Recently a good friend of mine and I were discussing how she was doing towards her vacation savings goal.  As you all know I visit family in Hawaii two to three times a year and she is saving to go with me next spring.  She told me she was doing great, she had almost hit her goal and would likely far outreach it by the travel date.  However, what she said next is such an important lesson for anyone who is trying to save.  She said “It is so much easier to save for the things I really want than it is to save just for the sake of saving.”  At that moment the financial coach in me got really excited because she had fully absorbed a concept that I am always working on with my clients (and she has been an unofficial client for a while now- so yay!).

It’s true, saving for something tangible is far easier than saving just because you should or because I tell you to.  Exponentially, saving for something positive that you want in your life (like a vacation) is far easier than saving for something you hope never happens (like an emergency).  This is why I refuse to use the terms rainy day fund or emergency fund in my practice.  Referring to your savings using these terms invites negativity into your financial subconscious.  Why would you save for something you hope never happens?!? In a rational world you wouldn’t work really hard to propel towards something you don’t want, so why should you be expected to do so in your finances?  Even if you don’t subscribe to the laws of attraction you can likely agree that when you are in a bad mood, bad or annoying things tend to happen and likewise when you are in a good mood, positive things tend to happen.  Regardless, I guarantee that if you are only saving for emergencies, emergencies will tend to happen. It’s that Murphy and his damn laws I tell you!

Another reason I don’t refer to these savings as rainy day funds or emergency funds is that it attaches a subconscious negative stigma to this money.  You may or may not have noticed this yourself, but many times when people have to dip into this account (regardless of how big or how small the balance is) is feels like you are doing something taboo.  It’s almost painful, like you’ve failed in some way, shape or form.  So again, why would you put money into an account where you feel guilty if you ever need to use it?  Are you starting to see how we sabotage our savings before we have even started?  No wonder it is so hard to save for anything other than the things you really want that you know will bring you joy. Last time I checked an emergency does not equal joy. Just sayin.
​
Instead, I want you to start thinking of, and calling, your savings account your FREEDOM FUND!  Remember, this is a separate savings account from your periodic savings- if you need a refresher on PERIODIC SAVINGS click here.  By simply renaming this account you will subconsciously shift your energy from saving for negative reasons into saving for positive reasons- things that you want to attract/invite into your life.

EXERCISE: Take a moment to write down the word FREEDOM on the top of a piece of paper.  Do this by hand- numerous academic studies have found that doing exercises like these in your own handwriting reinforces the habits you are trying to create.

Now, thinking about financial freedom specifically and about having a Freedom Fund available to you, what does that/would that mean to you?  Start brainstorming.  There are no right and no wrong answers.
               
Maybe if you had a Freedom Fund you would:
               

• Be able to take a day off if you are sick/ or be able to simply take a personal day
• Look for a better job/ hold out for a better offer
• Start training/school for something you have always wanted to learn/be
• Be able to spend more time with your kids/ family/ hobbies
• Be able to live enjoy life like normal while waiting for that check to come in                                        (Those of you who are self-employed know what I mean)
• Be able to take a vacation

 
Remember when we all agreed it is much easier to save for things that are both tangible and positive?  These THINGS you just wrote down are the tangible reasons for starting your Freedom Fund today. I encourage my clients to tape small pictures of these items onto their credit or debit cards.  When you can see these "freedoms" as material it is easier to stop yourself from purchasing things you don’t need in order to funnel more money into your Freedom Fund!
 
So now comes the hard question I get from clients all the time: How much should I have in my Freedom Fund?
 
Over the years you’ve probably heard conflicting information from many different financial websites, magazines, gurus etc. that you should have between 6-8 months of living expenses set aside.  Although this is a fantastic idea, it might not be a realistic goal for your situation or it may feel like way too overwhelming of an amount to even start.  The average monthly expenses in Los Angeles for those without children are about $5000-7000…that means according to the gurus you would need somewhere between $30,000- $56,000 in this account.  That’s a lot of money and it can easily feel like an insurmountable goal when you can barely save anything to begin with.  As a finance coach who works in the gray area and not just the black and white like said "gurus", my answer to how much you need is slightly different. Ask yourself the following questions….

• What is the longest period of time you have been unemployed? Or waited for a check?
• Knowing your own personality how much time would you give yourself before you would require yourself to make hard, life changing decisions, like selling possessions, getting a roommate, moving, or even taking a low paying job just to make ends meet?

