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You’ve read financial blogs and tuned into all the motivational money podcasts you can find.
You bury yourself in personal finance books and comb through online communities full of people like you, whether they’re frugal parents, financial-independence seekers, aspiring real estate investors, or any other type of person looking for strategies to grow wealth.
There’s no doubt you’re motivated and you’ve been working hard to improve your money management habits. You’ve probably made a lot of progress on your own, too!
But there’s just one problem: you’ve reached a point where you really need more help to get to the next level… and your significant other is not on board with hiring a financial planner for your family.
What should you do when you know you need financial help — but your spouse doesn’t see the value or simply doesn’t want to talk with an outside money expert?
Start by Hearing Their Concerns
The truth is, your partner could have valid concerns about reaching out and asking for financial help.
They could have had a bad experience with someone who oversold them life insurance or a terrible annuity. Your spouse may not know as much as you do about the financial advice world, and doesn’t feel confident about finding a planner to work with that they both like and trust.
Or maybe they just don’t feel comfortable opening up to a stranger about their money.
Whatever the reason, it’s going to make perfect sense to your significant other even if you don’t think it’s rational. Don’t dismiss their concerns. Listen first. From there, you may be able to answer their questions or share resources with them to alleviate worries, fears, or doubts.
If your partner doesn’t have specific concerns, but just doesn’t see the value in getting financial help, it may be more on you to do some initial legwork. If it’s important to you, do the preliminary research and then come back to your spouse with some specific options.
For example, instead of saying “I think we should get a financial planner,” and leaving it at that, do some digging and make a short list of 3 advisors you’re interested in — and explain to your partner why you picked those 3.
They may be more receptive to the idea of getting financial help if it doesn’t feel like such an overwhelming chore — and if they understand what they can expect before making any decisions.
Focus on Their Motivations
Getting financial help and then working on all the to-dos around your money that a financial plan sets out for you — budgeting, saving, investing, getting proper insurance policies and estate plans; the list goes on — isn’t exactly fun for most people.
It feels amazing to get your finances under control and make progress toward building wealth. But if you’re staring down the start of this process and have a lot of work to do to move from where you are to where you want to be?
That’s tough. It’s intimidating. And people are unlikely to do it just for the sake of doing it.
If your partner is reluctant to get a financial planner (or just doesn’t want to get on board with working your wealth together), they may just lack a good reason why. In other words, they might not have the same motivation you do.
To get their buy-in, you need to consider what does motivate them. What’s important? What makes hard stuff worth it for them? What kind of outcome would make them interested in taking action to get to it?
If your spouse has a business idea they’d love to explore because they want to quit their day job, for example, that could be excellent motivation for taking necessary actions together to increase your household financial stability so they can pursue entrepreneurship.
Forcing someone to do what they don’t want is a losing game. But talking about what motivates each of you could be a gamechanger.
Consider Your Options
Not all financial planners are the same or created equal — but if your partner doesn’t know that, they may be very reluctant to get on board with the idea of asking for financial help.
They may have one idea of what a “financial advisor” does, but they may have no idea how many different types of planners are out there. There’s a difference, for example, between someone who is “fee-only” and someone who earns commissions selling products.
There’s also a big difference between advisors who will only work with you if you have a million bucks in the bank and those that offer comprehensive financial planning advice without requiring you to let them manage your money.
If your spouse doesn’t know this, they may not be very keen on getting financial help. Be sure to let them know they have plenty of options — including what specific kind of support they receive.
You and your family can get the kind of help you need, which could range anywhere from a quick consult to an ongoing relationship that lasts years. Here are just a few of your financial planning options:
- A one-time meeting for a deep dive into a specific area
- A one-time plan that may come with several meetings, but with a specific end date and deliverable (in the form of your financial plan that you can then take and implement)
- An ongoing relationship where you get access, accountability, and guidance from a financial professional who’s available via email and through scheduled meetings to put you on the right track — and keep you there
- An expert who can help you manage your investments or make smarter investment choices if you need advice in that area
Find the Right Time to Start the Conversation
No matter what your situation, you need to talk to your significant other about getting the financial help you need to work your wealth. You’ll need to hear their concerns and questions, and you might need to do some work in getting them answers before they agree to move forward.
But you also need to consider the timing of that conversation. Don’t badger or nag them about it the minute they come home from a stressful day at work; don’t get into a situation where you need to shout over your screaming toddlers about making the decision.
And finally, don’t make accusations or threats. Your finances are extremely important and it can be stressful when you’re on board with making necessary changes but your partner isn’t — but instead of blaming them for that or accusing them of something, consider sharing why this means so much to you.
Share what motivates you, and what you hope to accomplish if you can better your family’s financial situation. Explain why you would appreciate the support and expertise of a professional (and objective!) financial planner who can give you more confidence and clarity around money.
Seeing your passion, drive, and motivation to help your family to a better financial place may be all your partner needs to get on board with the idea of seeking financial help.
Career, Cash Flow, Financial Planning, Goals, Human Capital, Income, Marriage, Newlyweds, Relationships & Money, Saving
We still have a long way to go for equality, but here’s a stat that should make you want to cheer:
42% of working women with children say they’re a breadwinning woman — meaning they make more than their spouse and bring home the most income for their households.
