Looking to store some extra cash, but don’t know where to start? Have no fear, your frugal friend is here! Below are 11 simple steps that will put you on the path to financial freedom:
Step 1: Find your reason
“If you aim at nothing, you’ll hit it every time.”Dave Ramsey
What’s the motivation behind your mission, your vision, your goals? Why do you want to save money? What is your motivation for starting a savings account? Are you looking to save for a rainy day? Saving so you can buy something new? Saving for your next vacay? Perhaps it’s all of the above…or none of these reasons.
I’m saving money so I can quit my job, teach English abroad, and backpack across the world #30CountriesBy30. I’m also saving so I don’t feel obligated to go to work. I love having the freedom to quit any job at any time, and still have the financial stability to pay my bills. Once you find your reason(s), you’ll truly be able to connect and have a stronger impact on making a change. Don’t be afraid to make it personal, because it is personal. It is your life!
Step 2: Find out where you’re at
“If you don’t know where you are, then you don’t know where you’re going.”Terry Pratchett
It’s like when you open Google Maps and press the triangle to zoom in on your location. Keep that same energy with your bills and your goals. How can you be debt-free if you don’t know how much debt you’re in? Figure out how much you owe your creditors, and how much you’re making. Then, create a plan to reach your goals. (See Step 3)
Step 3: Create a Currency Canvas
“We are all artists in our own way. The way we spend, save, and invest is how we create our reality.”Alycia Austin (aka Your Frugal Friend)
We don’t make budgets, we create currency canvases! A Currency Canvas is a four-step action plan that guides you through your mission. This is where you use your currency to help you flow where you want to go. It is designed to be filled out monthly, however, you are free to create a new canvas as often as you’d like. be honest, be open, be free. Use your Currency Canvas to turn your vision into reality by:
- Downloading your free Canvas
- Stating your vision,
- Setting expectations/goals,
- Creating your reality
- Tracking your progress.
Step 4: Track your spending
“The person who doesn’t know where his next dollar is coming from usually doesn’t know where his last dollar went.”Unknown
Tracking your spending shows that you value your time and money. It also holds you accountable for your purchases. It does not matter if it’s the 1st of the month or the 22nd, start tracking your spending TODAY.
TRACK EVERY SINGLE PENNY THAT GOES IN AND OUT OF YOUR POCKET!!! I CAN NOT STRESS THIS ENOUGH!
It is time to create new habits and keep an eye on your hard earned money. The simplest way to track your spending is to use ‘notes’ on your phone. There are also tons of free apps that will assist you with this as well, like Mint or Clarity.
Here’s how I track my spending:
-Date: March 1
-Category: Travel (plane ticket to New Orleans)
It’s truly that simple. Come back at the end of the day or the end of the week to add up how much you spent or saved in each category. You can use Microsoft Excel, Google spreadsheets, or the traditional pen and paper. Tracking your spending is the MOST IMPORTANT step if you want to become (and remain) financially free.
Step 5: Read a personal finance book
“An investment in knowledge pays the best interest”Benjamin Franklin
What did your teachers make you do in grade school? READ. What did you in college that you paid entirely too much for? READ. What do you do when you’re driving down the road and don’t know which way to go? READ! Do you see the correlation between reading and learning? Reading is so powerful. Reading is fundamental to your success.
Your frugal friend wasn’t always great at money management. The only thing I knew about money was that you had to work to earn it and use it to pay bills. I got tired of being broke and naive, so I started reading books that taught me how not to be broke. I educated myself on the principles that were taught and applied it accordingly. Everything you read may not be helpful, so take what you need and leave the rest. Take what you learn and put it into practice. Knowledge is what can separate you from the pack. It can take you as high as you want to go if you put it into action.
Here’s a list of the books that helped me become debt free.
Step 6: Change, change, change!
“Without deviation from the norm, progress is not possible”Frank Zappa
This is probably the most challenging, because the comfort zone is the warm fuzzy bed that coddles you, and makes you feel safe and secure. Progress is the annoying alarm clock that pulls you out of bed and keeps you from sleeping all day.
Being normal, complacent, and comfortable is a BREEZE. Change is walking against the breeze and going against the grain. It’s hard to change, but it’s part of the process. To start saving you’re going to have to change three things:
- Your Habits:
Are your habits helping you or hurting you? Are your habits bringing you further or closer to your goal(s)?
- Your Mindset:
Where’s your head at? Is it in the clouds or focused on the task at hand? How’s your mental health? Train your brain to make a change.
- Your Circle:
Do the people in your circle make you better or worse? Are they a catalyst or a roadblock? Take time to analyze your situation, then take the steps necessary to create a new reality. If you can’t change the people around you, change the people around you.
