Self Control and Your Finances

No, this isn’t a dieting post, I’m not going to tell you that Keto is better than ANY OTHER DIET EVER or that you should become a  vegan because #animallivesmatter.  But, it’s going to sound quite similar to a post on diet and lifestyle because Self Control and Willpower, especially if you have very little or none when it comes to your finances, is going to feel like a diet.

And like all dietitian gurus, I’m going to say it’s all about moderation. And with finances, it’s all about what you value the most.

 

What is Self Control with Respect to Your Finances

Can there be a plate of cookies or a box of donuts in the break room at work and you don’t have any? Can you have $200 in your bank account that you don’t feel the need to spend? While one is about food and the other is about money, they are the exact same concept. Self control and willpower over your finances is just like maintaining a healthy diet. You need to plan and use information to live your best financial life.  Many of these skills are taught on this blog and in my Femillionaire  series on my Youtube Channel.

 

The Science of Willpower

Let’s chat about willpower for a second. Willpower is like a muscle, it can become fatigued, but it can also be super buff and hawt. As you use your Willpower, you’re exerting that muscle and making it tired.  When you have to exert your financial willpower often whether it’s feeling too restricted, having financial issues, or other reasons, you’re more likely to make purchases you wouldn’t otherwise make.

The best way to overcome fatigue in Willpower is having a set game plan. When a situation comes up, or thoughts or feelings occur that make you want to spend, a game plan can assist in taking steps to not spend. Having rules set in stone make is so you don’t have to use any Willpower when debating an unplanned purchase. You simply won’t.

 

Building Financial Self Control: A Tips and Tricks

Track Your Spending: Track every single penny that comes into or out of all of your accounts and where it goes. Are you spending ungodly amounts on eating out? On Makeup? On that car? Tracking your spending is the first step in any financial journey. This also helps create Awareness on your way to becoming a Femillionaire.

There are great tools to help you track your spending, like Mint and YNAB (You Need a Budget). A simple Excel sheet also works great.

Make One Financial Decision at a Time: Science backs that decisions are exhausting. This is why people like Mark Zuckerberg wear the exact same thing every day. (And your blogger might follow a similar principle!). Decision fatigue is a thing, and so is Willpower fatigue, especially if you’re making too many financial decisions at a time. Make one decision, let it sink in and blend in with your finances, and then make you’re next decision. Decision 1 could cost a lot more, or a lot less, than you initially intended.

A prime example of this is having your first baby. While you’re preparing (and spending!) for baby incoming AND you need a new car, it’s really easy to go from affordable sedan to expensive SUV because you’re already spending so much on baby, you should get the more expensive car (plus you deserve it!). But that’s wrong, wrong, wrong. If your old car is fine, keep it, but if you need a new car, focus on that purchase first, remove baby from the equation.

Save Automatically: Your bank can do automatic transactions, did you know that? Set up automatic transactions so that every pay period your money is sent to savings, debts, and investments. Many times when money is out of sight, it’s out of mind. Also, having money specifically assigned to a labeled account can do wonders for one’s psychology.

Personally, every pay check I have money that goes my investments, a savings account at a different bank, savings accounts for travel, a treat yo self fund, my kitty, and my car. Whatever is left in my checking account is for bills, then fun.

Avoid Temptation: Remember those donuts in the break room? Guess where I’m not eating my lunch today. This rule applies for savings. Avoid places where you spend money or make you want to spend money. This includes shopping malls, certain Youtubers, and social media. You can also manage your spending by only carrying cash.

Find Support: Surround yourself who have your best financial welfare in mind, or with friends who understand if you cannot attend an event because you’re trying to save money. You know your friend who is always broke? Have them read this post, they need some Financial Willpower in their life.

If you struggle with managing your finances, seek help. Many psychologists have tools to help people better manage their money.

The Bottom Line

Just like with eating healthy, in today’s consumerist world, Willpower takes energy. But, it can take less energy if you build strong habits in decision making, and by resetting your primary reaction to not buying anything that hasn’t been well researched, much needed, and long awaited.

 

 

Female Fridays

Emergency Funds – How an Efund will Save You

Happy Fri-YAY! everyone! Will that ever get old? Probably. Will I start using something more original as an opener? Maybe one day! Hah! It is another Femillionaire Friday and I’m super excited because this is two Fridays in a row! How long can I keep it up, the world will never know.

Okay- great intro, Meredith, now to the point.

I want to write about Emergency Funds and why you need one, why your grandma needs one, why your dog needs one, and remind you of all the horrible things that happen when you don’t have an emergency fund.

First, do you want to know something terrifying? 56% of Americans can’t cover three months of expenses.

What is an Emergency Fund?

An Emergency Fund is a type of savings that is held in a savings account and used when an “emergency” occurs.  Generally, this is 3-6 months of living expenses, but all situations and plans of precaution are different. Expenses are inclusive of your mortgage/rent, food, kids daycare, insurance, electricity, trash/sewer, pet food, vet visits, gas, general car maintenance, student loans, personal care, etc. Any expense you currently have, don’t think of cutting it out, include it! I think a lot of people do this with child care, thinking they’ll be home, but you’ll be home and busy editing your resume, going on job hunts, and maybe even catching up on some work around the house/apartment!