That number is likely higher when you consider households where both women and men work and she earns more (but doesn’t have children; that 42% only counted moms).
While there’s absolutely nothing bad about making more money, you might have some unique challenges to face or consider when you make more than your spouse. Here’s what to think about (and how to handle both your finances and your feelings).
How to Work Your Wealth When She Makes More
There are some specific things you should consider for your finances when your work brings in more money than your spouse.
First, make sure you take care of your own retirement savings. Some research suggests that women save half as much as men (because they feel more obligated to take care of others before addressing their own needs), even though women usually live longer.
That’s a bad combination that can set you up for failure in your later years. Take advantage of a 401(k) if your job provides it.
Or set up the right retirement plan for entrepreneurs and make sure that, after paying taxes and business expenses, the next deduction from your gross revenues as a business owner goes toward funding that retirement account.
Then, you might want to look into a spousal IRA — especially if your partner is a stay-at-home parent who doesn’t have an employer. Spousal IRAs allow husbands or wives to save (tax-efficiently) for retirement in a Roth or traditional IRA if:
- You’re married and file taxes jointly
- Your partner has zero income of their own
- Your income equals or exceeds their contributions to the account
The rules around contributions and deductions for tax purposes get tricky with spousal IRAs, but a financial planner who works with families where one spouse is the high earner and the other spouse stays at home to provide childcare can help you decide if a spousal IRA is a good money move to make.
Finally, if it’s possible, use some of your high earnings to purchase some more time or peace of mind for yourself. Think outsourcing unpleasant or time-consuming tasks like house cleaning, laundry, or grocery shopping and meal prep.
Why? Because numerous studies show women still do the bulk of household chores even when she’s the breadwinner in the family. In fact, one paper The Guardian looked at reported this depressing fact:
Dig deeper into the numbers, and things look worse: according to some studies, in heterosexual households where the woman is the main breadwinner, the more she earns, the less her partner will contribute to the housework.
As a breadwinning woman, you work hard enough when you’re at work. You shouldn’t need to manage second, third, and fourth jobs as full-time house cleaner, nanny, and chef on top of all that.
Get Your Money Mindset Right as a Breadwinning Woman
These financial considerations are just one part of handling your household finances when you’re the breadwinner in the family. There’s also the mental and emotional side of things — and they can get a little weird.
But before we dig into that, let me begin by saying your money mindset should be super positive! Being a breadwinning woman is something to celebrate because it’s an accomplishment.
Just consider some of these stats about the gender pay gap you’ve had to overcome to become a breadwinning woman:
Still, it can feel hard to feel celebratory about how much you’ve overcome if you’re driven to succeed because of something like a scarcity mindset (or worrying you won’t have “enough” money).
Fearing you won’t have enough or that you’ll run out can seriously motivate you to earn more — at least in the short-term. In the long-term, it’s a sure way to feel perpetually exhausted, negative, stressed, and anxious about your money. If this is where your mindset is now, try:
- Knowing what’s actually going on with your finances. This means you need a budget that tracks your spending, an overall financial plan, and an investment strategy so you’re aware of the reality of your money. If you’re only guessing, you’ll probably always be afraid because the unknown is scary!
- Developing clear action steps. Goals and plans are one thing. But do you know how to reach them? Getting very specific about what you need to do with your money to create the life you love can help you feel more confident about actually making it happen. (If you don’t know where or how to start, click here.)
- Honestly assessing your money “scripts” or stories. What do you tell yourself about money? What do you believe about people who have money (or who lack it)? What does your income mean about you as a person? Be honest about your answers to these questions — and then realize that these are just stories. They’re subjective, not reality, and if they’re not serving you it’s time to replace them with scripts that empower and motivate you to work your wealth instead of feeling badly about it.
But what if your own mindset is no problem — and it’s your spouse that struggles with the idea of you making more?
Getting on the Same Page with a Spouse Who Makes Less
Your spouse may feel all kinds of ways about you earning more — and those ways likely have nothing to do with you and everything to do with how they feel about what their role in your family “should” be.
If your spouse saw being the breadwinner as part of their identity, your new position as breadwinning woman can feel like a serious conflict or even a threat.
And no, it’s not your job to get your spouse to work through these feelings, emotions, or conflicts. But you can be empathic, understanding, and supportive — by helping them:
- Find an objective third party to work through those internal thoughts or emotions with. That might be a therapist — or maybe it’s just a good family friend who as your best interests as a couple in mind and can provide an outlet for your spouse to have someone to talk to.
- Do what makes them feel more “masculine” — or just more valuable and helpful. If there are “manly” chores, get out of the way and let your spouse do them. Don’t try to micromanage or just do things yourself. Let your partner take full responsibility for the tasks you both decide are theirs to handle.
- Work on your finances like the team you are. Have monthly money dates, attend financial planning meetings together, and make financial choices around big decisions and long-term goals together.
What you don’t do can be just as important as a form of support for your spouse. Obviously, you don’t want to use your higher income as leverage in your relationship — or make your spouse the butt of any stay-at-home parent jokes.
Even though it may be tough (especially if you’re tempted to just shake your husband and tell him “oh stop being ridiculous and be happy our household has this kind of income!”), the best way to approach a spouse who struggles with the idea of you making more is with empathy.