Step 7: Start Small
“Managing money is a marathon, not a sprint.”Ray Brandon
Would you go out and run a marathon without any formal training? Probably not, so why would you try saving money without any financial training?! Your frugal friend is all about making money moves, but don’t move too fast baby! Pace yourself so you don’t tire out your financial muscles too soon. Managing money takes practice, patience, and perseverance.
By training, I mean creating new habits and educating yourself on money management. Saying, “I want to save $10,000 in one year” is an admirable goal…but is it realistic? If you’ve never saved a penny in your life how are you going to come out the gate saving $834 a month? ($834 x 12= $10,008). If you look at your Currency Canvas and see that you don’t have $834 left to spend, where is the money going to come from? Please set realistic goals so you’re not setting yourself up for failure. Rome wasn’t built in a day. Create your Currency Canvas, set your goals, and track your spending. Saving money isn’t magic, it’s sense (pun intended).
Step 8: Live BELOW your means
“Just because you can afford it doesn’t mean you should buy it.”Suze Orman
Have you ever heard of Warren Buffett? He is the CEO of Berkshire Hathaway and a BILLIONAIRE. His net worth is $84 billion, yet Warren Buffett lives in Omaha, Nebraska in the same house that he purchased in 1956 for $31,500. He drives a $45,000 Cadillac and uses a flip phone. Remember the part where I mentioned that he’s a BILLIONAIRE? Which means Mr. Buffett could live ANYWHERE, drive ANYTHING, and have the latest smartphone. However, he’s wise and chooses to drive an American-made vehicle (that’s paid for), live in a simple home (that’s paid for), use a flip phone (that’s paid for), and invests the rest. In a world full of broke people, LIVE LIKE WARREN BUFFETT!
Moral of the story: Just because you earn $1500 every 2 weeks doesn’t mean you have to spend $1500 every two weeks. Or, just because you can afford to pay $1800 for mortgage/rent doesn’t mean you have to live somewhere that charges $1800. You also don’t have to run to the store every time the new iPhone comes out. In a world full of broke tendencies, be like Warren Buffett and find a nice home that costs less than 30% of your monthly income, drive a vehicle that gets you from point a to point b, and stop buying the same exact iPhone (cause let’s be honest, it does the same thing as your old iPhone).
Step 9: Don’t be bougie
“Do what you have to do, so you can do what you want to do.”Denzel Washington
Your frugal friend has had 26 jobs in 10 years and was fired from at least 5 of them. I’ve flipped burgers, I’ve served tables, I’ve scrubbed floors, I’ve even served cocktails in a gentlemen’s club. There were times that I was unemployed and accepted a wage that was lower than my worth, but making $7.25/hour was better than making $0/hour. Nothing is beneath me. I will do whatever it takes to turn my vision into reality. Stop worrying about what looks good on social media or what looks good on paper, and start worrying about what looks good for your bank account and your financial future. Keep in mind that this is temporary, this is to help accelerate turning your vision into reality.
Step 10: Break up with broke tendencies
“If you make some sacrifices, inject some discipline, and get intentional about winning with money, the future is wide open.”Dave Ramsey
Breaking up is hard to do, but you’ve got to let it go if you want to grow. This is the part where you have to say, “it’s not you, it’s me” or “sorry this isn’t working out”. You’ll have to do this with your habits, and you may have to do this with some people in your life. The spending money before you have it, living paycheck to paycheck, partying and shopping every weekend, eating out every day, charging your credit card ENDS HERE.
Step 11: Remember that no two journeys are alike.
“Stop caring about how green other people’s grass is and start watering your own damn grass”Kierra Ivy
In this day and age, people are posting every aspect of their lives…except for their downfalls. It’s easy to look at someone else’s life and say, “They’ve really got it together. They have the perfect house, the perfect job, the perfect partner. I wish my life was like that.” But do they really?! If they do, good for them. But what did they go through to get there? We tend to look at the final product, rather than the steps it took to make it happen. That “perfect house” may have taken years of saving, cutting back, and precise money management. That “perfect job” may come with the stress of micromanagement and dirty politics. That “perfect partner” may come with therapy and figuring out how to work together and lov another human being, unconditionally. “Perfection” doesn’t happen, because it doesn’t exist, and comparison is a thief of joy. Accomplishing your goals takes practice, patience, and perseverance. Just do your best and be yourself, everyone else is already taken.
These tips are all you need to get started. Consistency (and following your Frugal Friend) will keep you going. Your frugal friend is always a click away. Scroll to the bottom and subscribe the tribe today! 🙂
Stay frugal, be brilliant!