPEAKER_00]: Whether you want to admit it or not, we've all given up on something during our lifetime. Diets, working out, school, relationships, the list goes on.

[00:00:49] [SPEAKER_00]: Shoot, I gave up on learning piano and guitar after two lessons. It was all because it was hard and I wasn't seeing results as fast as I wanted to.

[00:00:58] [SPEAKER_00]: Most would agree it's the same way with budgets. Getting started is kind of hard. And then once you do start, you become discouraged when results don't happen fast.

[00:01:07] [SPEAKER_00]: However, giving up on budgeting can lead to regrets later down the line. Budgeting can be a path to living your best life because it provides foundation for early retirement, traveling when you want, and building generational wealth.

[00:01:19] [SPEAKER_00]: So if you're on the fence about budgeting or have already given up, consider these five questions or solutions to get you back on track.

[00:01:27] [SPEAKER_00]: Question one. Am I regularly tracking my expenses?

[00:01:32] [SPEAKER_00]: It's one thing to say you have a budget, but what good is it if you don't actually track how it's going?

[00:01:37] [SPEAKER_00]: In my opinion, tracking is the foundation to any budget. Not only does it help you cut back on aimless spending, but it also gives you more control over your finances.

[00:01:48] [SPEAKER_00]: Solution. Consider using the envelope method for some expenses, Excel sheet, or an app that will help you track better.

[00:01:56] [SPEAKER_00]: Question two. Am I using the best template or mobile app for my finances?

[00:02:02] [SPEAKER_00]: Let's face it. Not all financial tools are created equal.

[00:02:05] [SPEAKER_00]: That app or even the budget template you're using might not give you everything that you're looking for.

[00:02:10] [SPEAKER_00]: Sometimes accounts don't sync up properly in an app. Other times the template doesn't provide the analysis you were hoping for to better your finances.

[00:02:18] [SPEAKER_00]: Solution. Consider downloading the Dancy with Money Starter Kit, shameless plug,

[00:02:24] [SPEAKER_00]: or switch to an app like Personal Capital or Mint.

[00:02:28] [SPEAKER_00]: Question three. Is my budget too restrictive?

[00:02:31] [SPEAKER_00]: When it comes to budgeting, I often tell my clients that your budget has to be flexible or fluid.

[00:02:37] [SPEAKER_00]: Something I see a lot is that individuals will set a budget, constantly go over it, and then beat themselves up about it.

[00:02:43] [SPEAKER_00]: Things happen, and you should give yourself some grace.

[00:02:46] [SPEAKER_00]: Solution. Consider following the Dancy with Money 40-30-20-10 rule,

[00:02:52] [SPEAKER_00]: or give yourself a checking buffer. This will help with having money set aside in your checking account for those instances.

[00:02:59] [SPEAKER_00]: Additionally, periodically re-evaluate your budget and adjust as needed.

[00:03:04] [SPEAKER_00]: Question four. Am I having money meetings?

[00:03:07] [SPEAKER_00]: Think of a money meeting as a time to sit down and do a pulse check of your finances.

[00:03:12] [SPEAKER_00]: It gives you an opportunity to review your spending, make tweaks to financial goals, and review how the previous period went.

[00:03:19] [SPEAKER_00]: Without a money meeting, how are you able to understand where you stand?

[00:03:24] [SPEAKER_00]: Solution. Set a weekly reminder to have a quick 10-15 minute meeting with yourself or significant other.

[00:03:30] [SPEAKER_00]: Make it fun, too. Have a glass of wine or your favorite spirit and create a vibe.

[00:03:35] [SPEAKER_00]: It doesn't have to be that serious.

[00:03:38] [SPEAKER_00]: Question five. Are my financial goals realistic and sustainable?

[00:03:43] [SPEAKER_00]: Having unrealistic financial goals is one way to set ourselves up for constant disappointment.

[00:03:49] [SPEAKER_00]: That disappointment could lead to less motivation to actually work on our goals, too.