If you need help, don’t force yourself to struggle through tough convos with your partner alone. Having a professional to help manage and moderate money discussions is invaluable, and can make a huge difference in how you work your wealth — together.
Financial Planning, Insurance, Investing, Millennials, My Thoughts
If you’re like many of my clients, at some point, an insurance salesperson will approach you and try and convince you that you need a universal life insurance policy. They may even call themselves an “advisor” or “financial planner” in the process.
In some cases, they’ll volunteer to do your financial planning for you, for free, if you only buy that universal life policy.
I’m here to tell you that they’re wrong. They’re not fiduciary financial planners or advisors (and they get a nice fat commission check when they manage to sell policies to you). And their “financial planning” is far from free because you’ll overpay for insurance you don’t even need.
Most people do not need universal life insurance, and those who buy universal life are proud owners of a financial product that is not the best fit for them.
Universal Life Insurance Is Not an Appropriate Investment Vehicle
This all may sound hard to believe because life insurance salespeople do an amazing job at pitching you on their products. They are salespeople, after all — it’s their job to sell you on what they have to offer!
One of their favorite lines is that universal life is an investment that can both protect your family and increase your wealth. While the right kind of life insurance can protect your dependents from financial hardship should you pass away while they rely on your income, insurance is not an investment.
It’s a product designed to do just that: protect your family from a hardship they might otherwise face if you (and your income) were not around to provide for them.
If you want to invest, you need to contribute to your 401(k) and Roth IRA. If you’re maxing out both those accounts, consider opening a taxable brokerage account and fund that as well.
That’s how you invest.
You Might Need Insurance — But You Don’t Need Universal Life Insurance
None of this is to say you don’t need life insurance. You very well might — and you definitely do if you have children or other dependents that rely on your income (which could include your spouse, even if they earn their own income too).
In this case, you likely need term life insurance which is very different than universal life. In both cases, these insurance policies do protect your beneficiary from financial hardship in the event of your death.
But term life insurance does this for a specific term, or set number of years (hence the name) and for a much, much lower cost. Here’s a quick rundown of the differences between the two:
Term Life Insurance | Universal Life Insurance |
| You get to choose how long your policy is — and therefore, how long you pay for it. | These policies last your entire life, no matter what — even if your insurance needs change. |
| Term life is very affordable, with low monthly premiums. | Universal life is extremely expensive, with high fees that eat away at its cash value. |
| You can’t borrow against the policy or get dividends from it — which you don’t need, because this is insurance, not an investment! | You could borrow against universal life and some policies offer dividends, but you can usually get a better return through proper investing within retirement or brokerage accounts. |
There’s a chance you don’t need any life insurance at all if you’re single, childless, and debt-free with no one relying on your income to survive. You certainly don’t need universal life insurance if you don’t even need a term policy!
Is Universal Life Bad and Out to Get You?
All this being said, there are cases where universal life insurance can make sense. But these instances are rare and usually involve very specific circumstances.
Extremely wealthy, high net worth families may want to consider this. You can use a universal life insurance policy to create liquidity — as in, cash outside of all your other wealth — that your beneficiaries can use to pay off expected estate taxes when you die.
You might also at least evaluate universal life if you have a special needs child or a dependent with special needs. It’s not automatically the right choice, but there are some instances where it could make sense depending on how the rest of your accounts and trusts are set up.
If You Need Insurance, You Probably Want to Stick to Term
For the vast majority of us, however, term life insurance provides the coverage we need at a low, affordable cost.
You’re better off getting a policy that only provides you with the coverage you need, when you need it — which is generally as long as you have minor children or family members who need your income.
If you don’t have kids, you and your spouse may not need any insurance at all (although it might make sense to at least consider disability insurance, which protects another important asset: your income while you’re still alive).
Then, with the cash you saved avoiding a overly expensive, high-fee universal insurance policy, invest in true investment accounts, like 401(k)s and Roth IRAs, to grow your wealth over time.
Career, Financial Planning, Goals, Income, Investing, Millennials, Retirement, Saving
Wondering, “how much do I need to retire?” It’s a good question, especially if you’re in your 20s and 30s. When you’re younger and earlier on in your career, you have plenty of time to think about what you want and then develop an action plan to actually make it happen.
But it’s also a tricky question because there’s no one right answer. What you want and when you want it will make the right steps for you to take look much different than what the person next to you needs to do to reach their goals.
This is where planning for or thinking about retirement can get overwhelming, and fast. There are just so many variables and options to consider!
That’s part of the value of hiring a financial planner who can figure this out with you. We’re trained to take complex questions like this and explore all the options so you get the best answer for you.
If you don’t have a planner, don’t just throw up your hands and give up on figuring out how much money you need to retire (or hit financial independence). You can at least begin the process of answering the “how much do I need to retire” question on your own by leveraging a few rules of thumb that will guide you to a specific number.
Here are 5 to try out and apply to your situation.
The Rule of 72
The Rule of 72 can help you understand the compounding effect — and may even motivate you to save more, now, so you can compound your money faster.
This math shortcut shows you how long it will take your money to double, based on the return you earn in your portfolio. Let’s say you expected to earn a 6 percent return. You would divide 72 by 6, which is 12.
In other words, if you earn a 6 percent return, it will take 12 years for your nest egg to double.