 
For some of you the answer would be 3 months or even less, for some it might be 4 months, 6 months, or even a year.  There’s your answer.  Now, it will obviously take some work to get to your goal and it won’t happen overnight, but now you have a realistic idea of the amount of FREEDOM that this fund will buy you when/if you need it.  So now that you know what the goal is for your Freedom Fund, how do you get started?  Well, besides writing it down, two ways…if you need some guidance, make an appointment with me and we will sit down together to calculate out what your targeted monthly savings should be with your current income and lifestyle, or if you are ready to try on your own, just get started!
 
I know it sounds too simple, but it’s true!  Open up a second savings account, maybe it’s an online account (these Money Market accounts usually have higher interest rates anyway- but definitely avoid any accounts with maintenance fees!  Check bankrate.com for current offers) so it’s one step away from your everyday account and slightly less tempting to “borrow” from.  Then, start with a small monthly auto-transfer.  Maybe it’s $25 a month, maybe $50 or maybe you set it up so that every time a paycheck gets deposited a certain amount automatically gets transferred into your Freedom Fund.  Likely, after a short while you won’t even miss this money anymore. SIDE NOTE: Be sure to revisit this amount and increase it whenever possible.  Before you know it you will have accrued a nice little savings and I promise once you hit a certain amount (every person is different and it’s hard to say what your amount will be, but you will know it when you get there) you will start to get the same amount of pleasure out of saving and watching that total grow than you do out of spending it on things that don’t bring ultimate joy to your life! And... if you ever need to dip into it to buy yourself some freedom for any of the reasons you listed above you can do it guilt free knowing that this is what this savings account is meant to do for you!
 
So here’s to saving for _____ months (only you will know what your number is) of financial FREEDOM and as always if you need a helping hand or have a financial question you need answered, just call Ari!
​

Most people assume that working with a money coach means they can kiss any extravagance they currently spend money on goodbye.  Bye bye morning lattes, auf wiedersehen dinners out, adios new clothing, sionara new gadgets, and a fond farewell to…. well, everything. Some clients have even told me that a big hesitation in working with a coach was that they felt by cutting back on these things they would appear cheap to their peers.  Good news!  This is NOT how money coaching actually works. You do not have to give up the things that truly make you happy or the things that fulfill a physical or emotional need in your life.  You only need to give up or cut down on the things that don’t matter.

Recently I came across a little story on the vast interwebs which really encapsulates one aspect of what I try to teach my clients. The blurb (source unknown…if you have any idea where this came from let me know) reads:

Let’s use my personal experience as an example.  Before I became a money coach I always felt compelled to donate money to non-profit organizations that I believed in.  Somehow, even though I was making great money I never seemed to get around to donating.  In looking back, I know the reason I “never got around to donating” was because my money was being diverted to my hot spots instead and I never felt I quite had enough extra to donate.  For me, donating was a low spot- something I wanted to do, something I knew would provide fulfillment in my life, but something that was being steamrolled by my hot spots.
​
By tracking my spending I was able to isolate the fact that if I were to cut down on my clothing expenses I could free up money to shovel into my low spot.  But I like clothing, and as you can imagine from my previous career being surrounded by very expensive clothing day in and day out my taste is expensive. In fact, my favorite brand is Theory.  So the question was, how could I cut down on my clothing spending when the things I like are really expensive?  Well, as a money coach I know that simply going out and buying cheap knockoffs is not going to serve me in the big picture.  Likely the knockoff is not made well, the fabric will be synthetic and not feel good against the skin and chances are I will lose interest in wearing it and simply purchase something else to replace it anyway…bringing me right back to where I started.  Does that mean I A) just don’t buy anything at all because why buy a knockoff if I know it’s a circular pattern or B) go ahead and splurge on the clothes I want and simply continue to ignore the low spot in my life?

Surprise, trick question, the answer is C! This is where I put on my frugal badge and wear it (pun intended) like a champ! Instead of picking A or B, I got creative and found a way around this dilemma.  I now find the things I like from Theory on ebay often for a fraction of the price and still with the tags on.  This is a win-win solution!  I get the exact well-made clothing that I want, clothing that I know will last a long time and get repeated use, and I have now freed up money to donate. I have filled both a want (clothing) and a need (fulfillment from making a donation and a difference) simply by being frugal about how I spend my money and it feels GREAT!

