We’ve all been there right? the freshman 15, the dirty 30, ”I just can’t lose this baby weight,” [insert your favorite cliché here].
We go on one crash diet or another, try this pill & that wrap, and every Jan. 1 we vow never to eat another cupcake, ever. It just doesn’t work and it really, REALLY SUCKS! each time.
It’s the same way with money. We all know that we should start saving, start investing for retirement, pay down our debt, budget (ughhhh), and watch our calories, cut out soft drinks, not eat fast food, exercise more, blah, blah, blah. But just because we know we SHOULD be doing these things doesn’t make them any easier to do…unless you’ve got systems in place to make them seamless.
Common Budgeting and Diet Pitfalls
“I don’t know where to Start”
Everything seems so overwhelming.
There’s the paleo diet, slow carb diet, low-fat diet, high-fat diet (my fave ), primal, low cal, fat free, sugar free, weight watchers, vegan, vegetarian, Zone, Atkins, etc.
On the financial side, there are savings accounts, money market accounts, credit cards, debit cards, 401(k)s, 403(b)s, IRA’s, taxable brokerage accounts, HSAs, fixed vs. adjustable rate mortgages, ARMs, car loans, personal loans, and 839 billion investment options.
If you are not an absolute nerd like me that likes to read about this stuff, it can seem overwhelming, but you don’t have to know exactly what all of these things are, just like you don’t have to find the perfect diet to lose weight.
What’s important is to find what works for you and what you can stick with long term. You don’t have to have all of the answers and you don’t have to get it perfect all of the time. If you get just a few of the big things right regarding both diet and money you are 90% there, and for most people 90% is enough. If it’s not sustainable, it’ll never work.
The important thing is to start, and adjust as you go. Start small and as you learn more along the way you can fine tune your strategy.
“I just don’t have the Willpower”
Contrary to popular belief, success in dieting is not solely based on willpower. Success on any diet (food/caloric based, financial, or otherwise) does take some willpower, but this is not actually the biggest determining factor in whether a diet fails or not.
Key’s to Saving (and Diet) success:
1. Start with WHY – Most of the time the surface answers we give ourselves for wanting to accomplish a goal, whether it be losing weight, saving money, or starting a new career, don’t keep us motivated for very long. Dig deep. This can get uncomfortable, but it is crucial to maintaining your motivation when times get tough.
There is absolutely nothing wrong with wanting to look good naked, but is that motivation going to be enough to sustain your resolve when someone walks in the office with cake.
What do you value? This is the big question. How will changing your spending habits to be more in line with your values benefit you in the long term? Do you want to pay down debt so you can quit your second job and have more time to spend with your kids, or just have enough money saved up to take a family vacation? Focus on the way you will feel once you have met your goals rather than the short term surface benefits.
2. Decide – No wishy washy, “I’ll try” BS. Decide now that you are going to make a change. Wishing things were different is never going to get you there. If you want things to change, you have to decide that you are going to do what it takes to make a change.
P.S. You are going to screw up sometimes. The important thing is to make the decision and do something about it. I’ve been telling myself for years that ONE DAY I would start this website. I never had the courage to put my thoughts out there for fear of judgement (and I’m still not sure that I do), but I made the decision that NOW is the time. Once you’ve actually made a concrete decision to make a change, things get easier. It’s all the worrying and excuses we give ourselves beforehand that are the most difficult to overcome.
3. Pick a Target– What are your goals? What do you hope to accomplish?
I hate the goal setting mantra as much as the next guy, because you actually have to sit down, make a solid plan, and risk failure. Nobody wants to fail, so many times we don’t even try. We’ve all got excuses we tell ourselves to justify our decisions, but what they really all boil down to is fear. What have you been putting off because you are scared to fail? (this website was one of those things for me)
We also expect that things should be easy. We want the quick fix. A pill that makes you lose 40 pounds over night, or we hope for some long lost relative to leave a fortune to us like so many spam emails promise, but it just doesn’t happen that way.
You know why you hear over & over, “Set SMART goals”? Because they actually freaking work. A goal to “lose weight” or “Save more” is that wishy washy, “I’ll try” BS I was talking about earlier. Make it concrete. What do you want? Who do you want to become? How will your life be different 6 months from now when you’ve accomplished your goal?
You don’t want to just pay off debt, you want to pay off $x,xxx.xx of credit card debt by the end of next year by paying $100.00 more than the minimum payment each month. You know this is possible because if you cut out eating out twice per month you will have an extra $100 to pay toward your debt. What will you do with that extra money each month once you’ve eliminated those debt payments?
