6 Steps For Mastering Your Money

The key to building a strong foundation that will provide the sturdy roots from what you can stretch, bend and try new things and rest assured that you will always be safe and secure is mastering your money. In this week’s Simple Sophisticate podcast, listeners will discover the 6 Basic Steps to Mastering their Money. […] Listen now or continue reading below.


The key to building a strong foundation that will provide the sturdy roots from what you can stretch, bend and try new things and rest assured that you will always be safe and secure is mastering your money. In this week’s Simple Sophisticate podcast, listeners will discover the 6 Basic Steps to Mastering their Money.  Tune in, and find all of the mentioned links, books and other information listed below in the Show Notes.

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SHOW NOTES:

{Note: more details and conversation occurs on the podcast, but below is an overview of what is discussed.}

Some people hear the word money and they cringe; others hear the word and they immediately think of opportunity. Today, I’m going to share with you six steps for mastering your money so that you can enjoy the process and value that money can bring into your life if handled well, and maybe you might just find a new respect for it.

Rather than dreading dealing with your money every month, it really can become an engaging process in which you begin to celebrate your life and become more engaged with your money and master it so that you can use that energy to propel you forward to pursue your dreams.

Simply being flush with money and living a lavish lifestyle doesn’t guarantee that you will be happy. However, while this lesson is undoubtedly true, let’s put money into context with our everyday lives. In order to thrive in any environment we must first come to understand how money functions in our lives and more importantly in the world we live in.

If you look at the basics of money, what it is is a source of energy that assesses the value of whatever is you are wanting to buy. And upon transferring that money, you are transferring that power – the money – to another individual, and they are gaining more energy (money). So basically you want enough energy to not only survive, but to thrive.

So today I’m going to share with you ix simple steps you can follow to get to that point of thriving.

1. Understand Where You Are Spending Your Money

Once you know where your money is going once you’ve received each hard-worked for paycheck, you can make a plan that is tailored to what you need and what you think you need, but are actually wants. So in order to accurately determine what is a need (necessity) and what is a want (discretionary), go through your past month’s bank statement and put each expenditure in one of those two categories. At this point we are just trying to bring awareness to our spending habits. The goal right now is to build our knowledge – where is our money going. Once each item is placed in one of the two categories, fine tune the expenditures (eating out, utitilies, travel, etc).

If you are sharing a budget with someone else – roommate, significant other, etc – make sure all parties are going through this process. The more knowledge you have about where your money is going, the more successful you will be in any pursuit moving forward.

2. Create a Budget

Setting up an itemized monthly budget needs to be as simple as necessary for the needs you have. By keeping it simple, you are creating a task that is something you are less likely to put off and won’t dread. Keeping a simple budget respects your time and anyone else’s who is part of your budget as well. Once you’ve mastered a simple budget, then feel free to get creative, but if you’re first starting out, don’t make extra work or stress for yourself.

After doing the math at the end of your month, your goal is to be cheering, celebrating how well you are handling the money you earn each month, but if there are times you are not, just know that in order to be successful with your money you must know where it’s going. And by creating a budget, you are striking out in the right direction. Success will come only when we are honest with ourselves about our spending habits so that we can correct behaviors that may not be serving us well.

The last step in creating a budget is making a monthly date with yourself to sit down and work through the numbers. Block out this time as you would for an appointment with your doctor – it is that important. And even if you don’t enjoy doing it at first, if you avoid this date, each day you don’t know where you are financially will only be that much more stressful. So trust me when I say, this is a date you don’t want to skip. Your dreams are at stake, and believe it or not, they do want to come true.

3. Find Ways to Trim the Budget

Now that you know where your money is going and how much money you have, make sure you are honest with yourself about where you can cut some corners. Whether you need to begin trimming the budget or not, there are simple ways to cut costs each month. (Examples shared on the podcast or see links below.)

4. Credit Card Mastery

Believe it or not, credit cards aren’t bad, but they can easily become a monster in our closet that we don’t want to look at or address if we misuse them. No one wants to create these monsters, but the beauty is because it’s a self-created monster, we can rid it from our lives. So long as we understand the power of a credit card, we can master it.

The benefits of having a credit card and using it well: (1) It can build our credit score (2) Allows wiggle room for big ticket items so long as we can pay it off in full each month, (3) Rewards – travel, etc. While I don’t advocate for getting rid of credit cards altogether unless you absolutely can’t be trusted with them, limiting the number of cards you have is a wise decision. Having one credit card that works best for your needs is a surefire way to successfully master your money. Be savvy about finding the best rate and understanding the rewards and benefits and determining what works best for your use of the card.