Recently I had a client tell me an incredible story of how being frugal changed their lives.  By tracking their spending this client realized they were spending more money than they thought was reasonable on Perrier.  In wanting to achieve the same result (being able to continue drinking their bubbly water) but by doing it “for less or no money” they decided to invest in a Soda Stream and make it at home.  In the long run this would save them money that could then be diverted towards a low spot in their lives.  But it gets better, in recent months this client had been very sick with kidney stones but when they switched to homemade bubbly water they noticed a vast improvement in their health, all of a sudden they were starting to feel better.  In relaying this connection to the doctor they discovered that the high mineral content in the copious amount of Perrier they had been drinking had been the underlying cause of the kidney stones!  In this instance, being frugal didn’t just save them money, it changed their lives significantly!

Granted not all stories about being frugal are going to be that impressive, or that dramatically life altering. Sometimes being frugal simply means stocking up on items that you use because they are on sale as opposed to buying them one at a time at full price. (Remember buying things you don’t need or don’t already use simply because they are on sale or you have a coupon is not being frugal. Need a refresher? Click here.) It could simply mean trading mediocre meals out for fantastic meals at home (or even mediocre meals at home for that matter).  Sometimes it is renting a movie instead of going out to a movie, or making coffee at home instead of buying a latte.  Figuring out how you can be frugal in the areas that don’t matter to your bigger picture can actually be fun, especially when the payoff is fulfilling something in your life that was constantly out of reach in the past.  Maybe that low spot is a vacation, or a house fund or even making a dent in old debt.
So I challenge you, going forward, how can you meet your financial goals and fill your emotional needs/low spots for less or no money?
​
If you are stuck and need a helping hand to figure out what your hot spots and lows spots really are, if you want to start tracking your money but don’t know how, or if you simply want advice when making a big financial decision, make an appointment today and I will help you sort it all out.

Can you really change your spending habits and save money in just seconds?

Yes, you can!

Is it your goal to finally get financially organized in 2016?  Do you want to spend less of your money on things that don’t matter so you have more to spend on the things that do?   Maybe you made a financial new years resolution and don't know how to start?  Then this is the first step you need to take!

It is estimated that American companies will spend about $77 billion (yes, BILLION!) on marketing in 2016 alone.  What are they doing with these billions you ask?  They are strategically capitalizing on your “fear of missing out”, by banking (pun intended!) on the fact that either a good deal, repeated exposure, or an emotional connection will be enough to entice you into buying their product when you hadn’t planned on doing so prior to seeing their ad. 

Granted there is no way to eliminate all advertising from your life, I mean c’mon the Superbowl is around the corner and we all know Budweiser has a special way of making us cry with those damn horse and puppy commercials, but what you can do is limit your temptation to buy things that you haven’t specifically budgeted for in your monthly spending plan.

My guess is that like me you are getting daily emails from the likes of Target, Nordstrom, Groupon, Living Social, Macys, Staples, Home Depot and every other retailer you have ever purchased something from in the last 10 years!  If you want to take control of your spending in 2016, the first step is simply to take the few seconds to actually open those promo/sale emails, scroll to the bottom and click “unsubscribe.”

Right now you are probably saying “but I don’t even read them, I just delete them, so what’s the point?”  Remember that repeated exposure thing I was talking about earlier?  Eventually there will be an email that has just the right subject line to pique your interest or comes at just the right time (like when you are having a bad day and feel like rewarding yourself with something pretty) for you to actually look at it. That’s all it takes for temptation to grab hold and quietly drag you away from your goals.  If you were cutting down on your sugar consumption you sure as heck wouldn’t want daily emails from Dunkin Donuts or Sprinkles, nor would you be browsing pretty pictures of cakes and desserts online.  So if you want to cut back on unnecessary spending the first step is to cut back on unnecessary advertisements.  If you continually find yourself justifying the “window shopping” then it may be time to look a little deeper at your spending patterns to identify the self-sabotaging behaviors that are keeping you stuck in your current financial situation.

