Making Basic Financial Decisions

After attending a women’s conference on money management, I realized a dire need in communities for a basic financial understanding.

The majority of the lectures centered around living within your means, spending less than you make. While this is a good basis of thought, there are some holes in it.

First, if you don’t make enough to fund the basic necessities of life, no matter how much you pinch pennies, your income will never be enough.

Two, you can cut costs until your lifestyle is miserable.

Three, there are better options.

The first step to understanding personal finances is to track where your money is going. There are great apps and website accounts available for free that will help you set up budgets. Personally, I love mint.com and use their app.

https://www.mint.com/

It is eye opening to see where your money goes and how much you really spend on unnecessary things. This is where you can cut – the unnecessary items. By unnecessary I mean pedicures, eating out, and excessive shopping, to name a few.

If you cut out all unnecessary items and still are in the negative, stop.

If you cut anymore, this is where the miserable factor comes into play. You can always live on less, eat the notorious Ramen, cut your heating bill by small amounts, or wear the same clothes for ten years. However, to me this is not ideal.

So what are other options?

There’s really only one. Make more money.

How do you make more money? Make yourself more valuable. How do you do this? Take risks and invest in yourself. One option is to go to school, another is to find a better job, work more hours,  become an entrepreneur, or many others for your specific situation. Don't limit yourself on possibilities. Sometimes there are more than you realize. Below, I discuss the school option.

For example, if currently you make $10 an hour that equates to $20,800 a year. While student loans can be discouraging, not all debt is bad. A degree or technical certificate in an in-demand field will usually yield at minimum $40,000 a year starting out. This is $19,200 more in income a year. Even if student loans costs you $40,000 (which a community college associates degree or a local university can be much less) you still come out ahead. Here’s how.

On the $10 an hour job, you bring in $1200 a month. With a $40,000 a year job, you’ll bring in at minimum $2000 a month. If you have two children, your student loan payment based on income, could be less than $100 a month.

See this website for details on estimated repayment amounts.

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

You might be asking yourself, but is all the school work worth it?

Here’s another benefit. Usually, degree based fields receive higher raises. This means your income will grow more rapidly. For example, in five years you might make $50,000 a year, having earned a $10,000 yearly increase, compared to making $14 an hour, an $8,320 yearly increase.

Ask yourself this question. In five years would you rather be making $50,000 or $29,120 a year ($14 an hour)?

Believe in yourself, in your ability to achieve. Don’t hold yourself back.