Coming up, we’re going to do our first Q&A post where I’ll answer questions from readers. So many good questions have already come in. Please keep them coming! Leave a comment below, subscribe to our newsletter, or find us on Instagram.
One question we already received was so good, I’ve answered it here in a dedicated post. The question came from someone that I love to talk money with. He read the Think and Talk Money Welcome Post where I mentioned that my credit card debt was partially due to having Chicago Cubs season tickets.
He knows that I’m a big Cubs fan and asked me if I would I really trade all those great experiences and memories just to save money.
It’s such a good question because it points to the intersection of money and life. It took me all of two seconds to know and feel the answer was, of course, “No, I would not have given up my Cubs tickets.”
He was absolutely right. If I gave up my tickets in 2010 when I was struggling with debt, I never would have been in the stadium in 2016 with my family for the Cubs’ World Series run. Those are some of the best memories I have.
In hindsight, I would have done some things differently so I could enjoy the experiences without the money worries. Let’s talk about that.
But first, story time.
Our nice friends, Phil and April.
Throughout that World Series run, we sat next to the nicest couple in the world, Phil and April. Phil was a diehard Cubs fan. April was more reserved. Both were smart and very friendly. They were enjoyable people to sit with. We chatted baseball, mostly. Pitching changes. Send the runner. Question the manager. That sort of thing. Completely normal, unremarkable stuff.
Game 5 was played on a crisp, October evening. Jackets and beanies weather in Chicago. Phil and April were sitting next to my brother and I, as usual. Mike Napoli was playing first base for Cleveland.
Around the 3rd inning, a jerk four rows in front of us taunted Napoli with a crude, juvenile insult. It was apparent the jerk was doing his part to keep Old Style in business for another year.
Phil was nice…and tough.
Anyway, the rest of our section was none too pleased with the jerk’s shameful display. Nobody was more displeased than Phil, who did what the rest of us were thinking but were too scared to do ourselves. Phil stood up. In so many words, Phil sternly recommended that the jerk knock it off and show some class.
The jerk turned around, aggressively scanning the crowd for the man who had publicly shamed him. The jerk had that unmistakable look in his eye that meant, “Let’s dance.” My brother and I were a bit worried for our nice… and all of a sudden tough…friend, Phil.
April did not look worried. She sat there like nothing strange was happening. Almost like she had seen this movie before.
When the jerk locked eyes with Phil, he immediately saw that Phil was happy to accept the invitation to tango. Well, the jerk was sloppy, but he had enough sense to recognize that he wanted no piece of Phil. He wisely turned back around and sat down quietly.
That was the last we heard from the jerk that night. Our nice, and now confirmed tough friend Phil had restored order.
Phil’s on TV!
On the day of the Cubs’ championship parade, my brother called me excitedly, “Phil’s on TV! Phil’s on TV!” It didn’t register right away who he was talking about. When I turned on the TV, sure enough, there was Phil, our World Series friend. I was so confused. Phil was giving an interview on set with the Cubs announcers. Our nice (and tough) friend, Phil? On TV?
I turned up the volume and listened to Phil talk about his experience watching the Cubs win the World Series. Maybe I was hoping he’d mention his nice friend, Matt. He didn’t.
I still couldn’t figure out why Phil was on TV. Why won’t they just put his name on the screen already!?
It wasn’t until the end of the interview that I learned who Phil was. All I could do was laugh.
Our nice, and confirmed tough, friend Phil is better known as World Wresting Entertainment (WWE) champion and icon, CM Punk.
His wife? WWE champion and bestselling author, AJ Mendez.
Life, huh?
A memory I wouldn’t trade for anything.
As much fun as the World Series was, my favorite Cubs memory actually took place during the 2015 season, the year before they won the World Series. It was during the 7th inning of Game 4 of the NLDS. This was the game where the Cubs knocked the rival St. Louis Cardinals out of the playoffs.
The entire stadium was rocking so loud, you could feel the ground shaking beneath your feet. Every fan was jumping up and down, hugging anyone close enough to touch. We were all dancing like nobody was watching. That moment was pure happiness.
I was there with my mom. A lifelong Chicagoan, she too was jumping up and down and high-fiving all the other diehard fans in our section. After the game, we met up with my wife at a restaurant and relived the victory over Champagne.
What does this have to do with money?
What does any of this have to do with money? When I said money was emotional, this is what I meant. I wouldn’t trade that memory with my mom for anything. My brother and I still joke about our nice friends, Phil and April.
These are the types of experiences that I want more of. These memories, and the desire for more like them, continue to motivate me today. I want to be good with money, not so I can stash it in the bank, but so I can use that money to create joy for me and my family.
So, to get back to my friend’s question. Would I really have given up my Cubs tickets? No, absolutely not.
What would I have done differently to keep the tickets but not the worries?
In hindsight, what could I have done differently so my Cubs tickets were not a major source of financial worry?
Even back then, I knew and felt that spending money on Cubs tickets was money well spent. I didn’t need to wait for hindsight to come to that conclusion.
That said, I would have put more thought into solutions to keep the tickets and the experiences without the debt and the shame. I would have looked at expenditures in my Now Money and Life Money buckets that were ripe for adjustment.
Maybe that would have meant giving up something else less meaningful, like my gym membership. Or, I could have looked into a side hustle as a way to earn more money, something we’ll explore at another time.
Whatever the solution was, I would have been more intentional with my decisions so my experiences were not overshadowed by my worries.
Talking money is really just talking life.
This was such a good question to illustrate a foundational concept of Think and Talk Money. Yes, we discuss money. But, we’re really talking about our lives and our experiences. Money is just a tool to help us.
And before you get cynical on me, of course money is not required for good experiences. That’s not the point. What I’m suggesting is that if you’re spending most of your time each week at your job, like most of us do, shouldn’t we think about the money we earn so we can maximize experiences like I had with my mom?
Think and Talk Money is all about awakening that thought process so we can use the tool of money to fuel meaningful lives. Would you use that tool to get you Cubs tickets? Or, do you prefer trips to Disney World? What if money is just the currency that you trade to get your time back, so you can do more of what you want with who you want?
Whatever it is that you’re after in life, thinking and talking about money will help get you there.
In Part 1 of our series on budgeting, we learned how to eliminate disappearing dollars by creating a plan for Now Money, Life Money, and Later Money.
In Part 2, we used a real life example to work through the budgeting process together. We learned that even seemingly minor adjustments can add major fuel to your Later Money bucket.
Here in Part 3, we’ll take a deep dive into my top 10 strategies for making thoughtful adjustments so we can consistently win the budget game.
1. See the ball go through the hoop.
When I was playing basketball growing up, I learned the concept of “seeing the ball go through the hoop.” When I was struggling to make a shot, my coach encouraged me to drive to the basket and make an easy shot. Once I saw that I could make an easy shot, I had my confidence back.
By seeing the ball go through the hoop, I subconsciously reminded myself that I could do it. There was nothing wrong with me. I was ready for more challenging shots.
Anyone who has been around young kids has witnessed this same phenomenon. My son is learning to swim. When he proudly drifted (with a life vest on) two feet from me on his own, he proudly exclaimed, “I’m swimming! I’m swimming!” It didn’t matter that neither his arms nor his legs were moving.
Once he saw that he could enjoy the pool without holding onto dad for dear life, he wanted nothing to do with me. He knew for himself that he could do it.
This concept works in a lot of different money situations, especially when making thoughtful adjustments to your budget. In our really lost boy example, we made small adjustments to our grocery budget, phone and internet bills, and social life spending.
These adjustments were easy to implement and added major fuel to our Later Money. Just as importantly, there was an additional psychological benefit in proving to ourselves that we could make improvements.
Start small. See the ball go through the hoop.
2. Don’t cancel your social life.
The point of starting small is to identify beneficial adjustments that are relatively painless. Focus on the “relatively painless” part. Canceling your social life will not be relatively painless. Your social life consists of ongoing experiences that bring you happiness. We always should strive for more of those experiences, not less. So, don’t cancel your social life.