Let me tell you, as good as I am with my money, I used to be a sucker for a good Groupon (why not try a new activity, right?) until I tallied up the amount of money I had spent on these “good deals” that I have never used.  There was the $99 for 20 exercise classes, the $19 for a rock climbing lesson, the $39 for an annual subscription to the botanic gardens, the $25 for a paint nite event, the $25 for a Match.com 3 month membership (and had I actually redeemed it, it would have come complete with a continued monthly membership fee).  These few things alone total $207.  Let me tell you, these weren’t even things I was looking to buy.  I didn’t wake up that day and think "Gee I need to buy an exercise package".  No, I saw the ad and thought, "hmm, I should be working out, it seems like a good deal, sure I’ll bite".  In hindsight, there are way better things I could have done with that $207.  Things that would have made a difference like putting that towards my RothIRA, or putting it towards the principal on my mortgage, or even simply donating it to a good cause.  The same goes for you.  I’m sure you can think of better ways to use your money rather than wasting it on “good deals” that simply catch your eye at the right time! Maybe use it to pay down those pesky credit cards faster, or save it to use towards something that will actually be of benefit to your life.​
​
The same goes for weekly circulars and coupon deals! Do you think retailers would be sending these out if they didn’t drive their sales up?  However good the deal is, it’s not really a bargain unless you actually need the product. So save yourself the inbox clutter and the temptation, and simply unsubscribe, it only takes a few seconds of your day.  Trust me, down the road when you are in the market to buy something specific, the good deals and the sales will still be out there, all you have to do is look for them and chances are you will save even more by searching and comparing prices rather than simply letting the deal come to you.

As always, if you need a helping hand to figure out what the next step is to keep you moving towards your financial goals,  if you want advice when making a big financial decision, if you need clarity about what it is you truly need to live your life on your terms, or to make sure your money is working hard for you, make an appointment today and I will help you sort it all out.

How many of you just sang along to the tune of Billy Idol’s “Rebel Yell”? If you didn’t … you will now!  Yes, I’m well aware that this is probably going to be stuck in your head for the rest of the day and that is actually a good thing.  Every time it pops in your head it gives you a chance to think about the concept that I’m about to lay down.

Halloween has come and gone, November is here and the holiday consumer season is about to be upon us in full force. 

 As the holidays become more and more materialistic with people wanting to give more impressive and more expensive gifts, I figured now was a good time to introduce the concept of doing more with less (or at least what you already have). That said, I want you to play a little game of fill in the blank.  This holiday season, and throughout the coming year, what do you want more of in your life?  Go ahead, grab a piece of paper.  You may want to reflect on these statements at a later date. Keep listing until you can’t think of anything else, and they don’t have to be holiday related at all.  

If I had more _______________________ then I would ______________________________.

Done? Great! I’m sure you have uttered this statement many times throughout the years and nearly everyone will have some version of more money on their list.  What will be different for each person is what we would do with this extra money.

Let’s take a moment to reflect on the sentences you just created especially the beginning part of the sentence, “If I had”.  These three simple words that we tell ourselves over and over again are a very effective method we use to delude ourselves into believing that our current situation is not our doing.  It is much easier to think that we are a just dealing with the hand that has been dealt us rather than owning the fact that our circumstances are created by our priorities, our choices and our actions or inactions.  “If I had more” subconsciously gives ourselves the permission to remain idle or to postpone making a change until we luck out and “more” appears.

For example you may have said If I had more money then I would be able to work less and spend more time with my family.  What you just said in this statement is that spending time with your family is important to you but that you won’t be able to do it until your circumstances change and you have more money.  To you, more money equals working less, which will then free up your time to spend with your family. As great as this notion sounds, I’m sorry to say that getting more money won’t solve the problem.  The root of the issue is that you are not determined to make spending time with your family a priority today.  What makes you think that you will simply be able to flip a switch in the future when more money appears? If you don’t make spending time with your family a priority now using the money and time that you currently have, simply having more of either will not change your habits.  Remember, to change your future, you need to change your actions today. 

If you don’t change your current habits you will quickly find that with more money comes a new set of excuses/delusions to keep you from what you have convinced yourself that you would do. More money often means more time spent shopping, more bills, more time managing the money, more time working to maintain the things the money purchased, not less.  All of these things will find a way to keep you from spending time with your family and perpetuate the cycle of "If I had more money."  Unless you are determined to make what you would do a priority today how can you think it will just magically become a priority tomorrow?

Let me use a real life example.  I used to say If I had more time I would exercise more.  The truth of the matter was that when I did have more time I didn’t actually exercise more.  Why? Because I hadn’t made exercising a priority in my current schedule.  It wasn’t a part of my daily, weekly or even monthly routine.  Exercising truly wasn’t a priority to me even though I tried to delude myself into thinking it was.  In the past my saying “If I had more time” was simply my way of making excuses for not doing something that I knew I should be doing, a way to justify the results I was getting by not working out.  It’s not my fault…it was because of my lack of time…right?!?