This gives you some sense of how long it will take to build the wealth you need to achieve your goals. But be aware that this rule really only works if you assume return rates between 6 and 10 percent. Outside that range, the rule of 72 is less reliable.
The 4% Rule
This rule doesn’t tell you how much money you need before you can retire, but it will let you test your current portfolio value to see if you’ve amassed enough wealth to live off your invested assets.
The 4% Rule says you can withdraw 4% of this amount each year. This is the “safe” withdrawal amount, meaning you won’t run out of money if you only take out that percentage.
Let’s say you have $500,000 of invested assets. That means you can safely take out $20,000 per year and you can reasonably expect to not run out of money. If you can live off $20,000 per year, then you can retire right now.
If not, keep saving and investing!
The “Multiply by 25” Rule
This is another super simple guideline and can give you the quickest answer to the “how much do I need to retire” question. (It’s also related to the 4 percent rule!)
How much do you want to spend per year in retirement? Take that number and multiply it by 25. For example, let’s say you wanted to spend $75,000 per year. According to this rule, you’d need at least $1,875,000 to retire and fund the lifestyle you want.
This rule is really straightforward, but it makes one big assumption about something that is entirely out of your control: how long you’ll live after you retire. Using this rule means you assume your retirement — or the time between when you stop working and when you die — is 25 years.
With people living longer (or retiring sooner), retirements that last 30 or even 35 years aren’t out of the question… and enjoying the same lifestyle for a decade longer is going to require a lot more money.
This rule also doesn’t account for things like taxes and inflation — but that’s where things tend to get complicated no matter what rule you use. It can be a good starting point, but you’ll want to do some additional retirement planning to make sure you set your goal high enough.
The Multiply-Your-Salary Rule
Another way to multiply your way to an answer is to consider your salary and your age. This will tell you how much you should have saved through every decade of your life in order to be on track to retiring with enough money to live off of.
Here’s how Fidelity recommends breaking this down:
- At 35, you should have 2 times your current salary in the bank. If you make $100,000, you should have $200,000 in your investment and retirement accounts.
- At 45, you need 4 times your salary. If you’re making $150,000 at this age, your investable assets should be about $600,000
- At 55, you’ll want to see 7 times your salary in the bank. If that’s still about $150,000 per year, you’ll need a nest egg worth $1,050,000.
The 10 Percent Rule
This rule isn’t so much about how much you need to retire, but provides a guideline for how you can get there. Most experts say that saving 10 percent of your salary over your working career will be enough to grow a sizeable nest egg by the time you’re in your mid-60s.
But that assumes a lot about what you want your life to look like over the next few decades. Do you really want to work well into your 60s? What if you can’t work before you hit that age? What if you feel comfortable investing more aggressively for the potential of a higher return?
It’s good to have a rule of thumb that dictates how much of your income you need to save — but 10 percent might be a little low if:
- You want to reach financial freedom earlier in life
- You want to have more flexibility and choice with your lifestyle once you reach retirement or financial freedom (only saving 10 percent during your working years might mean living on a strict budget in retirement)
- You don’t want to be forced to work into your 60s
- You didn’t start saving until your late 30s or 40s
Instead, I’d recommend saving 20 percent of your income — at a minimum. You should aim to save and invest even more if you have more aggressive financial goals, like early retirement or financial independence.
How Much Do I Need to Retire? A Financial Planner Can Tell You
The point of all these rules of thumb is to get you in the right ballpark. It narrows down the vast array of possibilities to a more manageable guesstimate — but it’s still just that, a guess.
Until you sit down with a financial planner who can actually run complex projections with various numbers, you may never know for sure how much you need to retire without running out of money, or how much in investable assets you need to have before you officially reach financial freedom.
If you don’t want to leave your financial future up to some rough guesswork, let’s chat further about what you hope to accomplish so we can develop an action plan that shows you how to make it happen.
Financial Planning, Income, Investing, Retirement, Saving, Tax Advantages
You’ve heard it over and over again as someone looking for good advice on growing wealth:
Contribute to a Roth IRA now when you’re younger, because you’ll probably be in a higher tax bracket later!
That could be true, because it’s reasonable to expect you’ll earn more as you advance through your career and gain more experience. The more you earn, the more you’ll pay in taxes, and Roths are helpful because the money you withdraw is tax free.
That means you’d pay less in taxes if you paid those taxes today on your Roth contributions (as opposed to other tax-advantaged accounts, like 401(k)s, where you don’t pay today but you do pay upon withdrawal in the future).
But “contribute to a Roth IRA” is not helpful advice at all if you can’t use a Roth in the first place. Roth IRAs come with income caps. For 2019, you can’t contribute to a Roth IRA if you’re single and your modified adjusted gross income is $137,000 or if you’re married and your MAGI is $203,000.
How to Get Around the Income Limits on Roth IRAs
Yes, there is. At least there is if you’re considering contributing to a Roth in the usual way (by pulling up your account and making a contribution).
But there are ways to get money into a Roth, even if you’re over the income limit… and there are also things to do with your money if you find you make too much to contribute normally.
Let’s look at how you can continue putting money into your Roth even if you make over $137,000 (or $203,000 as a married couple). That would be through a backdoor Roth conversion.