5. Invest Regularly To Create a Peace of Mind

In David Bach’s book Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding Your Dreams, the three baskets of savings are introduced: retirement, emergency and dreams. And having adopted this philosophy, I have found it to be greatly beneficial as it provides peace of mind for the future, a sound night’s sleep as I’m prepared for the unknown and excitement as I plan for dream vacations and expenditures. Ten to 15 percent (sometimes 20%) of our monthly budget should be divided into these three baskets. While retirement will receive the largest chunk (10-15%), make sure to fill the other two baskets as well. No matter how small, simply starting now will help to jump start the compound interest that will take place as time goes by.

6. Create Monthly Money Rituals

While at first it may seem impossible that enjoyable rituals can be associated with money management, here are a few ways that your monthly money rituals can be something you look forward to doing or at least help you to keep your spending in check which ultimately brings a better night’s sleep: respect your monthly budget limits, use cash as much as possible, plan one week a month in which you spend nothing, wait 24 hours before making big ticket purchases, or use a traditional check register to record daily spending.

Once you become the master of your money, you are dictating the terms of how your life will move forward. Granted you can’t control everything, but the more you take control of what is in your power, the more successful you will be.

LINKS:

~Happy Money: The Science of Happier Spending by Elizabeth Dunn & Michael Norton

~How to Get and Stay Out of Debt

~Simple Ways to Trim the Budget

~Blank Monthly Budget download (Excel instructions)

~Mint.com

~3 Baskets of Savings

~Taking Control of Your Spending (3 part series)

~Smart Women Finish Rich: 9 Steps to Achieving Financial Security and Funding Your Dreams by David Bach

~Money posts in the archives

~The BookChoosing The Simply Luxurious Life: A Modern Woman’s Guide

 

Petit Plaisir:

~TSLL Chocolat Chaud recipe

~David Leibovitz blog

Parisian Chocolat Chaud
adapted from David Leibovitz’s recipe
Yields: 4 Parisian servings (espresso cup amounts)

Ingredients:

  • 2 cups whole milk
  • 5 ounces of bittersweet dark chocolate – top quality (Scharffen Berger)
  • 2 tablespoons of brown sugar (optional)

Directions:

  1. Over medium heat in a medium saucepan, combine milk and chopped chocolate. Stir until mixed completely, one solid, lush chocolate color. For thicker chocolate, bring to a soft simmer for 2-3 minutes.
  2. Taste.
  3. Add brown sugar to taste.
  4. Pour and enjoy. (Refrigerate and reheat the next day on the stovetop over low to medium heat, stirring regularly.)

 ~Sur La Table espresso cups and saucers

~PREVIOUS PODCASTS YOU MIGHT ENJOY:

~8 Pillars to Building a Simply Luxurious Life (episode #1)



8 thoughts on “6 Steps For Mastering Your Money

  1. Hi Shannon, I have just downloaded these two podcasts from my hotel room in Paris! (how fitting!) I am saving them for my super long haul flight home to Australia on Wednesday and can’t wait to listen to them. Congratulations for taking this next step in your career!

  2. Just the post I needed!!

    Really helped! I am setting a date to make a true budget!

    The petit pleasure was incroyable! Tonight I am definitely making the Chocolat Chaud for dessert!! 🙂

    Can’t wait for next monday!

    ~KT

  3. Hi Shannon,

    Enjoyed listening to your podcast this morning. It is a very timely subject for me.

    May I suggest that for your next podcast that you lower the volume of your background music? It may it difficult, at times, to focus on your great content.

    Thank you.

  4. May I recommend youneedabudget.com? I’ve just started using this software and after 10 days I’m all in. It’s very forward-looking, as opposed to just seeing where your money went. There’s a free trial, and if you like it, a one time cost of $60. It has a bit of a learning curve, but there are excellent support articles.

  5. Shannon that was a great podcast! I loved #5. Here in Australia we have investment in superannuation (retirement) and I do save for emergencies but my dream basket tends to wait for dribs and drabs. I’m starting 5% now!

    1. Abby,

      The best way is to click on the iTunes button underneath the audio image on each podcast post. Then you will be taken to the iTunes Store where you can email it to yourself or download on your iPod or iPhone. Let me know you this isn’t working for you.
      ThAnk you for tuning in!

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