[00:03:53] [SPEAKER_00]: We can't say we want to save $500 a month, but we only have $500 left over after our needs and fixed expenses are paid for.

[00:04:02] [SPEAKER_00]: We still have flexible expenses to pay for, so that doesn't seem realistic.

[00:04:07] [SPEAKER_00]: Solution. Re-evaluate your financial goals and income to make sure they're realistic.

[00:04:13] [SPEAKER_00]: Try using the SMART method to make them more concrete.

[00:04:17] [SPEAKER_00]: SMART stands for specific, measurable, achievable, realistic, and time.

[00:04:22] [SPEAKER_00]: Having conversations with yourself about your money is not as crazy as it seems.

[00:04:26] [SPEAKER_00]: So whether you do it today or this upcoming weekend, go ahead, ask yourself the questions, and consider the solutions.

[00:04:32] [SPEAKER_00]: Most of all, I encourage you to give budgeting another try in the next few months.

[00:04:41] [SPEAKER_00]: Common Money Mistakes by Philip Dancy of dancywithmoney.com

[00:04:47] [SPEAKER_00]: I've made a lot of mistakes.

[00:04:49] [SPEAKER_00]: Forgetting to take the chicken out of the freezer before my mom got home,

[00:04:52] [SPEAKER_00]: bringing home the wrong thing on the grocery list, taking the wrong exit to my destination.

[00:04:58] [SPEAKER_00]: Whether you want to admit it or not, we've all made mistakes throughout our life.

[00:05:02] [SPEAKER_00]: But the thing about mistakes in most instances is that we can fix them, especially when it comes to money.

[00:05:08] [SPEAKER_00]: Money mistakes can prevent us from living our best life, reaching financial freedom, and even leaving wealth for future generations to come.

[00:05:15] [SPEAKER_00]: Check out these four common money mistakes so that you can either avoid or fix them.

[00:05:20] [SPEAKER_00]: Number one, not budgeting or tracking your expenses.

[00:05:24] [SPEAKER_00]: The B word.

[00:05:26] [SPEAKER_00]: Spending tracker, financial plan, forecast, whatever name you use, we all know we should at least be doing something.

[00:05:33] [SPEAKER_00]: When you don't do anything to track or budget, you're basically telling your finances, it is what it is.

[00:05:39] [SPEAKER_00]: Think of budgeting or tracking your expenses as a form of self-love.

[00:05:44] [SPEAKER_00]: When you budget or track your expenses, you're taking back control of your finances instead of your finances controlling you.

[00:05:50] [SPEAKER_00]: And trust me, you'll sleep a lot better at night when you know your finances are in decent shape.

[00:05:55] [SPEAKER_00]: Avoid this mistake by downloading an application to track your expenses or creating a simple budget to start.

[00:06:02] [SPEAKER_00]: Number two, living above your means.

[00:06:05] [SPEAKER_00]: I think we can all admit, including myself, that we like to enjoy the finer things in life, including the latest cars, technology, and lavish vacations.

[00:06:14] [SPEAKER_00]: When this lifestyle starts adding up and prevents you from properly saving or investing, it's safe to say that you're living above your means.

[00:06:21] [SPEAKER_00]: It can also be one of the quickest ways to get into a never-ending debt cycle.

[00:06:26] [SPEAKER_00]: I don't know about you, but I'd rather be wealthy than just look wealthy.

[00:06:31] [SPEAKER_00]: Number three, not paying yourself first.

[00:06:34] [SPEAKER_00]: On paydays, I know a lot of us are making transfers to pay our rent, phone bill, or other financial obligations that we have.

[00:06:40] [SPEAKER_00]: However, I believe we should all prioritize the act of saving before addressing our bills and discretionary spending.

[00:06:47] [SPEAKER_00]: Doing so on a consistent basis enables you to build wealth due to the compounding interest that your money will earn.