To do this, you’d contribute money to a traditional IRA, and then roll it over into a Roth IRA. This allows you to get money into a Roth even if you make over the income limit. There are pros and cons to doing this, and you’ll want to take into account the taxes you’ll need to pay on the rollover.
You’ll want to talk to (and work with) a financial planner before you do this. Making a mistake here could cost you big-time when it comes to taxes (and that’s in addition to what you’ll pay no matter what when you convert from a traditional to Roth IRA).
Plus, it simply may not be the right move to make, depending on your situation. A planner can help you evaluate your options and choose the best one.
In the meantime, you can also look at a few other steps to take if you make too much to contribute to a Roth IRA.
Where to Put Your Money If You Make Too Much to Contribute to a Roth IRA
There are many other things you can do with money available to save and invest than put it in a Roth IRA, so don’t get too hung up on the fact you can’t contribute normally anymore!
Why? For starters, Roth IRA contributions are low anyway. You can only save $6,000 per year if you’re under age 50, and as someone looking to accumulate and work their wealth you need to save far more than that per year.
You could easily stash that cash in another investment account, like a taxable brokerage account. No, you won’t enjoy as big of tax advantage seeing as you don’t get a tax break here at all. But that may not matter so much when you consider the tradeoff.
Remember, Roth IRAs are retirement accounts. They come with a lot of rules and stipulations around what you can do with the money you save there and when you can access it (without penalty).
A taxable brokerage account, on the other hand, allows you a lot more freedom and flexibility. You’ll want to invest here especially if you’re aiming for early retirement, so you can access your savings when you need to without facing fees for doing so before an official retirement age.
And don’t forget about your 401(k). If you’re not maxing that out, don’t worry about your Roth: contribute up to the limit in this retirement plan instead. You can contribute up to $19,000 in 2019.
Depending on your goals and financial situation, there are other investment vehicles to explore, too. You might want to invest in your business or in real estate.
If you want to evaluate what might be best when “Roth IRA” is no longer the default option, let’s chat about the best money moves you can make to work your wealth — and increase your net worth.
Budgeting, Cash Flow, Financial Planning, Income, Saving, Spending
Most people don’t think of “budget” as anything but a bad word. After all, the idea of budgeting likely makes you think of cracking down, being strict on spending, and missing out on the fun stuff that just happens to cost money.
The thing is, being really restrictive can pay off. The more you reduce your spending, the more you’ll have to save and invest. And that’s the end goal, right?
Yes, but be careful. Budgets are like diets: the more restrictive you are, the more likely you’ll rebel. An overly strict budget can be the very reason why you inhale an entire box of donuts when you happen upon them in the office, or completely blow way too much money on an impromptu shopping spree.
Even though you know it’s not good for you, it’s hard to resist after you’ve been deprived. So is there a better way to budget that doesn’t leave you feeling deprived, while still allowing you to save enough and spend wisely?
The answer is yes, and it’s all about creating something sustainable and balanced. Here’s why you need to do it, and how.
Why Your Strict, Detailed Budget Doesn’t Work
I believe budgets are powerful, but there’s a better way to use a budget than as a way to severely limit yourself and what you can do with your money.
Even if you think you can “tough it out” or believe your financial goals will keep you motivated enough to avoid temptation, there’s an entire mountain of research around this kind of thing. Specifically, studies have shown:
- We only have so much willpower to use, and eventually, we’ll run out.
- Decision fatigue is real (meaning, the more decisions we have to make the worse we get at making them, which can explain some money mistakes you might have made in the past).
- Humans aren’t good at managing temptation.
This tells us a few things. Number one, willpower isn’t enough. You can set strict budgets all you want, but it’s probably not going to do much good because eventually you’ll crack (we all do).
We run out of willpower, we make too many decisions and start making bad ones — and we feel exhausted the more we try to resist temptation (and because we’re exhausted we make even worse decisions; it’s a vicious cycle!).
Life Doesn’t Fit Neatly Into Tightly Defined Spending Categories
Ever seen a sample budget that lists out “$20 for toiletries,” “$50 for alcohol,” “$150 for groceries,” “$100 for transportation,” and on and on and on?
Budgets with a million line items are meant to capture every possible expense so nothing slips through the cracks. The problem? Life doesn’t arrange itself to fit neatly within these carefully organized categories of spending.
Some months you might spend $300 on groceries, and the next few months you might spend half that. One month you might hit the road a little more and see the amount of money you spend on gas go up, but then a few months later you find yourself walking, biking, or riding public transportation everywhere so your transportation expenses are next to $0.
You might find you spend $50 per month on average on something, but that might look different month-to-month — and you could drive yourself crazy trying to fit that specific expense into that average cost over and over again.
That can make strict budgeting unrealistic… and could leave you feel frustrated with the whole process and ready to give up.
But before you throw up your hands, consider this: what if your budget could work for you without being super strict?
How to Budget in a Way That Won’t Make You Crazy
Here’s one way to budget in a way that’s more balanced — and more realistic if you want to stick with it over time.
First, know how much money comes in every month. This is from your income sources (likely your paycheck or earnings from a business).
Then, determine how much you’ll pay yourself first. Account for things like:
Set up automatic contributions to those accounts so you don’t have any excuses for spending that money instead of saving it. Next, determine what’s left after you account for your savings.