Looking again to our really lost boy, you probably noticed that I made small adjustments to my Life Money. However, even those small adjustments did not result in less time with my friends.
This is a key point: I didn’t spend any less time with my friends than I did before. Instead, I thought and talked about alternatives so I could still see them without spending a lot of money.
In recent years, my students have thought and talked about some great examples of this concept in action. For example, say your friends are going out to dinner on Friday night. You know it’s going to be more expensive than what your Life Money permits.
Instead of going to the dinner (and wrecking your budget), or not going to the dinner (and being sad at home), what alternatives can you think of?
One student suggested you can meet your friends beforehand for happy hour. Another student suggested you take a pass on dinner and invite your friends over to your place later that weekend for coffee and bagels.
If you don’t want to spend your Life Money to go see Taylor Swift in concert, invite your friends over to watch the documentary on Netflix.
The common theme is that you still get to spend time with your friends, while keeping more money in your pocket.
3. Talk to your friends about Life Money.
Surprise, surprise! More talking! I recommend you talk to your friends about the thoughtful adjustments you’re implementing with your Life Money. Like in most life situations, communication is key.
Once your friends know that you are working on thoughtful choices in your Budget After Thinking, they will happily support you. They’ll know that you aren’t blowing them off. In the rare instance that they don’t support you in striving for your dreams? You may need to question if these are the right friends for you.
The art of budgeting is not about cutting, especially when it comes to things you love. Budgeting is about thinking and talking to find solutions or alternatives.
You can keep doing the things that bring you happiness at the same time you’re making progress on your life goals. It just takes a little bit of mental effort.
4. Keep on traveling.
Making small adjustments works in all areas of your budget, not just your social life. Let’s look at travel, a major expense, but also one of the best sources of life experiences for a lot of people.
For our really lost boy, cutting out travel completely was a nonstarter. My sister lived in Los Angeles, one brother lived in Washington D.C., and the other brother studied abroad in Spain. My best friends from college lived in New York and Virginia. My grandma was in South Carolina.
If I wanted to see my people, traveling was part of the deal.
Traveling was also a huge expense, and paying for all that travel brought me a lot of stress. I needed to think and talk about a solution so I could travel for less money. You know where this is going, don’t you?
Instead of exerting mental energy worrying about how to pay to travel, I exerted mental energy to master the game of frequent flyer miles and credit card points. I researched the best credit cards for travel points and how to best use those points for free flights and hotels.
I learned the most affordable days of the week to fly and the best times of the year to visit certain places. Yes, this took mental effort. But, this was more preferable mental effort than worrying about money.
Even if you don’t want to take these steps, you can still make thoughtful decisions about cutting back on even one or two trips a year, which I also did. I spent less money, but the added benefit was that I appreciated each trip even more.
I had more time to look forward to that trip and more time to remember it before another trip distracted me.
Do not use credit cards just to earn points.
This is not a recommendation. It’s a requirement. Stay tuned for a future post on responsibly using credit cards to earn free vacations.
For now, the only rule that matters is to not overly spend on your credit cards just to earn points. That is a recipe for disaster.
Using credit cards to travel only works to your advantage if you can pay your bills, in full and on time, each month.
“Triple points!!!”
Years ago, my friend and I were out to dinner with our wives at a nice neighborhood spot in Chicago. When the check came, I pulled out my credit card. He pulled out a debit card. I nearly fell out of my chair.
It’s not that using a debit card is a bad choice. It’s a great choice for a lot of people. In this instance, however, I was shocked because I knew this guy very well.
We had travelled all over Europe together. We had just spent most of dinner talking about trips we had taken and trips we wanted to take. This friend is also one of the smartest guys I know, a statement that I will forever deny and insist that I was hacked, if he ever reads this.
I was shocked he wasn’t using a credit card to earn points so he could travel for free.
I couldn’t help myself and had to ask my friend about the debit card. (What do you want from me, I like to talk about money.) Turns out he just never really thought about using a credit card. He wasn’t actively avoiding credit cards, he just didn’t know there were advantages to go along with the potential negatives (if you don’t pay your bills).
My friend was an instant convert. He was thrilled (maybe an understatement) to learn about how he could travel for free with credit card points. He began responsibly using credit cards and never looked back.
To this day, he won’t leave me alone any time he earns “TRIPLE POINTS!!!” or books a free vacation for his family. I love it.
5. Spark and cut.
Another one of my favorite tricks was inspired by Marie Kondo, famous for helping people de-clutter their houses by asking a simple question, “Does this item spark joy?” If it does, keep it. If it doesn’t, get rid of it. So simple, and so powerful.
Marie Kondo is an inspiration. In my opinion, there is no clearer display of brilliance than taking a complex matter (like organizing your house) and distilling into a simple, understandable idea.
We can apply the same strategy to any area of our spending. Does this subscription bring me joy? If yes, keep it. If not, cut it. Does this health club membership bring me joy? This expensive clothing store? What about attending concerts? Sporting events?
If these things don’t honestly bring you joy, cut them from your life and your budget. Italian beef or unagi? Either one is fine, if you’ve determined for yourself that it brings you joy.
When you spark and cut, you’ll create more money to fuel your Later Money goals. Just as important, you’ll likely find that you don’t miss those things or activities.
You’ll value your newfound time and freedom to pursue those remaining parts of your life with more dedication.
6. It’s OK if you occasionally exceed your spending.
What should you do if you overspend one month? Don’t get discouraged and give up. Before all your hard work goes to waste, take the next month to course correct. If you overspent by $300 in your Life Money in December, make it a priority to underspend by $300 in January.
Is this easier said than done? Well, sure. It’s always easier to say you’re going to do something. The hard part is following through. It will take discipline to get back on track. What will drive that discipline?
Once again, it’s your ultimate life motivations that we’ve talked so much about (and will always continue to talk about). Without that clear vision of your ideal life in front of you, no budget will ever last.
Don’t panic. Course correct. Stay on track.
7. Make a game out of it, like the $500 Challenge.
When I veer off track and have a bad spending month, I try to not get down on myself. I’m human. It happens. So, lemons to lemonade. I make a game out of it called “The $500 Challenge.”
My wife and I started playing The $500 Challenge years ago. The game was simple. Each of us had to limit our Life Money for the month to just $500. Whoever spent the least that month, won the game.
I’ve never won the game. My wife is… competitive. I cope by lying to myself that she wins because I enjoy paying on date nights.
We’ve played this game several times to course correct after a high spending month. January is the perfect time of year for this game since the holidays in December often result in overspending.
The $500 Challenge has many benefits. When we succeeded, we’d be right back on track for our goals. Even if we couldn’t quite stay under $500 (never an issue for my wife), this game still reminded us to to prioritize the experiences and things in life that truly mattered to us.
Get creative with nights out.
My favorite part of the game was it forced us to get creative with our nights out. One of my favorite date nights was a product of the $500 challenge.
We had just moved to our new neighborhood. It was a Friday night. People were out and the city was bumping, per usual in summertime Chicago. We set out for a walk to explore with only one rule: we had $20 to spend or less on dinner for two.
We weren’t going to waste that money on an Uber, so we just started walking. A couple miles later, having learned all about our new surroundings, we ended up at a casual restaurant we had never been to.
We ordered a plate of nachos to share off the happy hour menu. We even had enough money left for one of us to wash it down with a cold beer. The nachos were great and the vibe was perfect. The check, with tip? 19 bucks.
We walked home, which helped digest our dinner, and went to bed feeling light in the belly and heavy in the wallet.
8. Buy it if you want it, but not right away.
About 10 years ago, my mom bought me a jacket for a birthday present. It was the exact jacket I wanted. How did she know, I asked her. “You mentioned it when we were downtown four months ago.” Four months ago!
I shouldn’t have been surprised. My mom has one of those steel trap memories. If you only met her for five minutes and then saw her again two years later, don’t be surprised when she asks about your consulting gig, your trip to New Orleans, and that blue dress that she really liked.