The problem with this idea is that it keeps us in a constant state of fantasizing about what the future will be like, what we will do when we get more.  We assume that this new circumstance (the more) is what will make us happy and solve all of our current problems, instead of living in the now and finding a way to meet our needs with what we already have. This is a great reminder of why it is so important to keep ourselves in the present and to practice gratitude by making the best/most efficient use of what we have today!

The good news is that I now exercise about 3 times a week and I feel great, but I had to come at it from a different angle.  I had to ditch the delusional “If I had more” and make the “Then I would” a priority in my current every-day life.  How do you do this?  First, get to the bottom of why you want more.  What are you trying to accomplish? What emotion or outcome are you searching for in your life?  What problem are you trying to solve? Revisit your statements from earlier and see if you can dig deep to figure out what it really is that you are needing?

Stop reading here and see if you can identify what your end goal would be for each of your statements above. Start here:

If I had more ____________ then I would ___________ because I want/need to ____________.

Great!  Now that you are back, here’s how I did it.  My statement went something like this “If I had more time then I would exercise more because I want to feel good about my body.” For me, the problem/emotion I was trying to solve was not “exercising more”, it was that I wanted to feel good about my body and the way my clothes were fitting.  As humans we often try to mask our problems by buying material things to make ourselves feel better.  Had I gone out and simply bought a new wardrobe I may have felt better for a moment but soon enough the feeling of not liking my body would have crept back in, along with the bill for all the new clothes, exacerbating the problem.  So instead of putting a bandaid on the issue I came at it logically and made a list of the small steps I could take that weren’t so overwhelming.  Exercise was simply a broad (and for me overwhelming) solution to my problem.  Had I simply gone to the gym and tried to run on the treadmill for an hour you better believe I would have “magically” gotten so busy that I didn’t have the time to work out. (See how we create our negative circumstances to keep ourselves from getting what we really want.)  Instead, I started with baby steps.  I challenged myself by making small commitments to address my need to feel better about my body and doing them daily even if it was just 1 minute a day.  C’mon, even you can do something for one minute right?!  (NOTE:  I could have chosen to work on my diet or on my self image but exercise felt like the right path for me.)

So, for all of the wants/needs that you were able to decipher from your original statements above make a list of the following:

Today I will ___________________________. Even if it is a simple 5 minute task. Now, put it somewhere where you will see it and make a vow to complete these small tasks before you go to bed tonight. Slowly but surely you will create a new habit.

For me it started with challenging myself to do sit ups and jumping jacks for a total of 5 minutes. (Disclaimer:  Day 1 I wasn’t even able to do 5 minutes straight but instead of giving up I just did 1 minute at a time 5 times that day) Then a couple weeks later it easily became 10 minutes. Then I added jumping rope.  Then I started going to pilates classes, then I added Cardio Barre. Before I knew it I had “found” the time in my current schedule to workout 3 or more days a week and low and behold, when I have more time I actually work out more and it doesn’t feel like a chore, it feels great.  The end result, I love my body right now, my clothes fit better and a side effect is that I don’t have to buy more clothes, ultimately saving me money.

So let’s go back to my hypothetical example of the person who wants to spend more time with their family.  “If I had more money then I would work less and spend more time with my family because I want to participate in their lives.”  The need here is to participate, to connect.  Perhaps their small task is that they ask their husband/wife/son/daughter a question and remain present for the answer.  Perhaps they will read a bedtime story to their child, perhaps they will make walking the dog into a family event instead of a chore.  It is your job to be creative with what you ALREADY HAVE to meet your needs.  When you are determined, things will fall into place.  If a person is adamant about meeting their underlying needs, when they get more money the actions they take will be in line with their needs, and they will make effective choices like hiring a housekeeper to clean, freeing up more time for them to spend with the family since it’s already an ingrained habit. However if the idea of spending time with the family is just a nice notion for a future date,  if they were to get more they would likely just spend more on stuff that fills the void for a fleeting moment.  They will be doing the same thing they have always done yet expecting different results, and we all know that is the definition of insanity.  You see how the cycle of if I had more _______ then ______ will just keep going if you don’t tune into what it is you truly need?