4. Plan ahead – How will you deal with setbacks or roadblocks along the way? The best laid plans often crumble because we don’t have a backup plan and . Decide ahead of time how you will deal with these setbacks.
How Planning/Automation takes Willpower out of the equation and can Make or Break your goals
I don’t actually keep a strict budget, and I don’t really advocate for others to either. It can feel too limiting, and honestly, most of the time it kinda sucks. It can feel demoralizing when you feel like a failure at the end of the month when you spend more than your strict targets. Just like when you feel demoralized looking at your bathroom scale that JUST. WON’T. MOVE.
Making a plan for your money up front, and automatically directing a certain amount to savings each paycheck (before any spending) is your best bet. Take the guesswork out of your finances. Don’t wait until the end of the month to realize there is nothing left over. Making savings automatic will provide certain spending limits, but you don’t have that sense of failure when nothing is left over because you’ve already met your savings targets automatically. You can spend the remainder guilt free.
The same can be said for dieting. It doesn’t have to be so restrictive when you’ve planned out your meals and work things that you love into your meal plan. You don’t have to eat rabbit food every day of the week to lose weight, but salads are an easy go to when you don’t have a plan for what to eat and all of your other options are unhealthy. Make a plan, take the daily decisions on what you are going to eat for each meal out of the equation. You diet will be much less restrictive and you’ve taken willpower out of the equation. You already made the decision at the beginning of the week when you made your meal plan & cooked your meals ahead of time.
Don’t let an unexpected expense derail your savings plans or let your diet be derailed when something comes up and you don’t have time to cook. Make the decision ahead of time. Be prepared for the worst case scenario. No willpower required.
Saving/Dieting = Deprivation
We dread dealing with our money just like we dread dieting because it can feel so restrictive, but saving money has just as much to do with enjoying life as it does with restricting spending.
So many of us fight over money issues in relationships, feel crushed by the pressure of debt, and worry about what would happen if the car breaks down or we lose our jobs.
What I feel when I’ve met a savings goal, or max out my 401(k) is not restriction. I feel both accomplishment and a sense of Peace.
If you are having trouble saving money, or don’t even want to think about your finances, think about this… How would you feel if you had no financial worries? How much happier would you be if you weren’t stressed out about your finances? How many fights would it save with your spouse if you had some emergency savings socked away and didn’t have to worry about the car breaking down? What would it be like to NOT have hundreds or even thousands of dollars paid toward debt every month? What else could you do with that money?
Could you have more “fun” and less restriction if you didn’t have those debt payments to worry about?
Having a healthy savings account feels more like freedom than deprivation.
How “Cheat days” can work for your money – Set up seperate accounts for specific goals (Even the fun stuff)
We can’t all be perfect all the time. Planned cheat days or cheat meals can be a great way to break up the monotony of dieting. Cheat days shouldn’t be used too often, but they can help you to indulge in some of your guilty pleasures without derailing your diet goals.
All of the experts say you should have an emergency fund with a few months of living expenses socked away (and I agree), but you also need to have some FUN money set aside. If you’ve always wanted to visit Europe, set up a specific savings account to start saving for your trip. Once you get in the habit of saving, you are closer to your goal than you could ever imagine.
Keep these accounts separate. This is important! Don’t just leave all of your money sitting in your checking account, it will usually get spent. My favorite savings account is Capital One 360 (formerly ING). You can set up multiple accounts and give each one a name.
Saving for a Down payment on a house? Have a “Down payment” account or “Dream Home” account specifically for that goal. Have a major purchase you want to make? You could have a “new kayak” account or a “Star Trek Memorabilia” account…no judgement. What’s your fun money “cheat meal” account going to be?
Saving money is not about being responsible or restricting your spending, it’s about planning ahead for the life you want.
The important thing to remember is to keep these accounts separate and make your contributions automatic through a payroll direct deposit or an automatic savings plans that can be set up to reoccur at certain times (ideally on each payday). If you need help setting these up, shoot me an email at Ashley@smartwealthhacks.com.
I’ll talk more about why having separate savings “buckets” is important in another post.
For today: sign up for a Capital One 360 and set up at least 2 accounts, an emergency fund and a FUN money account. If you’re really feeling frisky, go ahead and open that account for whatever other weird shit you are into.