I learned from my mom’s gift strategy and modified it to help myself resist the temptation to make impromptu purchases. I don’t have her memory, but I do have a phone with a notes function.
When I see something that I might want to buy, I do my best to resist the temptation of buying it immediately and make a note in my phone. After a couple weeks, if I still want that thing, I buy it.
More times than not, I no longer want whatever it was that tempted me in the moment.
9. You don’t have to go big or go home.
We’ve been focusing on smaller adjustments, but of course, bigger adjustments can have a bigger impact on your overall budget. Making bigger adjustments means examining your biggest expenditures, which for most people is housing and transportation.
If your life situation allows for big changes in these areas, you should by all means consider them. After all, reducing your housing costs by $500 by switching to a less expensive apartment opens up a lot of dollars to deploy as fuel elsewhere. That one decision can make a big impact.
The challenge that I have personally experienced with big adjustments and continue to observe in my students today? Making big adjustments is not realistic for everyone.
Let’s talk about switching up your housing situation. By going big in this scenario, you are giving up your home. This may be a realistic and intelligent decision for someone in their 20s, with no dependents, and living somewhere with ample housing units available.
On the other hand, moving to a new home may not be realistic for someone with children in school and strong roots in a particular community.
To advise that family to pack up their home and move away could be counterproductive. While they’ll save money, they’re giving up a part of their lives that may be very important to their overall happiness. That tradeoff might not be worth it.
The same rationale applies to transportation costs. Like our really lost boy, if you live in a city with public transportation, you probably don’t need a car (or an expensive parking spot).
If you have kids and regularly drive them to dance class, swimming, soccer, gymnastics, piano, music class, ski lessons, and grandma’s house (yes, this is my life right now), giving up your car is not realistic.
How can I adjust my rising housing costs without giving up my home?
It’s because of these complicated tradeoffs that I encourage everyone to start with small adjustments while you’re thinking about bigger adjustments. As you think and talk about the bigger adjustments, you may unlock other solutions that don’t require you to move.
For example, if you’re renting an apartment, you could negotiate with your landlord about locking in a longer term lease at a fixed rent. That way, you keep your largest Now Money expense consistent and avoid paying more each year as your lease renews.
I employed this strategy with great success when I rented an apartment in Chicago, generating a lot of fuel for my Later Money by staying in the same apartment for seven years.
This strategy works for families, too. A buddy recently moved to a new state with his wife and two kids. Instead of buying a house right away, he signed a four-year lease on the perfect home for his family. He has a wonderful place to live and his costs are fixed for the near future.
What can I do if I’m a homeowner?
If you’re a homeowner, what can you do to reduce your expenses without giving up your home? You may not want to re-finance your mortgage in today’s environment, but could you address other rising home ownership costs?
As an example, I recently re-caulked and re-grouted my shower. I had never done that before, but I watched a lot of YouTube videos like this one. The project took me a while, in small bursts, but doing so saved me close to $1,000.00.
I also felt satisfaction for learning something new and getting a job done despite my many frustrations along the way.
In the long run, is $1,000 saved going to pay off my mortgage? Of course not. This is just one example to illustrate that we can all use our mental energy to think about solutions, without giving up our homes.
This thought process can be repeated endless times, and does not only apply to DIY projects. From your couch, you can work on lowering costs related to home insurance, maintenance, and utilities by making phone calls or sending emails.
When you’ve trained yourself to exert mental energy to solve your rising home ownership costs, those savings will add up. You can lower your expenditures without giving up your house.
10. Plan ahead for budget busters.
Budget busters are any inconsistent expenditures, good or bad, that can derail your planning. Good budget busters might include trips, weddings, and holiday/birthday gift shopping. Bad budget busters include unexpected car repairs, home repairs, or medical expenses.
Note, budget busters are inconsistent; they are not unexpected. These expenditures are 100% predictable every year, we just don’t always know when they will surface. Planning ahead for budget busters is crucial to staying on track.
To do so, open up a savings account, preferably at a different bank than your checking account. This helps isolate those funds so those dollars don’t disappear.
As part of our really lost boy’s Budget After Thinking, you’ll recall that we had a separate line item for budget busters in both our Now Money (bad budget busters) and Life Money (good budget busters).
I encourage you to do the same. Each month that you don’t spend your budget buster money, transfer it to your savings account so it’s there when you need it.
One more bonus tip for dealing with budget busters. We talked above about how to course correct when you exceed your budget in one month. On the flip side, what should you do when you’ve had a great month and underspent?
I recommend you transfer the amount you underspent to your budget busters savings account. Don’t let that hard-earned money sit in your checking account. Those dollars will disappear. By transferring them to savings, those dollars will be at your disposal when needed.
We’ve covered a lot of ground here to help generate fuel for your Later Money. To recap:
My Top 10 strategies for adjusting your Budget After Thinking:
See the ball go through the hoop.
Don’t cancel your social life.
Talk to your friends about your life money.
Keep on traveling.
Spark and cut.
It’s OK if you occasionally exceed your spending.
Make a game out of it, like the $500 challenge.
Buy it if you want it, but not right away.
You don’t have to go big or go home.
Plan ahead for budget busters.
These are the strategies that have worked for me in the past and continue to work for me today. I hope you’ve see than budgeting does not have to be hard and nasty. It just takes a little mental energy, exerted ahead of time.
Whether these specific tips work for your personal situation isn’t the point. I promised you before that I won’t tell you what to do with your money. Review my tips and focus on the thought process to identify solutions that might work for you.
Have you used any of these strategies? What about other strategies that worked for you?
Drop a comment below or on the socials to keep the conversation going.
In Part 1 of our series on budgeting, we learned that the art of budgeting is having a plan for your next dollar before you earn it. That way, you avoid having disappearing dollars. It’s not a good feeling to work hard all month and then realize you have nothing to show for it.
We also learned the three steps to get started with a realistic budget based off your current personal situation:
Step 1: Track your spending for at least 3 months.
Step 2: Separate your spending into 3 main categories.
Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.
Here, in Part 2 of our series on budgeting, we’ll use a real life example to work through the budgeting process together. Through this example, you’ll see how even seemingly minor adjustments can make a big impact to your budget.
In Part 3, we’ll take a deep dive into my top 10 strategies for making thoughtful adjustments to our budgets so we can add more fuel to our financial and life goals.
Before we get ahead of ourselves, let’s meet a real life, really lost, boy.
Learning from a real life, really lost, boy.
In today’s budgeting example, we’ll look at real numbers from a real life, really lost, boy: 26-year-old Me. Remember when I told you I started a money journal in 2010? The dollar amounts below are what my actual income and spending looked like back then, adjusted for today’s dollars and rounded for easier math.
For some context, I was 26-years-old, living by myself in Chicago (no dependents, no pets), and working as a slasher. Not a joke, that was my actual job title. I worked for a judge with the Appellate Court of Illinois, and as the junior member of the team, my responsibilities included lawyer duties and secretarial duties. I was a judicial law clerk “slash” secretary. Hence, slasher. Lawyers are funny, huh?
In today’s dollars, I earned an annual salary of $90,000.00. That means I earned $7,500.00 per month. We did not have bonuses at the courthouse, so the $90,000.00 salary was my full compensation.
How to benefit from this budgeting example.
The benefit of going through an example like this is not to compare your situation to mine. Your income might be much higher or much lower. Same with your expenses. Instead of the numbers, focus on the thought process so you can start to think about adjustments that suit your current life.
Below, you’ll see charts showing that I completed each of our three budgeting steps:
Step 1: I tracked my spending for 3 months and reflected the average monthly amount for each expenditure in the column labeled “Baseline Budget.”
Step 2: I created a separate chart for each of the three main categories: Now Money, Life Money, and Later Money.
Step 3: I made thoughtful adjustments to better align my spending with my true motivations in life. I illustrated my decisions in the third column labeled “Budget After Thinking.”
