Money Tips That Have Saved My Sanity

Over the years I have very much embraced the ebb and flow of money and my relationship with it. At times I have had an air of entitlement and believed that I knew all the ways that I was going to be rich by 27, riding around in my red Ferrari. 

News flash: at 35 I don't own my Ferrari yet, but I do have a plan for that dream to be my reality. In order to embrace the idea of Wealth creation I needed to learn first how to best manage my cents, so I can continue to multiply and manage my dollars. 

Coins with Seedling Growth

The top money tips that I have learned and implemented over the years are:

1. Live below my means - While this idea sounds simple, I have had various times in my life where living below my means was not feasible. From having too high of monthly costs, to too low of an income for what I owed in debt - I needed to learn how I could minimize my monthly expenses so that I wasn't just living within my means, but I was living well below my means.  Living below my means has enabled me to reduce my debt, live a life I love, while also building my Networth and creating a life I love. In order to effectively do this I needed to examine and decrease my monthly outflow, while also developing skills so that I could continuously increase my annual income. 

2. Avoid lifestyle inflation - Going along with the idea of living below my means, I next learned that when my income increased, the best way to pay off my debt and increase my Networth would be to avoid lifestyle inflation. Lifestyle inflation is when an increase in income is realized and nearly immediately the monthly spending increases to match the new income. Rather than increasing my monthly outflow by moving into a bigger apartment, getting another car, buying the latest and greatest (technology, clothing, make up, etc.) or increasing my spend on experiences I consciously choose to continue to live as I was when I was making $48,000 a year. Although I have not increased my monthly expenses to match my income, I have found ways to enjoy and appreciate the fruits of my income increases. After increasing my savings and debt repayments I do ensure that I am also saving for travel, and have a healthy play fund for experiences, gifts, self-care and splurges. 

3. Embrace Frugality - When I landed in Calgary in 2019 after being away for about 3.5 months, and not working for about 6 months I knew things had to change. I had depleted my cash savings, and also maxed out my credit card, line of credit, and nearly maxed out my overdraft. In order to reel my finances back in I needed to learn ways I could be more frugal, while still having the ability to embrace and appreciate the things in life that bring me joy. During this process I learned to lean on going to the library to rent books, taking public transit and walking everywhere, started bringing my lunch and coffee to work most days, and started working out consistently as I had the privilege of a free membership through the organization my sister was working for at the time. Embracing frugality is not about deprivation: to me it's about using my resources to invest in quality over quantity, making space to experience and appreciate the free or low cost services that are available in every city, and finding ways to enjoy simple pleasures like a delicious cup of coffee or smoothie, without it costing $5-$10+ per day.

4. Have a system - One of the first personal development books I self selected to read was "Secrets of the Millionaire Mind" by T. Harv Eker. That book got me hooked on the personal development journey I've been on since about 2009 (honestly - my mom tried putting me onto the industry when I was a rebellious tweenager but at the time I was too stubborn to believe she knew what she was talking about.) The book shares that one of the main differentiators between rich/wealth people and broke people are the way they think, and the way they manage their money and life. The strategy that is shared is to use a jar system in the following way:

  • Necessities: 55% of income for needs including housing, food, cars, insurance, clothing, etc.
  • Play: 10% of income to spoil yourself, your family and loved ones, and treat yourself to leisurely expenses
  • Long Term Savings For Spending: 10% of your income for vacations, rainy day fund, larger future expenses, etc.
  • Education: 10% of your income should be invested in education through mentoring, hiring a coach, buying books, attending courses, etc.
  • Financial Freedom: 10% of your income should be invested in stocks, mutual funds, passive income opportunities, real estate (that is not your personal residence), business, etc.
  • Give: 5% of your income for charitable donations. 

I have adapted the jar system to be more of a bank account system with a series of free bank accounts through multiple organizations where I have the funds direct deposited and then I am able to implement this system easily, and know exactly where my money is, and where I can draw from when I need to use some of the money for investments or purchases.

5. Track your numbers and re-evaluate regularly - This is a big one for me. While I was travelling in 2018/2019, and at various points in my life prior to that, I would go through phases were I would essentially burry my head in the sand and avoid logging in/checking accounts as I did not want to see, or feel the pressure of the "mess" I had created. When I began to seriously track my numbers, both incoming and outgoing, I was able to get a better understanding of where I indulge, the experiences and expenses that are vital for the life I love to live, and where I am over spending or investing in things that are not bringing me joy (*cough cough* copious amounts of weed and nights out drinking). By regularly logging into my accounts and tracking my expenses using Mint I am able to easily identify places that I could decrease consistent monthly costs, better manage my spending, and where I may need to readjust either my spend, or the resources allocated to a category based on what is really happening in my life. 

As a bonus, I've also implemented a value based investment strategy. This is a strategy that I learned through an investor named Phil Town, founder of Rule One Investing. Using this strategy, rather than purchase (for example a new iPhone, or changing phone companies) I first choose to invest enough money in the stocks of the companies I value enough that I would be willing to buy their products. Sticking with an iPhone as my example, rather than buying a new iPhone I invested a few thousand into AAPL stock so that when I do actually need a new phone (not purchasing just because a new one was released) I will at least be supporting an organization that I have some ownership in. Please note I am invested in other companies also, and this is not specifically an endorsement for AAPL stock or encouragement to invest in the company but personal example of one portion of my strategy where in I invest in companies whose products and services I actively use and will continue to use or support in the future. 

I hope you find the six tips helpful for your money management journey! I'd love to hear which of the tips resonates the most with you either through a comment below or via instagram @meghanswim

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