Have you ever noticed that it is a heck of a lot easier to find the resources to support something that is a priority in your life?  It’s way easier and more realistic to take that approach rather than hoping that the resources will create the priority.  If you make spending time with your family a must, you will find the time.  By finding time you will be forced to be more efficient with the time you already have.  By being more efficient with the time you have you will create opportunities to earn more money. And so the cycle begins.

It’s like I always say to my clients, adding a zero on to the end of your paycheck is not going to fix anything unless you address the roadblocks you are having today.  If you are currently spending more than you bring in you will continue to do so.  If you don’t know where your money is going now, how will you know where it is going when you have more?  If you can’t seem to find money to save, or pay down debts today, what makes you think more money will solve it?

This holiday season I want you to give yourself the gift of making full, efficient use of the money, time, and resources you already have, that way when you do find yourself with more, you will know exactly what to do with it to maximize the benefits!

As always, if you want help honing your financial skills, figuring out what it is you truly need, or to make sure your money (and time) is working hard for you, make an appointment today and I will help you sort it all out.

Ok, so that headline might be mildly deceptive…

I’m not giving you permission to run out to the mall for an impromptu spending spree so put your wallet down, but did you know that there are 3 types of savings accounts that we should all have and that one of them is meant to be spent? Today I’m going to tell you all about that kind of savings. 

When clients start working with me we often begin by focusing on a type of savings we call PERIODIC SAVINGS.  (NOTE: I recommend this being the savings account tied to your checking for easy access.  Other savings accounts, like an emergency fund, or retirement savings should go into a separate account, like an online savings that is harder to access.) Periodic Savings is a savings account for expenses that come up periodically as opposed to monthly.  They could be things you know are coming because they come up every few months (like union dues, tuition payments or quarterly taxes), every 6 months (like car insurance premiums or property taxes) or yearly (like a birthday or your Amazon prime membership- surprise there’s $100 auto-charged to your account that you probably forgot all about!).  They can also be expenses that you anticipate but that have more fluidity surrounding them about when you will need the money (like new brakes for a car, i.e. your mechanic mentioned you are due for brakes in the next 3 months, or maybe a repair around the house that is looming, i.e. your washing machine is making that weird noise again).

Here’s what happens when you don’t have a special savings account for your periodic expenses. If you are like most people you either try to squeeze the money out of somewhere (you know what I am talking about!), or you end up reaching for that credit card you swore you were never going to use, or even worse skipping the payment/expense altogether.  Let’s use quarterly taxes as an example and assume you owe Uncle Sam $500 in anticipated taxes every 3 months.  Likely when that bill is due you have an oh, sh*t! moment and have to decide do I... A) pay it and eat nothing but ramen for the rest of the month and hitchhike to work, B) skip the payment and try to make a double payment plus the fines next time, or C) put it on the credit card and eventually (we all know how that goes right?!?) pay it off.  Personally none of those options sound very good to me so I am going to provide you with a fourth option.  Option D) pull it from your periodic savings, pay the bill and then continue on your merry way. 

Sounds pretty great right? 

Here are the 3 steps you need to take that will keep you on your merry way.

STEP 1. Know your periodic expenses.  How can you decide how much you need to save ahead of time if you don’t think about the expense until the bill is sitting in front of you demanding to be paid?  Here’s how...  

• Create a quick spreadsheet with the following headers across the top (see image below). Expense-Jan-Feb-March etc all the way to Dec and lastly, one for Total. 
• List all the periodic expenses you can think of in the first column. Spend some time thinking about all the things you wish you had been prepared for last year.
• Put the amount associated with each expense in the appropriate month(s) column.  
• Add up each month to see how much “extra” cash (above and beyond your normal monthly spending) you will need for any given month.  Some months might be zero and some might be quite heavy.
•  Add up the entire year to see how much “extra” cash you need each year beyond just your average monthly expenses.

Here’s an example:

STEP 2. Decide how much you need to save every month to avoid options A, B, & C above!

That sounds easy enough and it might be as simple as taking the yearly total of all periodic expenses and dividing by 12 to figure out how much you need to save every month.  If we use our example above it would be $566 each month. ($6791.91 ÷ 12 = $565.99).

However, (yes, there’s always a however) let’s pretend we are currently in the month of February.  As you can see from our chart above, April is a big month with $2107.91 due for property taxes and our annual Amazon Prime renewal.  Even if we were to save the $566 we just calculated during the months of February, March and April we would still be short by $1085.91.  Yikes!  Wait, how did you get that math? 