Now Money
Now Money is what you need to pay for basic life expenses. These are expenses that you can’t avoid and should be relatively fixed each month. If you have expenses for kids, pets, and other fixed life expenses, be sure to include them in your Now Money category.
Now Money
Baseline Budget
Budget After Thinking
Apartment rent
$2,200
$2,200
Renter’s Insurance
$20
$20
Parking spot
$430
$0
Gas for car
$40
$40
Car Insurance
$50
$30
Car Maintenance
$150
$150
Utilities
$120
$120
Internet
$60
$30
Cell Phone
$55
$35
Groceries
$300
$240
Personal upkeep(wardrobe, haircuts, etc.)
$100
$75
Gym Membership
$360
$360
Budget Busters
$300
$300
Now Money Total
$4,185
$3,600
What I learned tracking Now Money.
Now Money is pretty easy to track. There is not a whole lot of variance from month to month.
You’ll notice immediately that I had one major expenditure that needed immediate adjustment. That parking spot for $430? Definitely did not need that. I lived 2 miles from work in one of the best cities for public transportation in the country. It was frustrating at times to look for street parking, but I didn’t use my car enough to justify the cost of a parking spot.
The other adjustments resulted in more minor savings, but don’t ignore these. Each adjustment took relatively no effort to make, just a little bit of thought beforehand. When I say relatively no effort, I mean three phone calls and three reductions for car insurance, internet, and cell phone. That’s $70 saved per month, or $840 saved per year, for about 30 minutes of effort.
Otherwise, I decided to show a bit more restraint when grocery shopping and found a cheaper place to get my haircut.
All told, I reduced my Now Money Budget After Thinking by $585 per month with a little bit of thought and hardly any effort. That’s $7,020 per year of fuel for my Later Money.
Life Money
Life Money is what you spend every month on things and experiences in life that you love.
Life Money
Baseline Budget
Budget After Thinking
Social Life (dining out, concerts, ball games, etc.)
$800
$700
Purchases (books, fun clothes, gifts, etc.)
$200
$150
Travel
$500/mo ($6,000/yr)
$400
Cubs Season Tickets
$400/mo ($4,800/yr)
$400
Budget Busters
$200
$200
Life Money Total
$2,100
$1,850
What I learned tracking Life Money.
When you’re reviewing your Life Money expenses, don’t be overly aggressive in cutting here. These are the things and experiences that make your life enjoyable. Even modest adjustments can make a big difference in the long run.
In Part 3 of our series on budgeting, I’ll show you my favorite strategies for adjusting your Life Money without sacrificing the things and experiences you love.
As we saw with Now Money, with some thought and very little effort, I reduced my Life Money Budget After Thinking by $250 per month. That’s another $3,000 of fuel for my Later Money.
Some bonus tips for tracking Life Money
Life Money is the most annoying category to accurately track. These expenses vary month-to-month. You may buy concert tickets or have a trip planned some months, but not every month. So, how do we get an accurate picture of our Life Money?
This is why I recommend you track your spending for at least three months. You’ll get a more accurate picture because you can average your Life Money spending over those 3 months and balance out any inconsistencies. Of course, if you have the patience to track your spending for even longer, you’ll get an even more accurate picture.
Fortunately, it is easier to track our spending today with the availability of apps and online banking platforms that can automatically track your spending. We’ll review some of these tracking options in a future post.
Keep it simple when tracking your Life Money.
I highly recommend you keep it simple when tracking your Life Money. Many of my students give up on budgeting because they make this category more complicated than it needs to be. I really struggled with this at first because I was so concerned about doing it right.
What I learned was that it doesn’t matter. If you go to happy hour with friends, don’t agonize over whether that goes into your “Dining Out” category or your “Drinks” category? It doesn’t matter. Make it easy on yourself. Have one category called “Social Life” and move on.
Don’t forget that the point of budgeting is to learn your current habits so that you can make thoughtful adjustments. Don’t let yourself become so obsessed with the details that you get stressed and give up on budgeting.
Break down large, annual expenses on a monthly basis.
One last tip, when you have large expenses, like season tickets or a big vacation, it’s helpful to break down those expenses on a monthly basis. That way, you can see how much those individual purchases are impacting your overall monthly goals.
I’m not suggesting you actually pay for that trip over 12 months (like on a credit card), or that you can only spend that much on travel in a certain month. Think of it this way: you likely will not take a trip every month of the year.
Using my Budget After Thinking figures, let’s say I did not take a trip in January, February or March. That would mean that for my planned April trip, I now have $1,600 available that I can use, assuming you didn’t let those dollars disappear. In Part 3, we’ll talk about what to do with the money you didn’t spend in the first three months to make sure they don’t disappear when April rolls around.
Later Money
Later Money is what you are saving, investing, or using to pay off debt. This is the fuel for your most important goals.
Later Money
Baseline Budget
Budget After Thinking
Student Loans
$1,100
$1,100
Credit Card Debt
$150
$900
Savings
$0
$50
Pretax Retirement (401k)
$300*
$300*
Other Investments
$0
$0
Total Later Money
$1,250
$2,050
*This was pretax money to my employer’s retirement plan. For budgeting purposes, it’s easier not to count the amount here.
What I learned tracking Later Money.
This is where all your efforts in tracking your spending and making thoughtful adjustments starts to pay off, IF you have a plan for your next dollar before you earn it.
In my baseline budget, I was very good about paying my student loan debt in full every month. I knew enough not to mess with student loans. The consequence was my credit card bills were the last to get paid each month. This usually meant only paying the required minimum since I had run out of money by this point. It also meant no money for savings or investments.
In my Later Money Budget After Thinking, because of the thoughtful choices I made with my Now Money and Life Money, I created $800 of fuel.
With that fuel, I had committed myself to paying off my credit card debt as quickly as possible. I also wanted to start the habit of saving each month. So, I added $750 of fuel to my credit card bills and $50 of fuel to my savings. I stayed true to my plan and put that money to work. Otherwise, what was the point of budgeting?
Some bonus tips for tracking Later Money.
When I run through this exercise with my students, I usually get a question along the lines of, “I’m aiming to save 20% of my income each month. Should I count the pretax money I’m saving for retirement towards that 20%?”
It’s a sneaky question. Think about it: the rest of your budget relates to your take-home paycheck, meaning your after-tax money that hits your checking account. Your retirement savings are typically withdrawn from your paycheck before taxes and before you ever see the money.
How to account for your pretax retirement savings can be another one of those tricky areas when you start budgeting. In my example, you may have noticed that I contributed $300 of pretax money through my employer’s retirement plan, but I did not count that money in my budget calculations.
Should you count that money if you’re aiming to save a certain percentage each month? Setting aside that this question demonstrates how a standardized framework, like 50-30-20, can be very confusing…
Yes! Give yourself credit where credit is due! Contributing to your retirement plan is a good choice. If you are aiming to save 5% or 10% or 20% each month in Later Money, count your pretax money towards that goal.
Make budgeting as easy as possible for yourself.
That said, I want to encourage you to make budgeting as easy as possible for yourself so you stick with it. In my example, I excluded the $300 pretax retirement savings because I am creating a plan for the $7,500.00 that hit my checking account each month. These are the dollars in jeopardy of disappearing.
The entire point of your budget is to create a plan for your next dollar before you earn it. You already wisely chose to save your pretax dollars by enrolling in your employer’s retirement plan. Those dollars are already accounted for and working for you. They are not disappearing dollars. You did your job!
Like in my example above, you can exclude the amount you’re saving for retirement in pretax dollars from your budget calculations. Feel good knowing that you’re saving that money. It’s icing on the cake. No need to worry about it when budgeting.
The real life, really lost, boy was starting to figure it out.
Let’s look at the complete picture before and after I started the budgeting process:
Baseline Budget
Budget After Thinking
Now Money
$4,185
$3,600
Life Money
$2,100
$1,850
Later Money
$1,250
$2,050
Total
$7,535*
$7,500
Income of $7,500
With some thought and relatively little effort, I was able to stop the disappearing dollars and start making progress towards my ultimate life goals.
