I am in no way qualified to give money advice, as we're still mostly living paycheck-to-paycheck sans emergency/college/retirement funds. All of which is due to really stupid financial decisions that we're slowly repairing. Don't make my mistakes! Listen to a different kind of young mom — a financially smarter kind of young mom — like Gemma, here.
I was never super irresponsible with money. I didn’t rack up credit card debt during college or take out student loans. When Rob and I decided to get married, we had a two year engagement to save up for our wedding. We bought a house we thought we could afford. And when it came time to start our family, we thought we had saved enough to cover expenses. But when the roof suddenly needed fixing and Lucas unexpectedly spent his first week in the hospital, things started to fall apart for us financially.
The summer after Lucas was born, we had reached the point where we were getting calls from creditors because we hadn’t paid our enormous hospital bills. Rob was working less hours and I was working for pennies an hour doing in-home daycare. Our credit card bill was growing substantially from the textbooks for school we hadn’t paid off. I felt utterly defeated.
That’s when I came across a copy of The Total Money Makeover, which was given to us by one of our parents. I initially scoffed at the book, without ever bothering to open it. But once I read it that summer, there was no going back. I decided to change our financial future, rather than fall deeper into the hole, and I haven’t looked back since.
We still aren’t making a whole lot of money, but with careful budgeting and a lot of motivation we’ve managed to eliminate all debt but our mortgage, build a solid emergency fund, contribute to our retirement fund, and build college funds for both of our kids.
So if you’re at that turning point where you want to take control of your finances, here are some tips I’ve learned along the way to help you succeed:
1. Start budgeting
Creating and sticking to a budget is the cornerstone to everything else. Tracking your expenses and making a plan is the only way to be in control of your money. I use my own system that I've devised and perfected over the years, but try mint.com or daveramsey.com if you're just starting out. They both have excellent tools to get you started.
2. Discover Dave Ramsey
Without the guidance of Dave Ramsey's methods for financial freedom, we would never be in the position we are in today. If you're ready to get out of debt and change your relationship with money, he is your guy. The success stories are real and amazing — there's even quite a few bloggers out there who followed his advice and clawed their way out of debt.
3. Cut out credit cards
A good rule to live by: If you can't afford it now, you can't afford it period. If you don't have the money in the bank and your budget for an item, it doesn't belong on your credit card. If you use credit cards at all, use them exactly the same way you would your debit card, and make sure you pay them off in full every single month.
4. Set up an emergency fund
When life gets stormy, having a cushion of cash between you and the elements will give you so much security and peace of mind. Start small and grow your emergency fund. We started our journey by scraping together $1000 for emergencies, and now we have over $10,000 in our emergency fund.
**Ed Note: If you want to save for an emergency fund/travel fund/anything fund, open a high-interest account (like ING Direct, for instance) and schedule automated withdrawals from your checking account. Even if you only take out a small amount each month, it'll add up without feeling the burden.
5. Redefine fun
Changing your financial state is a big adjustment. You'll have to give up bad spending habits — i.e. forgo the dress you really want but can't quite afford, say "no" to drinks at an expensive bar, etc. In order to deal with the lifestyle change, it's important to realize that your life doesn't have to be dull because you're pinching pennies. Go out for walks with your girlfriends, host wine nights at your house instead of going out for drinks, and get thrifty with your style.
If you need a jumping off point, check out this pin-worthy post: 56 Things To Do Instead of Spending Money.
6. Find a community
You need to find a community to keep you motivated. This journey to financial freedom is not an easy path, but there are plenty of others who are walking it with you. My go-to motivation is watching/listening to The Dave Ramsey Show and reading Anna Newell Jones' fabulous blog And Then We Saved.
7. Stop using your kids as an excuse to spend
I've always been pretty good at not spending money on myself, but spending on my kids? That's a different story. I want them to have the best of everything, all the time. But the fact is I'm just using my kids as an excuse to spend. They don't need or want for anything in their lives. So buy used when you can and keep your wants vs. their needs in check.
8. Get on the same page
If you are married or living with your partner, it's important to get on the same page when it comes to financial goals. I know that planning monthly budgets isn't the most romantic or fun thing to do, but it's necessary. Plus, financial talks don't have to be all work and no fun. Make sure you take time to dream together. Dream about what your life together will look like when you're debt free and financially secure, when money is no longer an issue to fight over.
**Another ED Note: Cracking a bottle of wine is a nice way to smooth out those after-bedtime budget conversations. (Our conversations actually might require some tequila.)
9. Make some extra money
I know — the idea of getting to a point where you could save and invest money seems like a fairytale when you're barely scraping by with kids. If you really can't find places to save in your budget, try picking up some extra cash using your time and talents. Pick up some babysitting jobs, get crafty and sell your stuff, walk dogs, repurpose furniture — it doesn't have to be forever, but it will help to jump-start your journey to financial freedom.
ALSO SEE: 5 Ways to Make Extra Money at Home
10. Be patient
It won't happen overnight. Be diligent, be focused, and be patient.