Got that number? Good. That’s how much you can spend throughout the rest of the month, on whatever you want.
That does include fixed and flexible expenses, like rent and groceries. But it can also include whatever makes you happy each month, whether that’s travel, nice dinners out, or a few new items for your wardrobe.
As long as you took care of your savings first and pay your bills and necessary costs, you don’t have to strictly allocate every other dollar and cent. You can spend freely with the money you have left (but once it’s gone, of course, it’s gone!)
This allows you to spend on what’s important without worrying if you went “over” in a certain budget category (since you’ll likely spend less or nothing at all in other categories that might be more important to someone else but that you don’t value as much).
The bottom line? Budgeting doesn’t have to be overly complicated or super strict.
Use yours to be responsible about what you need to save and invest and what bills you need to pay — but beyond that, don’t stress yourself out trying to choose the precise amount you might spend on Amazon this month and holding yourself to it.
Your budget can help you see where your money really goes, and help you identify how you can cut back in one place to make room for something else — if you so choose.
The great thing about a less detailed budget is that it provides more room for freedom to spend the way you really want.
Budgeting, Cash Flow, Credit Cards, Holidays, Saving, Spending, Travel
You have a lot you want to accomplish and do in your life. And your goals probably look different than the goals of the person sitting next to you — with one exception.
Almost everyone I talk to shares the desire to travel more. It seems like traveling is the one thing we all want to do, whether it’s taking an exotic vacation, backpacking through a foreign country, or just experiencing and seeing new things.
The thing is, no matter what kind of traveling you want to do, it’s going to cost money. But your travel plans don’t have to break your budget if you know how to leverage the tools and resources available to you.
There are some amazing apps and websites out there that can not only make planning your trip and enjoying the sights better and easier, but also save you some money in the process.
Before you head out on your next adventure, try out my favorites for travel hacking (and money saving along the way!).
Your budget is what it is. Instead of fighting it (or just blowing it), work with it. Wander will help you do just that, by suggesting destinations based on what you can realistically spend.
Even if you feel like you have some flexibility on your spending, Wander can still be a useful tool for brainstorming future trips. Let the app suggest new places to go that you might not have considered on your own!
Some of the best trips are the spontaneous, last-minute ones — but if you like to jump on last-minute plans, you know that approach can sometimes backfire. Prices can be sky-high if you want to book a room close to your travel date (and that assumes there are rooms available at all).
But if you use HotelTonight, you can still play your travels by ear and find the hotels offering last-minute rooms for really low prices. Hotels share their available rooms on the app, and then you can book one to stay within the week for a reduced rate.
Making on-the-fly decisions doesn’t work for everyone. You might not have that kind of flexibility in your schedule — or leaving important travel details, like where you’re staying, up in the air until the day-of might just drive you crazy!
You can still save money on accommodations if you’re willing to check out hostels instead of hotels. But finding a good one can be stressful. You want to save money, but you might not want to stay in what feels like a throwback to your college dorm days.
HostelWorld makes the search easier, helping you connect with hostels that offer the amenities you want or can cater to your needs. The app allows you to search for specific features, like private rooms or bathrooms.
And of course, there are always sites like Airbnb and Kayak that can help you find other good deals on places to stay while traveling.
Why bother looking for “cheaper” when you could just stay somewhere on your travels for free?
It’s possible to do if you can connect with a homeowner that needs a house sitter for a period of time. Trusted Housesitters does just that, helping people who own homes but may be away for extended periods of time find people they can trust take care of the property while they’re gone.
To make this travel hack work for you, you do need to have some experience, references, and knowledge on how to set up a profile that appeals to homeowners. There are lots of resources and blogs that can help you learn more, like The Money Smart Nomad. And Trusted Housesitters runs their own blog that can help teach you how to get started.
Yes, Twitter is a social media app and not a dedicated travel or money-saving tool… but there are a lot of accounts on social media dedicated to finding and sharing travel hacking tips, deals, and savings tips.
Follow accounts like Airfare Watchdog to find good prices on flights across airlines, or someone like The Points Guy if you want to make the absolute most of those credit card points you accumulate through your everyday spending.
Cheap flights are out there. But finding them can take some time and effort — and you’re busy. You don’t exactly have the ability to spend hours and hours to search every corner of the web for the best airfare.
That’s what Scott’s Cheap Flights is for. The site offers both free and paid memberships, and sends great flight deals to subscribers of all plans on a regular basis.
7. Your Credit Card’s Rewards Program
If you can manage your credit wisely, choosing a credit card that offers powerful travel rewards can be a great way to save money on your trips and travel costs. Instead of paying cash, you could redeem points for hotels, flights, and more.
This is probably not a good money-saving tip if you…
- Already have a lot of credit card debt
- Tend to overspend when you use credit or struggle to stick to your budget
- Buy stuff just to get points (rather than using your card to earn points on purchases you needed to make anyway, like groceries or your bills)
- Have a low credit score and are focused on improving it
You might want to discuss your options with your financial planner before you actively use a credit card as a way to travel hack or save money on your trips. But if you use your credit cards responsibly, good rewards programs could save you a lot of money.
Nerdwallet can help you compare different travel rewards cards, so you can get the one that works best with the kind of spending you do most often.