In my baseline budget, I was spending more than I earned each month. That meant I had no money to pay my credit card bills, which kept getting bigger because I kept spending. In my Budget After Thinking, I broke my habit of living above my means and generated $9,600 of fuel in one year for my Later Money goals.
Taking these first steps may seem like minor steps on the way to financial independence, but they were the most important steps I ever took on my personal financial journey.
The real life, really lost, boy was starting to figure it out. The spark was lit. There was no turning back.
In Part 1 of our series on budgeting, we’re going to learn that the art of budgeting is having a plan for your next dollar before you earn it. That way, you avoid having disappearing dollars.
Here, we’ll learn how to create our baseline budget based off of our current personal situation. Wherever you currently are in life, you can then make adjustments to your spending based on what you truly want.
In Part 2 of our series on budgeting, we’ll use a real life example to work through the budgeting process together. Through this example, you’ll see how even seemingly minor adjustments can make a big impact to your budget.
In Part 3, we’ll take a deep dive into my top 10 strategies for making thoughtful adjustments to our budgets so we can add more fuel to our financial and life goals.
In the end, I’ll show you how to use the information you’ve learned about yourself to create a lasting money plan that does not require you to track every penny. What I mean is that if you can practice these budgeting tips for just a little while, you actually won’t need to budget anymore. That’s when thinking and talking about money starts to be a lot of fun.
Let’s start with a question:
What would you do right now with $20,000.00?
What would you do right now with a $20,000.00 bonus that was unexpectedly deposited into your checking account?
No strings attached. It’s your money to do anything with.
Answering this question should be fun. It’s a free $20,000.00!
But, my guess is that if you thought seriously about it, you didn’t have much fun at all.
Many of us likely struggled with what to do. We want to do the right thing, but we don’t know what that right thing is. Should we pay down debt? Should we invest? Take a vacation? Do nothing?
Do you have a plan for where your next dollar is going?
The reason we struggle with decisions like this is because most of us don’t have a plan for where our next dollar is going. What ends up happening is we do nothing. Our money hits our checking account, we spend it on this or that, and pretty soon that money has disappeared. We haven’t used the money to advance any of our priorities. It’s just gone.
To me, this is one of the most important money mistakes that we need to fix right away. Having a plan for our money, before we earn it, is essential if we want to reach our goals. With a plan, we can eliminate the disappearing dollars with confidence that our money is being used to serve our purposes.
Budgeting is about having a plan ahead of time where your next dollar is going.
And, that leads us to budgeting. The word “budget” is synonymous with “plan”. The art of budgeting is to know what you want to do with your money before it hits your checking account. Otherwise, it’s too late. Those dollars will disappear.
I teach my students that to create a budget, you need to first study your own personal situation to figure out where your dollars are currently going. Then, you can figure out a plan for how to use your next dollar before you earn it. This applies not just to bonuses or other unexpected dollars, it applies to every dollar you earn.
When you put the time in to study your own habits, you can then create a realistic budget. When you have a realistic budget, you will have confidence that your dollars are working for you.
Some dollars will be used to pay your ordinary life expenses, some dollars will be used for all the things in life you love, and some dollars will go to your financial goals.
That’s all there is to it.
Let’s take a look at three steps to take when first creating a budget.
Step 1: Track your spending for at least 3 months.
I recommend everyone, regardless of where you are in life, start with this first step of tracking your spending for at least three months. Without knowing where your money is currently going, you won’t be able to think about adjustments.
I won’t lie to you. This step can be hard and you probably won’t like it. This is the step that makes people think budgeting is a nasty word. I get it and don’t blame you for having that reaction.
Still, there’s no getting around this first step. Remember, you don’t have to budget forever, just long enough to learn your own behaviors towards money.
Please know that many of us struggle with this first step. You might not like what you learn by tracking your spending. When I first started budgeting, I learned that I was $20,000.00 in debt and was spending way more than I earned. That wasn’t fun, but I’m happy that I put in the effort to find my blindspots and make adjustments.
I often think to myself, “Where would I be today if I didn’t go through this process 15 years ago? How much further into debt would I have fallen?”
Talk to your people as you go through the budgeting process.
One last thing, budgeting is one of those areas where it can really help to talk with our people along the way for support and encouragement. You don’t have to budget in secret. We’re all in this together. Put the mental energy into this step, so you can stop wasting mental energy worrying about money and start getting energized thinking about money.
In Part 2 of our budgeting series, we’ll talk about the different ways you can track your spending. I’ve used apps, spreadsheets, and even the notes function on my phone. The good news is, tracking your spending is easier today than it’s ever been.
Regardless of how you track your spending, be honest with yourself. If you intentionally or mistakenly leave out certain expenditures, you won’t learn where your money is actually going. A budget, which is just a plan, is only as good as the data it’s built off of. Be honest about your data.
One quick note: Budgets are usually done monthly, so you’ll want to create a separate accounting for each month you tracked. The reason we track three months of spending is so you’ll be able to identify any patterns or inconsistencies in your spending from month-to-month. This helps ensure you’re making decisions based off the best data possible.
Step 2: Separate your spending into three three main categories.
Great work completing the first step! That wasn’t easy, but you did it.
Now that you have tracked your spending for three months, you can assign each expense into separate categories. Most personal finance experts agree, though we have different names for each category, that you should divide your money into three main buckets. I refer to these buckets as:
Now Money
Life Money
Later Money
1. Now Money
Now Money is what you need to pay for basic life expenses. These expenses include housing, transportation, groceries, utilities (like internet and electricity), household goods (like toilet paper), and insurance. These are expenses that you can’t avoid and should be relatively fixed each month.
2. Life Money
Life Money is what you are going to spend every month on things and experiences in life that you love. This bucket includes dining out, concerts, vacations, subscriptions, gifts, and anything else that brings you joy.
We can’t be afraid to spend this money. This bucket is usually what makes life fun and exciting. The key is to think and talk so you are spending this money consistently on things that matter to you.
3. Later Money
Later Money is what you are saving, investing, or using to pay off debt. This bucket includes long term goals, such as retirement plan contributions (like a 401k or Roth IRA), college savings for your kids (like a 529 plan), emergency savings and paying off student loan or credit card debt. This bucket also includes any shorter term goals, like saving for a wedding or a downpayment for a house.
Most fun of all, this bucket includes any investments you make to more quickly grow your wealth, like investing in real estate or the stock market.
You’ve probably guessed it already. Later Money is the key category that fuels your ultimate life goals, like financial independence. The more you fuel this category, the faster you can reach your goals.
Don’t worry about assigning a percentage to each category.
I have intentionally not recommended target amounts or percentages to allocate to each of your three categories. The reason is because of what I’ve learned from my students over the years. I’ll lay out my full reasoning in a separate post.
The short version is that in my experience working with law students, assigning target percentages for each category is counterproductive. When I used to teach my students to aim for certain percentages in each category, I could tell that they would get discouraged as soon as I put the numbers on the slideshow. I completely understand why.
Each of us is starting in a different place. If you are currently spending 80% of your monthly income on Now Money, it’s not helpful to have someone tell you to create a budget that automatically drops that level to 50%. My students would tune me out as soon as I put those numbers on the board.
Now, I teach my students to think and talk about their current personal realities and aim for steady and lasting improvements. I want my students to create a plan that will last, not an unrealistic plan that they give up on after a few months.
So, whatever amount you’re currently spending in each bucket, that’s what we’re going to work with as we move on to step 3.
One other thing before you move on to step 3: don’t get hung up stressing about what type of expense goes into each category. Sometimes, it gets tricky. Do clothes you buy for work count as Now Money or Life Money? Don’t stress. It doesn’t really matter. It’s not worth the mental energy thinking about it. Just stay consistent and move on.
If you still want a target, aim for 20% of your income added to your Later Money each month.
All that said, I know that some of us operate better if we have a specific target in mind. If that’s you, the conventional wisdom is to aim for 20% of your income added to your Later Money each month.
