Your formal education may be in your rearview mirror. But the tests don’t stop there.
Know that you have traded in midterm and final exams for a different string of assessments. You will now be assessed based on the words you speak and the actions you take – or the decisions you don’t make.
These new tests can be a lot of pressure, or they can be an exciting time that challenges your inner spirit and will. It all comes down to taking control of your money life.
Let’s begin with an understanding of from where exactly these judgements are coming.
The first assessor is you. You have just so much money coming in each pay period and you have a certain amount of fixed costs. The rest lies in your decisions.
Let’s play a numbers game.
Assume you are depositing $5,000 per month into your account. If your fixed costs, for example, rent, food, student loans, and utilities, total $4,000, that means you have $1,000 left over for savings, entertainment, or other discretionary spending. If you spend $1,500 on vacation, entertainment, gifts, etc., you enter the next month in a $500 hole.
This is where too many people get into trouble: by kicking the can down the road and telling yourself you’ll make it up next month.
It rarely works out that way.
You will also be assessed by peer pressure. If your friends are chipping in for a house at the beach or going out to costly clubs, you might feel, internally, the glare of being judged as “not enough” if you don’t join them.
The fact is, only you can make the decisions that are in your best interest. Your friends don’t necessarily have your money life in their decision-making process.
Maybe the beach share is the perfect idea; or maybe it will put you in financial jeopardy. Only you can make that determination.
But I warn you now, you might feel degrees of shame, guilt, anger, frustration; or you might feel super empowered by making decisions that allow you to feel you’re on track to money success.
Let’s look down the road a bit.
Depending on the money habits you create, you will either build a strong and powerful financial profile or one that is debt-ridden and a hand-to-mouth existence. If you decide to buy a car, a condo, or anything where financing is necessary, the credit agencies will make the determination of whether or not you can pursue your goal. The banks might refuse you or charge you exorbitant interest in exchange for an approval.
In reality, it’s up to you.
Here are a few tips to help you get your money life on the right path.
1. Begin with an understanding of what is important to you.
If you’ve just finished your education and are now “adulting” your way out of college days into the real world, you likely haven’t spent much time thinking about what you value. I’m not talking about the meaning of life-type thinking. I am talking about what, realistically, becomes your guardrails for your life.
For example, you might say, “I don’t want to have to deal with credit card debt,” or “I want to create financial choices.” Take the time to consider those MUSTS or MUST NOTS in your life. This is a really good place to start.
2. Understand Your Financial Picture.
Know your numbers and the impact of your decisions. Consider all the expenses associated with your lifestyle; everything from medical expenses to haircuts to transportation to insurance to your daily coffee. Every dollar you spend is money that cannot be used for something else. Make sure you value each purchase enough to put it in the spend category, and not in a savings category.
3. Create Small Goals
Making the goals too audacious, especially in the beginning, can have the opposite impact of inspiring. Start small and doable, then build from there. The easier it is to achieve success, the more enjoyable the process will be.
4. Monitor Your Spending
If you get paid every week, check your numbers weekly. The more frequently you check in, the better handle you’ll have on your situation. Being unaware is the opposite of a smart money strategy.
5. Prepare For Disaster
Life happens and your job is to be prepared. Build an emergency fund of cash. That should be very high on your list of MUSTS. People lose jobs, apartments, have medical emergencies, or other unanticipated situations. Ignore this at your peril.
6. Make Adjustments
As you monitor your progress, you will undoubtedly see variations of what you expected originally. You may also potentially earn more money, receive a gift, or experience something better or worse than anticipated. Be flexible, resilient, and willing to shift your thinking where appropriate and necessary.
7. Celebrate Your Successes
Don’t forget to appreciate your efforts and savor each victory. Take nothing for granted. It can be a struggle. Treat yourself with every small goal that is attained.
Welcome to your life’s next chapter. I wish you all the success and happiness you can create.