Want More Travel Hacking and Money Saving Tips?
Be sure to check out past posts I’ve done on this topic, like this one here. That will give you even more suggestions on apps and tools you can use to plan out your travels and save money along the way.
Or, if you want to really level up your travel and financial planning, we can work together to create a solid financial plan that makes space for what you care about most — like adventures, the ability to explore, and trips that allow you to see more of the world.
Click here to learn more about how it works!
Budgeting, Credit Cards, Holidays, Kids & Money, Marriage, Parents, Saving, Travel
When you have kids, your priorities shift and change. It’s no longer all about you and what you want — you have these little humans who depend on you completely for everything they need.
No pressure, right?
Don’t get me wrong: being a parent is wonderful and the best thing in the entire world. At the same time, there’s no denying raising kids is exhausting and gives you even more reason to need your next vacation.
Which you can have, even when you have young kids and you want to stick to a tighter budget. Here are some of my favorite tips for creating a great trip for your family when you have young kids (and still want to enjoy yourself while traveling).
Beat High Prices and Crowds: Travel on a Budget with Young Kids by Using Shoulder Seasons
One of the easiest things you can do to plan a cheaper, more relaxing trip for you and your family? Travel in shoulder seasons rather than at the peak of the tourist season for the area you want to visit.
Shoulder seasons are the “in-between” times, usually in the spring and fall when they weather is decent but may not be the absolute best the region receives. These seasons are also usually when older kids are in school.
These times can both be cheaper and less stressful to travel within because there are less people trying to get to the same place. Less demand means lower prices for hotels and flights. And less people traveling means fewer crowds to hustle and bustle around with.
Our family is full of huge Disney fans and being located in Southern California means Annual Disneyland Passes are a part of our travel budget. Instead of heading up on the weekends, though, we tend to opt for trips on Tuesdays and Wednesdays when the crowds are lighter and navigating around with a stroller is much easier.
Use Your Credit Card Points and Perks
If you’re a responsible credit card user, take advantage of rewards points that you rack up throughout the year. This will allow you to exchange points for travel, rather than cash.
And depending on what kind of card you have, you might also be able to enjoy other benefits or perks. Some cards get you access to special events or discounted tickets. Others could offer you sales and deals off normal prices — which may equate to a cheap spa day for you.
If you’re really into travel hacking and strategically using credit cards to accumulate lots of points, you might want to reach out to travel and money bloggers who can actually help plan a trip for you.
Some bloggers, like Holly Johnson of Club Thrifty, will help families plan specific trip itineraries and give suggestions on things like flights or hotels. The service is free, with the idea being you’ll sign up for a specific credit card as part of the process.
That credit card will help you get the rewards points you need for the trip — and when you sign up for the card through a blogger, the blogger gets a kickback from the credit card company. If you have any questions about how it works, ask. If the blogger doesn’t disclose how they get paid, look for another resources to help you.
Make Sure Your Kids Will Have Stuff to Do (and Time to Rest)
As long as you keep your kids engaged during the trip, traveling with younger children doesn’t have to be impossible. Think about all the stages of your trip ahead of time and map out solutions to potential problems.
Will your kids have places to get their energy out? Just as importantly, will there be time for them to rest and recharge so they’re not running on empty (and having meltdowns because of it)?
Plan your trip around what you want to do with your family and the realities about what your kids need and can or can’t do, rather than worrying about a specific destination. And then prioritize those experiences over things like shopping or buying stuff while you’re on your trip.
Not only will you save money this way — but you and your kids will likely have a better time, since experiences tend to bring us more happiness than material things.
Consider Extra Kid-Specific Costs or Gear
Sometimes, kids can get in free or for reduced rates at attractions, museums, and other locations during your travels (and if you can plan to visit those places, it might help keep your overall travel costs in check).
But other times, kids will cost you more when you travel. You can use various money-saving tips to help offset those added expenses (like using coupons, looking for deals, leveraging credit card points, and so on), or you can simply plan for it and budget appropriately.
The latter is a good option when spending a little more money means a lot more convenience, comfort, and simplicity — all key things you need when traveling with young kids. An example of how you can buy these for yourself might be renting baby and toddler gear rather than bringing your own with you.
TravelMamas explains the benefits of renting some gear instead of hauling everything along with you — and also provides a directory of suppliers for rentals by location.
We’re fans of renting car seats along with rental cars when we travel now, because honestly – who really wants to lug a carseat on an airplane?
Don’t Skimp on Your Own Research
There are a ton of blogs out there that can help you get started with travel hacking, traveling with kids, saving money, and more — so take advantage of it.
Google, read travel blogs, check out books from the library to figure out where the deals are or what touristy activities aren’t worth the hype or the cost, and so on.
My favorite thing to do these days is add “with a three year old” or “with a baby” after all the destinations we’re considering for a vacation. That lead us to realize (not so surprisingly), that a trip to Hawaii would not be as relaxing as we’d want and all of the activities we would be able to do are the same we have access to in San Diego.
Why torture ourselves with a plane ride with kids for more of the same?
Have a Plan… But Be Willing to Let It Go
Keep in mind that while plans are important, Plan B might be letting go of all your carefully arranged itineraries if stuff goes sideways while you’re on the road.