What Constitutes an Emergency?

An emergency is anything that meets the UNU criteria:

Is it Urgent?

Is it Necessary?

Is is Unexpected?

This is where you need to build AIM (Awareness, Information, and Management Skills) when it comes to your finances. You need to be aware of how much you spend and use that information to manage your accounts!

A perfect example of this is car maintenance. You know a new timing belt is going to be needed at your next oil change, so why dip into your emergency fund? Save for that piece of car maintenance as best you can! I personally don’t measure out the price of maintenance (I hate dealing with cars), but I budget around $600 a year for car…. stuff. And if anything goes over that, I do dip into my Efund.

true emergency is something you absolutely cannot plan or expect.

 

The most common reasons to use an emergency fund:

  • Loss of Job
  • Necessary travel (ill family member or death, NOT a wedding)
  • Car repairs
  • Unexpected medical bill
  • Unexpected pet illness (Save for your pets!)
  • Heater or A/c went out in unfavorable temperatures
  • Necessary and Urgent Home Repairs
  • Use to cover before insurance pays out

 

NOT Emergencies

  • Christmas
  • Birthdays
  • Spur of the Moment travel
  • Going out with friends

 

… What happens if I DON’T have an emergency fund? It’s Risky…

Have you ever been stressed out before? Was it about money? That’s EXACTLY what not having an emergency fund feels like, overwhelming, compounding stress that you can’t control the situation you find yourself. One of the main issues in marriages is money. One of the main causes of depression is money. You know what solves some of life’s biggest problems? An emergency fund!

Some more extreme examples include homelessness, being hungry, losing your home, or taking on bad debt (i.e. credit cards) and finding yourself in even more stressed out.

An Emergency is the definition of peace of mind.

 

Let’s talk about the Beneies- the Benefits of an Emergency Fund

The largest benefit of an Emergency Fund is peace of mind, aka not being stressed. When your car needs a new tire- or four and you can pay for them, it’s the easiest “yes” you will ever say. You might even get a little high from the sheer adrenaline rush of not having to worry about the expense.

The second largest benefit of an emergency fund is it stops you from taking on bad debt. Aka, it stops you from taking on debt with high interest rates that make you more stressed to pay back.

The third benefit is somewhat indirect- having an Emergency Fund teaches you to not spend money. Having a lump of cash in the bank takes huge amounts of self restraint to not spend. And if you can keep it there, you’re absolutely killing the mental game of savings.

 

How the Hell am I supposed to Build an Emergency Fund??

I’ll tell you right now, it’s going to take time, patience, and intelligence to finally have your emergency fund, especially if you already have a tight budget. My recommendation is to save at least 10% of every single paycheck into a savings account until you have the amount of money you need.

You can help yourself by opening a High Yield Savings Account outside of your current bank and set up automatic transactions. This means when you login to your normal checking account, you never even see your Emergency Fund.

If an emergency happens while you’re building your emergency fund, take a deep breath, use your cash, and start building again.

 

Meredith Foxx’s Approach to an Emergency Fund

What’s my personal approach to an emergency fund? I use my emergency fund for only the most true emergencies, aka loss of job. I have had to dip into it once for my cat and once for my car, but for the most part, I like to structure my savings.

I have accounts labeled (and yes, these are all seperate savings accounts):

  • Car account – $106/pay period, this is for gas, insurance, and $600 of maintenance a year
  • Kitty – $30/ pay period, this is for food, toys, clothes, and vet visits. Any excess I’m saving for a surgery he’ll need.
  • Travel – $200/pay period, this money isn’t used for any unexpected bills (although I could for unexpected travel), but I think it’s important to point out where my cash goes
  • Efund/General savings – $300/pay period, while my Efund has been maxed out for a couple of years now, I am in the beginning stages of saving for a house and other big purchases. I have all of this lumped into one high yield savings account. But I know, $10,000 of what’s in there is an emergency fund.

 

Really think about the Amount you Need

There are a couple of reasons why you should think critically of what you need. The more important one being, will you have enough money? 3-6 Months is the standard, but if you have a large mortgage, kids, a spouse that doesn’t work, pets, loans, a job that is high risk, etc, you might want to consider 12-24 months of cash reserve. You’ll be prepare when the shit hits the fan, especially because when it rains, it pours.

If you’re young, healthy, no pets, no dependents, etc, really think about not holding onto too much cash. You’re losing time in the market by keeping dollars in an account that doesn’t even keep up with inflation.

 

In Conclusion

I hope halfway through this article you opened up your bank account and started a new savings account called EFund. Having an emergency fund is so critical to being able to handle stress and impactful moments in life. An Emergency Fund takes the edge off and allows you to breathe easy, knowing you’ll be okay.

I know saving money isn’t always easy, but it’s so much better than the alternative.

 

I hope you enjoyed this article, thank  you for reading! Check out my Youtube video for more:

 

Female Fridays Finances