Let’s take a closer look at the totals we need for the first few months of the year.

Since we are pretending it is February and we intend to save $566 this month, we can't forget to factor in that we need $211 of that savings to use towards union dues (February's periodic expense), leaving us with $355 in the savings account.  Then in March we will add another $566 to our savings and have a total of $921 in the bank.  But wait, car insurance is due in March so we will need to pull $465 out for that meaning we will be left with only $456 in savings.  Now April rolls around and once we get our paycheck we add our monthly $566 to the savings for a total of $1022.  The issue is that $1022 is nowhere near the $2107.91 we need in April. Oh sh*t, right?

So, instead of just dividing the entire yearly amount by 12 like we first did, we are going to have to do a little creative math. 

Again, let's pretend we are currently in the month of February. The good news is that we’ve already managed to cover the January expenses and they won’t roll around again until next year, phew!  Now we just need to tackle the next 3 months!  If we total up all the expenses that occur between February-April we are looking at $2783.91.  Since all of this needs to be accomplished in 3 months lets divide that total by 3.

                                                                       2783.91 ÷ 3 = $927.97   


Yikes, that’s a lot to save each month!  These next few months are going to be rough but the good news is that after that it is smooth sailing ahead.  C'mon, you can do anything for a few months especially knowing that the alternative is ramen and hitchhiking!

Now we just need to figure out the rest of the year…

With Jan-April out of the picture the expenses for the rest of the year add up to $3908.00. If we divide that by the 8 months we have left to save (May-Dec) then we only need to save $488.50  per month.  However, if you can challenge yourself to save the $566 we talked about earlier then you will be in fantastic shape when next April rolls around again! Or if you can challenge yourself to save above and beyond the $566 (maybe round it up to $600) you will be well on your way to starting your emergency savings fund!


STEP 3. Figure out how you are going to “find” the money to save!

THIS IS THE HARDEST STEP OF ALL! This is the step that will probably put some hair on your chest.  It’s time to take a good, HONEST, look at your spending.  It may feel uncomfortable but sometimes the things that do us the most good feel terrible at first, like sit ups or salad in my case.

Are there places in your spending you can scale back?  Probably.  You may not want to do it but if you don’t make sacrifices your financial situation is going to stay exactly the same... and you wouldn’t be reading this if you were content where you are. (If you haven’t already done so, read this article for some ideas on how to cut costs without making sacrifices.) In fact, if you start tracking (writing down) where your money is actually being spent versus where you think it is being spent, I’m sure you will find that you are leaking money on things that you won’t miss at all. I personally tend to leak money on magazines that I never end up reading. Maybe you leak money at Starbucks and can make coffee at home. Maybe you spend more money than you realized on going out to dinner just to hang with friends?  Perhaps have a pot luck bbq instead or a make your own pizza night.  Coming up with creative ways to cut back can actually be fun!

If it comes down to it, another way to find extra cash is to figure out a way to bring in more money?  Raise your rates?  Ask for a raise? Work overtime? Have a yard sale? Start an Etsy store?  Here’s your chance to be creative and think outside the box! Who knows, you might just come up with the next big idea!

As with most new habits it takes about 4o days to really cement them into place but you can absolutely do it.  Just keep at it, and as always, if you need that extra helping hand I am here for you.  All you need to do is reach out!

Cheers!

Now let’s take that $3000.00 budget and divvy it up.  You may have already bought your airline ticket at the price of $800 but are anticipating another $200 in transportation costs between taxis and trains so we will allocate $1000 to Transportation.  Do the same with all the other categories.  Now in the appropriate columns deduct what you have already spent before you even started your vacation.

Now you know how much you have to work with during your trip.  If you keep this envelope handy as you travel and keep a running tab of what is left to spend (you can shift available funds from one category to another as you see fit) you will make smart money decisions ensuring an amazing HAPPY adventure full of lifelong memories to pull from in the future.

The sentiment behind “The American Dream” is heartwarming; the opportunity for Americans to achieve prosperity through hard work.  I bet you work hard, do you feel prosperous?  If you are like most Americans the answer is likely, no.  So what happened to that nostalgic ideal of the perfect family with 2 kids and a dog, living in the perfect house with a white picket fence, two cars in the driveway, and enough money left over to save for retirement? 

