After 15 years in the financial services industry, I’ve seen it all. And since then, I’ve taught a lot of women about money, about their business, and more. However, it’s important to make sure that everyone has the basics. This is an idea I’ve shared with many of my clients, but hasn’t made its way to my website before this. And that’s a shame, because this has helped so many other women just like you! So it’s time to talk about the basics to financial stability both here and in my weekly Financial Tip Tuesday videos.
So you’ll want to follow me on Facebook so you catch each of them live.
The Foundation to Financial Success is Knowledge
So many women transition in and out of the workforce due to a wide variety of life circumstances. For some it’s having children, raising children, taking care of elderly parents, or something else. It’s statistically so much more so than our male counterparts. And because of that, women seem to have a greater fear around money and a different view of money.
And part of overcoming that money block fear is having the right mindset about money. So, I’m going to show you two very visual methods to better understand your money. It’s helped so many other women, so I’m sure it’ll help you, too.
First, we need to get over the taboo around the word “budget.”
Skip the Boring Budget – and Use This Pie Graph Instead
Instead of calling how I allocate my finances a budget, I like to see it as a pie graph.
That pie graph is made up of all of your gross income that’s coming in. Perhaps that’s from a salary, a business, from commissions, or somewhere else. Everyone’s total gross salary amounts will be different – that’s fine. Talking about changing that amount is for another day. Today, we’re talking about how to set you up for financial stability.
Now that you’ve got your pie graph visualized in your head, it’s time to see where that money goes – and how you should allocate it for your financial needs. It’s going to be split up by 25%, 45%, 15%, and 15%.
Here’s What Money Needs to Go Where – and How to Adjust it
Looking at your pie graph, you need to know that 25% of it (your gross income) is gone to taxes. Just think of that 25% of your pie as out. There’s some tax sheltering and savings you can do, but that’s much too involved for now. Just cut that quarter of the pie out.
The next 45% of your pie will be for foundational expenses. That’s your bottom line for what you need to survive. It’s things like:
- Mortgage or rent
- And any other basic necessities you need to live every month
Now, if you don’t know what that is, feel free to contact me for a little template you can use to figure that out. But it is something you need to pay attention to each month.
The next 15% of your gross income is savings. That’s saving for your future, and you really need to make it a priority. In fact, if you’re finding things too tight at the end of every month, you need to adjust your foundational expenses or your spending money – and leave your savings alone!
The final 15% of your pie is your fun money. If you’re in the midst of paying off debt, then you may be putting a large chunk of your fun money towards that. It won’t be fun right now, but having that debt paid off will be worth it!
So – now you know where your money is – and where it should go. And that is going to get you set up to be financially savvy and reach financial stability sooner than you thought possible.
Do you need some help shifting your mentality so that your business thrives? Let me be your second opinion. If you’re ready to go from entrepreneur to shining like a diamond with a fabulous six-figure salary, then let’s chat.
Financial Tip Tuesday! Want to get a handle on your money and keep more of it in your pocket?
Posted by Lori Hildebrand on Tuesday, August 28, 2018