[00:06:53] [SPEAKER_00]: Paying yourself first can be done in a number of ways, including contributing to your employer-sponsored retirement account,

[00:07:00] [SPEAKER_00]: opting to send a percentage of your paycheck to a savings account, or even just automating your savings transfers to hold yourself accountable.

[00:07:08] [SPEAKER_00]: And number four, not maximizing your employer 401k match.

[00:07:13] [SPEAKER_00]: Question, do you like free money?

[00:07:15] [SPEAKER_00]: One of the benefits that a lot of employers offer new hires is matching of their 401k contributions dollar for dollar to a certain percentage.

[00:07:24] [SPEAKER_00]: According to Investopedia, the average matching contribution is roughly 4.3%.

[00:07:30] [SPEAKER_00]: I've seen a lot of individuals either not knowing their company offers a match, or they're simply not contributing enough to max out the benefit.

[00:07:38] [SPEAKER_00]: When you think long-term, this benefit could add several thousands in your retirement account depending on how long you're at the company.

[00:07:46] [SPEAKER_00]: For example, I received over $9,000 in 401k matching alone at my previous employer.

[00:07:52] [SPEAKER_00]: By not taking advantage of this benefit, you're missing out on free money.

[00:07:56] [SPEAKER_00]: During your next money meeting, take some time to put things in place to either avoid or fix these mistakes that could be impacting your finances.

[00:08:08] [SPEAKER_00]: You just listened to the post titled, 5 Questions to Ask Yourself Before You Give Up on Budgeting, and Common Money Mistakes, both by Philip Dancy of dancywithmoney.com.

[00:08:19] [SPEAKER_00]: And I'll be right back with my commentary.

[00:08:22] [SPEAKER_00]: Here's something I like to tell myself when I've lost enthusiasm for a goal or I've given up on something that I know deep down is important.

[00:08:30] [SPEAKER_00]: Every moment is an opportunity to start over and try again.

[00:08:34] [SPEAKER_00]: So if you've given up on budgeting, perhaps consider that you're really giving up on the previous way you went about budgeting.

[00:08:41] [SPEAKER_00]: And now you get to try again with another way that might work better.

[00:08:45] [SPEAKER_00]: Whether that be experimenting with an app like You Need a Budget, or working with cash envelopes,

[00:08:51] [SPEAKER_00]: or spending a few months first tracking all of your expenses so that you can be sure you're coming up with a realistic budget.

[00:08:58] [SPEAKER_00]: Remember, a budget is just the simple act of telling your money where to go versus wondering where it went.

[00:09:04] [SPEAKER_00]: It's an exercise in awareness over your money that contributes to the mindful management of your hard-earned dollars.

[00:09:11] [SPEAKER_00]: When it comes to money mistakes, we've certainly all made them.

[00:09:15] [SPEAKER_00]: I think the key here is how we respond to them.

[00:09:18] [SPEAKER_00]: Do we learn from them and take steps to avoid repeating them in the future?

[00:09:22] [SPEAKER_00]: Or do we bury our heads in the sand out of embarrassment?

[00:09:25] [SPEAKER_00]: I mention this because I know how discouraging it can be when we struggle with financial mistakes.

[00:09:31] [SPEAKER_00]: But it's important to keep in mind that this is all figureoutable.

[00:09:34] [SPEAKER_00]: The foundation for good money management is relatively simple, but that doesn't mean it's easy.

[00:09:40] [SPEAKER_00]: So if you find yourself making some of the common money mistakes outlined today,

[00:09:45] [SPEAKER_00]: and maybe feel like giving up, let this be your reminder that every moment is an opportunity to start over.

[00:09:52] [SPEAKER_00]: I'll leave it there for today.

[00:09:54] [SPEAKER_00]: That's a wrap for another Sunday show.

[00:09:56] [SPEAKER_00]: Have a great rest of your day, and I'll be back tomorrow, right here, where your optimal life awaits.