Being able to adapt and roll with whatever comes your way, rather than clinging to a really specific idea of what you wanted your trip to look like, will help you and your kids have a better time.
Entrepreneur, Financial Planning, Goals, Income, Insurance, Investing, Retirement, Saving, Spending, Taxes
Forgetting something?
If you’re an entrepreneur, it would be completely understandable if you lost track of a thing or two.
You probably have a thousand thoughts running through your mind 24/7. Add in your never-ending to-do list, tasks that need to be outsourced or delegated, and big ideas you want to tackle, and it’s no wonder that some things may slip through the cracks.
Like, you know, some of the finer details of your financial plan.
Obviously, that’s not something you want to leave on your mental backburner. That’s why I’m giving you a quick reminder on the 5 things you need to make sure are taken care of to avoid putting your financial success and security at risk.
1. Saving for Your Own Retirement
The number-one financial concern you may be neglecting? Retirement savings.
It’s obvious when you stop to think about it, but many small business owners — as many of one-third of entrepreneurs! — don’t save for their own retirement or future financial freedom.
You may have gotten into business for yourself because you wanted the freedom and flexibility entrepreneurship offered over working for someone else. But getting stuck in your own business is just as bad as being trapped in someone else’s.
That’s what’s likely to happen if you fail to save for your own financial future. I get that it’s tough, especially without the benefit of something like an employer match to a retirement plan — but you can keep yourself covered by getting one of these plans made for small business owners.
2. Disability Insurance to Protect Your Earning Ability
When you’re young and building your business, your biggest asset probably isn’t the money you already saved in the bank. It’s your potential for earning, saving, and investing more money into the future.
But what would happen if you suddenly couldn’t work, run your business, or do anything to earn an income? You’d still have bills and living expenses, but no way to pay for them.
No one wants to think about worst-case scenarios, but the reality is things happen that we don’t foresee, plan for, or want to deal with. Life throws curveballs. We know that happens, even if we don’t know exactly what that curveball will look like.
That’s where the good news is, because it means we can plan for these things. You can protect yourself from a complete worst-case scenario — not having any income coming in — through disability insurance.
If you become injured or ill, disability insurance can kick in and provide you with an income stream so you can continue to support yourself or your family, even if you could no longer work.
3. Life Insurance to Protect Your Family
I know thinking about facing a disability is daunting enough — but we’re going to have to get a little darker, just for a moment. Disability insurance would only cover your income, which is important.
But if you were to face a true worst-case scenario and pass away, your family wouldn’t receive anything from a disability insurance policy. That’s why you need life insurance as well.
The purpose of life insurance is to protect someone who currently depends on your income from financial hardship should that income suddenly disappear through your passing. You need life insurance if you have a spouse (even if that person works) and if you have minor children.
You may also need what’s called “key man” insurance if you’re an entrepreneur. If your business couldn’t run without you, and something happened to you, this type of policy would help the company survive in your absence.
When you consider life insurance, know that most people just need term life. Unless you’re in a very special circumstance, whole life or permanent life insurance doesn’t make financial sense for most business owners and their families.
You can learn more about the insurance that’s appropriate for you in this episode of the Work Your Wealth podcast.
4. Your Business Continuity Plan
Your business doesn’t just need insurance to survive if something happened to you — you need a clear plan of how the company should continue to operate if you were no longer around to run it.
This is known as a business continuity plan, and yours should outline important topics like:
- Critical functions and responsibilities that need to be handled
- Roles and individuals who would be responsible for carrying out specific tasks
- Areas of the business that depend on each other (and would be impacted by your absence)
- Plans for maintaining normal operations even in a crisis situation
You may also want to include notes about what is most likely to be negatively impacted if you were no longer able to perform your duties, and create clear plans around how the business will recover from your loss.
Once you have what feels like an appropriate plan on paper, don’t just trust that it works. Test it and see how well it stands up to the stress it might one day be under. As you find flaws or holes in the plan, address those accordingly.
5. Professional Liability Insurance
There’s one more piece of protection planning you should do for your business (but may be forgetting about). Do you know what would happen if someone sued you or your business tomorrow for something they claim you’re liable for?
Without that insurance, your entire business could be at risk. If you provide professional services to other individuals or businesses, you need to at least consider some form of professional liability insurance.
Professional liability insurance (which is also known as errors and omissions insurance, or E&O), will cover you where general liability insurance will not. You might not think you need this because you don’t intend to do something bad or harmful to your clients, but mistakes happen.
E&O insurance includes issues over things like inaccurate advice, which can happen even when you have the best of intentions. This policy is just another way to cover your basis and ensure you don’t put everything you’ve worked hard to build at unnecessary risk.
As a busy entrepreneur, these are just some of the things you need to consider and include in your financial plan. But there’s a chance you could forget other important factors that need your attention.
To make sure nothing slips through the cracks, double-check with a fee-only financial planner who can review your plan — and maybe even spot opportunities or potential pitfalls that you missed. Having a second set of eyes on your financial picture can give you a lot of added confidence and peace of mind.
Or, you can go the DIY route. Just make sure you get the right guide to use along the way. I’m in the process of writing that very guide right now! Click here to be the first to know when you can get Work Your Wealth for Entrepreneurs.