Targeting 20% savings each month was popularized in Elizabeth Warren’s book, All Your Worth: The Ultimate Lifetime Money Plan, first published in 2005 (before she was Senator Warren, she was a law professor and author). Senator Warren advocated for a 50-30-20 budget framework with 50% going to fixed costs (what I call “Now Money”), 30% going to wants (“Life Money”), and 20% going to financial goals (“Later Money”).
Most personal finance experts agree that the 50-30-20 framework is a solid plan for your budget.
In theory, I agree.
In reality, I’ve become convinced through working with my law students that the 50-30-20 framework does not cut it in today’s environment. Like me, some experts have also recognized a 60-30-10 framework may be more appropriate today.
While I agree the 60-30-10 framework is more realistic, my experience has taught me that assigning rigid percentages is just not a practical framework for most people at the beginning of budgeting process.
Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.
OK, so now that you have assigned your spending to each of the three categories, the next step is to think and talk about your current habits and whether you’re spending matches your true motivations and desires in life.
If you decide that your spending does not match your life values, then it’s time to make some adjustments. What kind of adjustments?
We’ll talk much more about how to make those adjustments in Part 2 of our budgeting series. In essence, my budgeting philosophy is to aim for steady and lasting improvements based on your current reality and your ultimate motivations. What does that mean?
Your budget is really just about finding fuel for the best things in life.
This is where we circle back to the importance of having a clear understanding of what we want out of our money. Money is a tool. Ask yourself:
“Is your current spending aligned with how you want to use your money to fuel your goals and ambitions?”
If not, you can make incremental adjustments as you progress towards your ideal spending alignment.
The idea will be to continuously add more fuel to our Life Money and Later Money, the buckets that represent the things we love the most (Life Money) and our most important life goals (Later Money).
You can make small adjustments, which are usually easier and faster to put in place. These adjustments might include dining out a bit less, cutting out a concert, or cancelling a gym membership or subscription you don’t use.
You can also make big adjustments, like moving to a cheaper part of town or getting rid of you car.
Small or big, the key is that when you make these adjustments, you repurpose that money in a thoughtful and intentional way. You’re now starting to align your budget with your money motivations.
With each thoughtful decision, you’re progressing towards your best money life. Most importantly, you’re learning about yourself and developing lasting habits. You won’t get discouraged and give up on budgeting.
As we wrap up Part 1 in our budgeting series, keep the three initial steps in mind.
Step 1: Track your spending for at least 3 months.
Step 2: Separate your spending into 3 main categories.
Step 3: Make adjustments so your spending better aligns with your true motivations and desires in life.
As you start to implement these steps, you’ll start to have a clearer picture of how your money can work for you.
And, the next time you’re asked what you would do with $20,000.00, you’ll know the answer ahead of time because you have a plan in place.
Answering the $20,000.00 question will be fun. No more anxiety-inducing, disappearing dollars.
I hope you’ve started thinking about why you want to be good with money. This will be personal for all of us and may change with time. The more you think and talk about why you want to be good with money, the clearer your motivations will become.
Three powerful reasons why I want to be good with money:
Money can give you choices.
Money can give you personal power.
Money can give you time.
1. Money can give you choices.
This may seem obvious, but when you have money, you have choices. You can choose where to live. You can choose who you work for, or can work for yourself. You can choose how you eat, exercise, relax, and travel.
This holds true whether you make $50,000 or $250,000. Of course, your options may be different. The point is that when you’ve made good money choices, you’ll at least have options.
2. Money can give you personal power.
This is another way to say that money gives you control of your life situation. If you are in a bad relationship, a bad job, or just need a change, money gives you the personal power to do something about it.
3. Money can give you time.
When you have enough money to be truly financially independent, you have earned the freedom to do whatever you want with your time. You can spend your working hours at a job that is meaningful to you. You can spend more time with people who are meaningful to you.
It’s been said many times, “time is our most precious resource.” When you have money, you can buy your time back.
From the time we’re in diapers, we start learning by observing people older than us. As my family prepares to leave the house, my son has recently started chanting “Let’s roll! Let’s roll! Let’s roll!” Yup, that one’s on me.
The same idea applies when it comes to life and money. I’ve mentioned before how much I’ve learned about life from listening to my clients suffering with mesothelioma. I’ve learned even more by listening to my family, friends, and mentors.
When you listen to enough people with more years behind them than you, certain themes continue to surface, like the importance of family. You’ll hear about creating experiences and memories, usually involving vacations or time with friends.
One thing I’ve never heard? Someone saying “I wish I spent less money on doing the things I loved.”
You don’t have to agree with everything you hear, but the act of listening will start turning the wheels in your own mind. And when your wheels start turning, you can’t be afraid to spend money on the things that make you happy.
Why do we need to actively think about the things that make us happy?
A sneak peak of how I look at budgeting.
I said we weren’t going to discuss budgeting yet, and we won’t. “Budgeting” is kind of a nasty word. Nobody likes to say it out loud, let alone aggressively do it each month. This is why we spend so much time in the beginning talking about our money mindset.
A budget is worthless if you are not motivated to stick to it. Sure, you may stick to your budget plan for a month or two, but you’ll fall back into old habits if you haven’t prioritized what matters most to you.
We’ll save the particulars for another day. A sneak peak at how I teach my students:
Like it or not, everyone needs a budget… for a little while. Once we’ve identified what we spend money on and made some thoughtful choices, most of us don’t need a rigid budget.
If you’ve thought and talked enough about your true motivations, you won’t need a budget either. Each month, you will take care of your obligations, grow your net worth, and use the rest of your money to buy things you love and to create experiences.
Talking money should be emotional.
If you’re being honest with yourself, talking money should be emotional. Remember, most of us exert mental energy pretending we’re not worried about money. My challenge to you is to exert that same energy into figuring out why we behave in certain ways when it comes to money.
The reason it matters is because we’re soon going to be talking in detail about budgeting, which is just the process of making thoughtful choices about how we spend our money. If we don’t know why we choose to spend in certain ways, we won’t be able to make lasting adjustments to our budget.
Let’s look at an example to start prepping ourselves for the budgeting process. This is a good time to revisit one of the main principles when talking money with your people: no judgments allowed. We’re not looking to shame ourselves or each other. We are aiming for understanding so we can make thoughtful decisions.
Say you’ve looked at your monthly spending and realize that you’re spending a lot of money dining out. The key to creating a budget you will actually stick to is actively thinking about why you spend so much money dining out. You might learn that dining out is an essential part of your best life. You might learn it’s really not.
Ask yourself these questions:
Is there an emotional reason you dine out frequently, like it makes you feel successful? Or, you like spending time with friends? Do you get joy out of trying new dishes?
Maybe it’s something else entirely and unrelated to your emotions. Maybe you don’t have time to cook at home because of your work schedule? Maybe it’s just laziness?
It might have nothing to do with how often you eat out, but where you choose to eat and what you choose to order. Do you order a bottle of wine with dinner? Could you have drinks at home beforehand instead?
When you honestly think about and answer these questions for yourself, you can start to make thoughtful decisions on whether that spending matches your priorities. If it doesn’t, then it’s an area for adjustment.
And, that’s really all that budgeting is. Not so nasty, right?
Too many of us are really good at pretending not to worry about money.
“Credit card debt?” Everyone has it.
“Emergency savings?” My job is secure.
“Retirement?” I have so much time.
Accept money for the tool that it is.
Instead of honestly assessing our relationship with money, we actively ignore it. Yes, actively ignore. We don’t passively hide from our credit card bills. We all have the credit card apps on our phones and receive multiple emails about our bills. We know what the numbers are, and we bury that knowledge. We exert mental energy to not think about our money.
Let’s stop doing that and re-frame how we think about money. Instead of convincing ourselves that we’re not worried about money, let’s accept money for the tool that it is. Let’s get energized thinking about what money can do for us.
Thinking about money does not make you a bad person.