What happened is this, technology has killed the American Dream!

If you are like most Americans, technology plays an imperative part in your life, after all you are reading this online!  I’m guessing not only do you pay for internet at your home but you probably have a cell phone, possible even a home phone, cable or satellite, and some streaming services like Hulu, Amazon Prime, Netflix, and Spotify.  In addition you might even have cloud based services like, Microsoft Office 365 , Photoshop/Adobe Creative Cloud, data storage, web hosting, and the list keeps going and going. Then there are the apps, the add-ons, the tablet data, the e-magazines, and soon to come are mobile data packages for your car.  I mean, who doesn't want their car to be a mobile hot spot?! You get where I am going with this…

Prior to 1990 you, or more likely your parents, only paid for one thing: a home phone, that’s it.  In addition, long distance was really expensive so either you learned to talk ridiculously fast or you wrote letters.  I know, writing letters?!? That’s crazy talk! There was no internet, no cable tv, no cell phones, and no data plans to worry about.  Yes, it was the dark ages, but we survived!

So, what kind of financial impact is technology having on us today?  Let’s take a quick look using our average “American Dream” family: 2 parents, 2 kids

Home Internet: $50/month (with enough speed for all your streaming services)
Cell Phone: $250/month for an average family plan
Home Phone: $40/month
Cable/Satellite: $120/month
Hulu: $7.99/month
Amazon Prime: $8.25/month (not including tax)
Netflix: $8.99/month (price increases from $7.99 to $8.99 in May 2015)
Spotify: $4.99/month
Microsoft Office 365: $6.99/month
Adobe Creative Cloud: $9.99/month
Web Hosting: $4.99/month

GRAND TOTAL: $512.19 per month or $6,146.28 per year!

Granted you may not have these exact services but chances are you subscribe to a good amount of them and maybe even have more.  Regardless, this is a significant amount of your hard earned cash, enough to fully fund a Roth IRA, or help pay down that credit card, car loan, or mortgage you've been chipping away at. No wonder it was easier to achieve The American Dream before technology.  To make matters worse the average income hasn't increased much in 40 years so here we are in a modern age trying to buy more with less.

So, how do we fix this?!!  Never fear, there is always a solution…

1.       Grab your bank and credit card statements from last month. By grab I mean go online, login and print them out… oh how I love the internet. 
2.      Highlight all of your technology and streaming services.
3.      Just for fun (masochistic fun) tally them all up to see what the technology in your life costs you each month!  Now for full impact, multiply it by 12 months! Ahhhhh, scary right?
4.      Now, cancel all the things you have been meaning to cancel or the things you don’t actually use.  You can probably just do it online.  Go ahead, do it now and come back to this later.
5.       Find cheaper alternatives, perhaps start using Amazon’s music streaming services or Pandora instead of Spotify.
6.      Next, team up with a friend and split the cost.  Perhaps they pay for Hulu and you pay for Netflix and you simply password share.  Did you know you can share your Amazon Prime subscription with up to four people?  That’s right! So why are you paying for it when your sister, aunt, cousin and neighbor are all paying for it too? (Don’t worry they can’t see what you buy…each person’s account remains their own but you both get all the perks!)
7.      See if you can buy a yearly subscription at a lower rate.  For example if you buy a yearly subscription to Microsoft Office 365 on Amazon it is only $29.99/year instead of $83.88 if you had paid monthly. Granted you have to wait for the box to be shipped to you but who cares, you have free two day shipping thanks to the Amazon Prime you are now sharing with a friend right?
8.      Last but not least, call your providers (phone, cable etc) and ask for lower rates!  Tell them you are thinking about changing providers because other companies are offering better plans.  If you can reference a specific competitor price plan your current provider will transfer you to their customer loyalty team who has the power to match these competitor rates.  For example, my Dish Network bill had slowly crept up to about $91/month (and that is without any movie channels) however when I called them and told them Time Warner was offering the same service plus a few more channels for only $39.99 per month, they matched it.  It took some patience but in one phone call I saved myself $600/year.  Not bad for 15 minutes work!

Technology is not going anywhere, but it doesn't mean we need to sacrifice our big picture goals to enjoy its perks.  It’s time to take back The American Dream!

Did I miss a monthly service?  Do you want to share your experience about lowering your rates?  Questions, comments and stories welcome!  Join the conversation by leaving a comment here or connect with us on Facebook.