Creating A Positive Relationship With Money
As of right now, I wouldn't say that my relationship with money is a positive one ... but I'm working on it. You see, as soon as I started to "make a living" doing what I love, it became instinctual for me to protect my earnings. To not treat myself or invest in new things, even though I could. For some reason, I couldn't shake the feeling that my dream job could end at any moment and that I should be prepared in case anything ever happened. But that's not a very positive mindset to have, is it? Instead of investing in the future and enjoying the present, I was saving for catastrophe, whatever I made that out to be in my head.
So in order to establish a more positive relationship with money, I've taken a few important steps over the past year to shift my mindset. Here's what's helped so far:
- - - - - -
01. To start, I sat down with my husband and together, we listed out all of our expenses in order to understand how much money we absolutely need to continue on with our current lifestyle. We did our best to outline absolutely everything and ended up with a safe monthly amount. I had never done this before (face palm), so it was extremely insightful to know how much we need to get by as well as realize that it's also a very realistic goal. Something we've been able to comfortably hit each and every month.
I can't tell you how much of a relief this simple and eye opening exercise was. We even took it a step further and agreed to make sure that we always have at least 6 months of "money to get by" saved up in our bank account. I realize this last part isn't for everyone, but it's the kind of safety net and peace of mind my frugal self needed.
* Speaking of frugality, this is a topic I’ll be talking about in this week’s newsletter, on a more personal level. The letter is titled “Things I’m Afraid To Tell You,” so if you want in, sign up right here.
02. Another big thing I did was give myself a realistic spending budget for work related purchases. Before my whole money mindset shift occurred, I had absolutely no budget. If I needed to buy something big (like investing in a new computer), a huge amount of guilt would wash over me, simply because I wasn't aware of how much money I could spend.
Coming up with a spending budget is easier said than done and will depend entirely on who you are, how you spend, and what your job is. But in general, I’ve found that 5% of your annual salary (or 5% of each paycheck) is a great starting point.
The number this gave me is actually quite a bit higher than what I realistically need. So even though I won’t use all of it, it’s nice to know that the option is there and I’ll be fine if I ever need it.
Thanks to the simple math I described above, I now know how much money per month I can safely set aside for things like supplies, programs, fonts, printing, and more, which allows me to spend smartly without feeling bad. Win Win Win.
03. While budgeting (and saving and spending) are all important things to consider, the amount you charge for your services is also important. In fact, it's a pretty big deal. I could go on and on about the importance of charging your worth and most likely will in a future blog post. But today, I’m going to direct you to a free e-book I read about 2 years ago that helped solidify my own confidence in value base pricing. This book, Breaking the Time Barrier, is a short but impactful read and that I highly recommend!
04. And last, but certainly not least, is a seemingly simple tip that I picked up from my friend Jen on a visit to Chicago. We were in the middle of a discussion about money (typical) when she informed me that she pays herself a fixed amount two times per month, just like most traditional jobs. In doing so, she always knows how much money she’ll be bringing in on any given month and can allocate the rest for things like taxes, savings, and other business expenses.
Being someone that just “kept it simple” and dumped all of her pay checks into one bank account, this blew my mind. I’ve heard about this tactic from countless others since and am sharing it here, just in case you haven’t and are in need of a “blow your mind” moment yourself ...
Discovering this bi-monthly amount is again easier said than done and depends on a slew of factors. So, to keep things simple, you could start by taking your monthly “money to get by” number (from item #01 above) and divide by two. This would equate to a nice base payment … something you already know will be enough to live off of because you’ve done the math.
Most people, however, will (and can) opt to inflate this number to account for personal spending. Or, the treat yourself factor, as I like to call it. This adjustment is entirely up to you and can change whenever you see fit. To start, you could increase your bi-monthly payment by 25% and see how things go. If you find that it’s either too much or not enough, adjust and try again. Etcetera etcetera. Eventually, you’ll land somewhere that feels about right.
- - - - - -
If you have any other tips for establishing a positive relationship with money, feel free to share them in the comments section below! Just remember: saving money is smart. But it's also important to pat yourself on the back every once in awhile. So yes, have that ice cream cone. You deserve it. ♡