Thinking about money does not make you a bad person. Always remember what money is: a tool. You are not a bad person for wanting to use that tool to build the best life for you and your family.
Remember, the goal is not to fall in love with or obsess over the dollars in your bank account. The goal is to think about how you can use those dollars to maximize your life experiences. When you start thinking like that, money is energizing.
A higher income won’t cure your money worries.
You are not immune from worrying about money just because you have a high income. Ask people further along in their careers if earning more money magically solved all their money worries. A lot of times, the opposite is true.
The more we earn usually means the more we spend. We tell ourselves that we deserve to spend more. Or, we need to spend more to match our neighbors or colleagues. You can see this through the clothes people wear, the vacations they take, the restaurants they eat at. This habit of spending more, even as we earn more, explains why credit card debt in America continues to surge.
The other thing about earning more? It also usually means we’re working more. If you were worried about money when you had more available time to think about it, what’s going to happen now that you’re working longer, harder hours?
Vicki Robin, often credited for laying the groundwork for the FIRE movement, has a lot to say about the relationship between money, work, and time. Her book Your Money or Your Life is a must read.
Years ago, my friend came to Chicago to visit. He loves good food and treated me to one of the premier restaurants in the city. Very fancy, Japanese menu. 12 courses. Sake pairings. At one point, my friend spilled some sauce on his shirt. Having noticed his predicament, the waiter walked over and discreetly handed him a stain removal pen folded in a napkin. Classy, right?
It was one of the best dining experiences I’ve ever had, but it had nothing to do with the food. I loved being there with my friend, and he knows it wasn’t about the food.
Towards the end of the meal, I got up and went to the bathroom. I returned to my friend and the couple at the table next to us gushing about the meal. Turning to me, one of them asked, “Did you absolutely love the food, too?” He choked on his Unagi when I responded, truthfully, “I could really go for an Italian beef.”
I want you to spend your money.
OK, so what’s the point? I am in no way saying we should all stop spending money. Or, that we shouldn’t use our money to enjoy what we want in life. Quite the opposite, actually. I want you to prosper. What I really want is for you to define for yourself what a prosperous life means.
If that means you want to use your money to eat Japanese delicacies instead of Italian beef, please do! Just do it because you put some intentional thought into how spending your money that way fits into your overall life experience.
Get energized thinking about money.
If you’ve read this far, I’m assuming that you’re tired of pretending not to worry about money. You’re tired of treating money just like everyone else. You’re tired of fooling yourself that if you just made more money, everything would be fine. You want the worrying to stop.
Now, you want to feel like you’re moving forward. You’re ready to be energized about using money as a tool to reach your hand selected goals, regardless of how much you make.
To start moving forward, we need to change how we exert our mental energy when it comes to money. In the beginning, many of us exert mental energy into making excuses about our money. Or maybe worse, we actively ignore our money. We convince ourselves that we’re just like everyone else. We pretend not to worry.
Let’s flip that around. Instead of exerting mental energy to ignore our money worries, let’s get energized thinking about how we can use money as a tool to build our lives. It starts with discovering what truly motivates us. Only then can we talk about strong personal finance habits. Without the motivation, we’ll slip back into that existence of pretending not to worry.
There’s no dress rehearsal in life.
Life doesn’t come with a dress rehearsal. There’s no practice game to test out new plays. We need to think about our motivations now and continue to think about those motivations as we go.
You’ll soon hear all about my Tiara Goals, my made-up name for what truly motivates me. At this point, I’ll share the simple recognition that we each only get one life. I don’t say that to be morbid or depressing. I don’t say it to be inspirational, either. I’m saying it simply because it’s true.
Bill Perkins, author of Die with Zero, makes a very convincing argument that most of us wait too long to start using money to create life-changing experiences. You should read Die with Zero and talk about it with your people. This book has led to more money conversations with my friends and family than any other book I’ve read.
This truth is a powerful reminder for me to use money as a tool to accomplish my Tiara Goals. That truth helps explain why I work hard for my clients with mesothelioma, own rental properties, teach law students, and now write this blog.
I encourage each of you to start thinking about what truly matters to you. Not in a theoretical sense. Not what you expect other people would say should matter to you. What you, after deliberate thought, believe truly matters. You won’t have all the answers right away, but you need to start somewhere.
For now, let’s start by helping each other. Let’s stop pretending that we aren’t worried about money, so we can do something about it.
“Credit card debt?” Yup, and I’m attacking it.
“Emergency savings?” Growing each month.
“Retirement?” Not a problem.
“Unagi?” Eh, I’ll have the Italian beef. Dipped, hot peppers.
4 responses to “How to Think About Money and Italian Beef”
Kevin
This really hit home for me! I read the book Die With Zero, and loved it.
So, is the Italian beef like a ‘steak & cheese sub’ in Boston?…if so, then , hell yes… Italian beef over Unagi every time. It is great to see you tackle the topic and attempt to make money a candid discussion. I suspect your teachings, and this blog will inspire more people to do the same.
I named my financial freedom blog “Think and Talk Money” because most of us don’t do enough of either.
I believe we can make it easier on ourselves to make consistent, good money choices if we just spent a little time each week thinking and talking about money.
Wouldn’t most of us agree that doing new things, and especially doing hard things, is easier when we have a partner? Someone to bounce ideas off. Someone to keep us accountable. Someone to pick us up when we aren’t at our best.
Have you ever talked about money or read a financial freedom blog?
Who is the person that knows the most about you?
Your best friend? Significant other? Brother or sister?
This person knows your most embarrassing stories. This person has seen you cry. This person has been there for you through thick and thin.
But, have you ever talked to this person about money?
Have you ever shared what drives you to wake up at 6 a.m. for work? Have you mentioned that you’re worried about how you’re going to pay off debt? Have you ever talked about how you’d like to use money as a tool build your life on your terms?
You might be surprised how powerful these conversations can be. It’s likely the person you’re talking to will be relieved you started the conversation.
If you don’t know where to begin with conversations like this, a financial freedom blog is a good place to start.
I didn’t read a financial freedom blog or talk about money in 2010.
I certainly didn’t think to have conversations about money in 2010 when I fell deeper and deeper into debt. I still remember the day when I realized I was financially heading in the wrong direction.
It was an ordinary Monday. I had grabbed my mail on the way out the door as I headed to my job at the courthouse. When I got to my desk, I opened my credit card statement and was stunned by what I saw. $20,000 owed ($30,000 in today’s dollars) one year into my career.
Looking back, I wonder if I would have had these feelings for so long if I had read a financial freedom blog. Or, what if I was more willing to discuss my money choices with the people I trusted?
I likely would have saved myself a lot of worry, frustration, and time if I hadn’t struggled alone. Perhaps I would have learned that so many others were struggling with consumer debt like I was.
I made it harder on myself by not talking.
I unnecessarily did it the hard way, but I figured it out. I made it a priority to turn things around. I didn’t know the solution at that moment. But, I had been trained to do research so I could find answers to hard questions. So, that’s what I did.
Along the way, I realized that the fundamental and basic personal finance principles are, well, basic. George S. Clason wrote “The Richest Man in Babylon” nearly a century ago. His collection of parables set in ancient Babylon is legendary.
Everyone should read it. His advice is simple and excellent: spend less than you earn. Save. Invest. The same fundamentals are as true today as they were then.
Easy, right?
Money is about continuous choices.
Not exactly. Money is about continuous mindset and choices. The basic concepts are easy enough to understand. Consistently making good choices is hard.
Even as I was racking up credit card debt, I could have aced a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”
For some reason, though, most of us choose to deal with money on our own. I’d like to change that with my financial freedom blog. There’s a stigma that we shouldn’t talk about money. I’d like to change that, too.
Get comfortable talking about money.
I want us to get comfortable with the idea of going to our friends and loved ones to talk about money, just as we would talk about anything else. There should be no embarrassment or shame in it. We’re all dealing with the same challenges.
By talking about money, we can help each other turn those challenges into opportunities. If we can alleviate our money stress, perhaps we can reverse the trend of lower happiness levels among young people today.
