A Girlfriend’s Financial Survival Guide

My daughter Taylor who is 16, is now home with me every day while I work and she is doing her virtual school. And if anyone has a teenage daughter I’m sure you deal with this on a daily basis. “Mom, I need my Grande Vanilla Sweet Cream Cold Brew!!!” “Mom, there is nothing to eat!!!”
This demand for Starbucks coffee every morning, and Uber Eats in the afternoon is enough to make anyone go broke, or insane to say the least. Being the financial person that I am, I start doing the numbers for her. “Do you know that instead of spending $10.00 a day on random, unnecessary high caloric drinks and foods, if you just took that money and invested it and it earned a 6% compounded rate of return, you will have over a$1million by the time you retire at age 65.” Her response…blah, blah, blah, blah, I want my Starbucks!
It is pretty mind boggling, right? And relatively simple, however most of us do not think in those terms, especially a teenager. However, as you start approaching the #adulting stage, you need to start thinking about it.
So where do we start and how do we do it?
It’s amazing what the power of budgeting can do for your finances. It almost sounds too simple however most people have no idea how much is coming into the household and how much is leaving.
Do you actually know what you are spending on? Have you ever just sat down and did a breakdown of every purchase? I would gather most would say no.
The easiest way to set a budget for yourself is to know how much money is coming in and how much money is going out. First create two columns, fixed expenses and discretionary expenses, or to simplify it, break it down between needs and wants.
Fixed expenses include things that are necessities, such as housing, food, transportation, and clothing. And no ladies, not your Gucci, just the basics.
Discretionary expenses include things like entertainment, vacations, hobbies, botox – I like to call it “Me Maintenance”. You’ll want to be sure to include out-of-pattern expenses (e.g., holiday gifts, car maintenance, and home repair) in your budget as well. I’m also very aware as a woman who gets her “Needs” hair, nails and feet done, that those expenses naturally flow to the fixed expenses. Kidding, but not kidding.
To make sure you are not forgetting anything, it may help to look through your bank statements, credit card bills, and other receipts from the past year. Finally, as you list your expenses, it is important to remember your financial goals. Whenever possible, treat your goals as expenses and contribute towards them regularly.
As you establish your budget, you should examine your financial goals. Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., purchasing a home, child’s education, retirement, Me Maintenance).
Next, ask yourself: How important is it for me to achieve this goal? How much will I need to save? Equipped with a clear vision of your priorities, you will work to build a budget that will help you achieve them.
Compare the two totals once you have added up your income and expenses. You should spend less than what is coming in, so you can stay ahead. You’re on the right track if your income column is greater than your expense column. If it is not, then look closely at your expenses and reduce your discretionary spending. And note, don’t panic if you find yourself coming up short! All it’s going to take is some persistence and a little self-discipline, and you’ll get it right eventually. You may need to regularly review your budget and make adjustments as needed, but here are a few tips to help keep you on track.
• Agree on a budget up front and check your progress quarterly or annually
• Stay disciplined: Try to make budgeting a part of your daily routine
• Start your new budget at a time when it will be easy to follow and stick with the plan (beginning of the year, as opposed to right before the holidays)
• Find a budgeting system that fits your needs (there are a ton of budgeting apps)
• Distinguish between expenses that are “wants” (e.g, designer shoes) and expenses that are needs (e.g., groceries)
• Build rewards into your budget. I set up a FUN FUND for myself, this allows me to spend on my wants without feeling guilty
• Avoid using credit cards to pay for everyday expenses. It may seem like you’re spending less, but your credit card debt will continue to increase
Last thought, skip the cups and save the buck$!