Talking about money is not about numbers.
We’ll have plenty more to say about how to talk money in this financial freedom blog. For now, let’s agree that talking about money is not about prying into how many dollars we each have in the bank.
We can benefit by talking about our money mindset, habits, and strategies, while still keeping certain information private.
Let’s also agree that talking money is a “no judgment” endeavor.
We have all had different experiences that have shaped our relationship with money. It’s important not to pass judgment, especially when talking to our significant others. Your conversation won’t last very long if you ignore this advice.
Each session I’m with my students, I learn from their experiences and money mindset, same as they learn from mine. I encourage them to continue the conversation outside the classroom with their loves ones.
When my students report back, they tell me how empowered they felt after starting these conversations. The more we can talk money, the less we’ll feel alone. We’ll all make better choices because of it.
What topics will we cover in this financial freedom blog?
In this financial freedom blog, we’ll talk about the importance of money mindset and why you should want to be good with money. Money mindset touches every aspect of personal finance, so it’s a theme we’ll keep returning to.
There’s no reason to embark on your journey to financial freedom alone. Share your accomplishments and struggles with your friends and loved ones. You’ll only be better off for it.
I certainly will be doing that with my financial freedom blog.
Please share in the comments below if you’ve ever benefited from talking about money with a friend or loved one.
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2 responses to “A New Financial Freedom Blog”
Kevin
I’ve been learning from Prof. Adair for the past decade. Not only that, I’ve followed his advice, and it is one of the reasons I am financially independent today. I could not be more excited for this website – there’s so much more left to learn!
I founded Think and Talk Money after years of teaching personal finance for lawyers.
My purpose is to share these principles of personal finance for lawyers with all professionals striving for financial freedom.
I like to think and talk about money. To help us achieve financial freedom, we can’t be embarrassed or afraid to talk about money with our friends and family.
When I graduated law school in 2009, I never thought about money. Within a year, I had racked up $20,000 in credit card debt ($30,000 in today’s dollars), on top of my student loan debt. My salary at the time was $62,000. This was a problem.
How did that happen? Well, I wasn’t thinking about money. I certainly wasn’t talking about money. I later learned that I had made every money mistake in the book. Rented a fancy apartment I didn’t need? Check. Paid for Cubs season tickets I couldn’t afford? Check. Traveled coast-to-coast? Traveled overseas? Put it all on credit cards? Check. Check. Check.
It’s not that I intentionally decided to get into debt. I generally wanted to make good choices. I am a relatively smart human. You are, too. You’re reading a blog about financial wellness with the entire internet at your fingertips.
Since 2010, I’ve dedicated myself to learning about money and its role in crafting a healthy life. I read all the personal finance books. I listened to podcasts. I talked to people I trusted. I kept a money journal.
Along the way, I started to make choices with my money that matched my values.
15 years into learning, and now teaching personal finance for lawyers and professionals, here are a few things to know about me:
I work for clients with mesothelioma, a cancer caused by asbestos.
Since 2011, I’ve represented hundreds of people suffering from mesothelioma, a rare cancer caused by asbestos. Most of my clients are in their seventies and eighties. A significant part of my job since I’ve been in my twenties has been meeting with individuals in their homes after they had just found out they have incurable cancer.
Before we ever get around to talking about the case, we inevitably end up talking about life. I do most of the listening. You can imagine what I’ve learned about life in these moments. Most of my core money beliefs have been shaped by these powerful experiences.
I am a real estate investor and own rental properties in Chicago and Colorado.
In 2018, my wife and I bought our first rental property in Chicago, a 4-flat in an up-and-coming neighborhood. We lived in one unit and rented out the other three.
I’ll never forget riding my bike with my wife and a buddy, heading from the fancy part of the city where I had been living to my new home. I could tell my buddy was skeptical about my new neighborhood.
Finally, he saw something he recognized and said, “Hey, nice! A spin studio!” He saw a sign that read “Cycle Spin.” It was a laundromat.
He wasn’t the only one who was probably thinking, “what is Matt doing?” Well, that 4-flat allowed my wife and I (and eventually two kids) to live for free for six years.
See, the rent we collected covered our mortgage, insurance, taxes, maintenance, and then some.
With the money we saved, we bought our second rental property in 2019, a nearby 3-flat. In 2022, we purchased another Chicago 3-flat, where my family lived for about two years before moving to our permanent home. My tenants are doctors, lawyers, engineers, TV personalities, pilots, and other young professionals.
In 2021, we bought a rental condo in Colorado ski country. This had been a dream of mine hatched at The 1800 Club in Evanston during college.
Back then, I amused my friends on many a ski trip by cartwheeling down the mountain as I learned to snowboard. To pay for flights and lift tickets, I took a couple part-time jobs in local offices. I told myself one day I would “Get that Mountain.”
While my wife and I were contemplating life during the height of the pandemic, we determined that a ski condo fit perfectly with our desire to be with family, to be active, and to be outdoors as much as possible.
I started a money journal in 2010.
I started a money journal in 2010. It has been a lot of fun to look at as I launched my financial wellness course and as I’m writing this blog. I’ll refer back to these entries as I share my lessons about personal finance for lawyers and professionals.
Some entries are just scribbles while I worked through that month’s money question.
Some entries go deep. My favorite: I wrote in 2011 that someday I was going to marry the girl I had been dating at that time for the past few months. That girl became my wife in 2017.
I encourage everyone to keep some sort of money journal. It doesn’t have to be a daily log or a detailed memoir. It will help you think. It will also reinforce the idea that we all need to think about money continuously.
Some of the same challenges I had in my 20’s, are resurfacing today. I am more confident today because I can look back at how I handled those obstacles back then.
I have taught personal finance for lawyers since 2021.
Since 2011, I’ve taught law students how to research, write, and communicate in the courtroom. We work on finding answers to difficult questions. Oftentimes, there are many possible answers, and we have to think and analyze which is the best for our situation.
I regularly have coffee with students who want to talk about what comes next after finishing school. I learned that, just like me in 2009, my students didn’t typically think or talk about money and life. They never considered learning about personal finance for lawyers.
I wanted to help them avoid the money struggles that I had experienced at the beginning of my career.
That’s why in 2021, I designed and launched a law school course focused on personal finance for lawyers. My goal with that course, and this website, is to help us all think about using money as a tool to build a life that conforms to our personal values.
The point is not to get rich. Though, you will if that’s your goal and you follow along. The point is to live your life on purpose. Where you actively think and choose what happens next.
Think about why money matters.
The first step is to think about a simple and powerful question: why does money matter?
For me and many others, money is about financial independence, which translates to the power to choose. When we have the power to choose, we have the power to live a life that conforms to our personal values. We can live on purpose, not on auto-pilot.
We can choose to spend our working hours doing what is meaningful to us. We can choose to spend more time with the people that are meaningful to us. We can choose to use money as a tool to do what we want with our lives.
My favorite part during my personal finance for lawyers class is when my students share their motivations with each other. We all learn so much from these honest conversations.
It’s why I believe talking about money is so important. We all benefit from knowing that we’re not alone in our money worries. We can be inspired by hearing what our friends want from their money and their lives.
If nothing else, I want you to think and talk about money.
As a lawyer, I’ve been trained to build upon the work of those who have come before us. Think and Talk Money is my contribution to this essential field of personal finance, building upon what I was so grateful to learn. Not just from authors, but from all the people in my life who talk with me about life and money.
In teaching personal finance for lawyers, I’ve learned that most of us are facing the same challenges. Maybe my voice and my experiences will resonate with you. Maybe not. And that’s ok.
I will be honest about the mistakes I’ve made and the lessons I’ve learned. We’ll talk about motivation, habits, and fundamentals. We’ll talk about careers and goals. We’ll talk about investing in real estate and managing rental properties.
I’ll share my thoughts on key news and developments. I don’t expect you to agree with everything I say. Not every post will be immediately helpful for you. That’s not my goal or even realistic.
Think just a little bit about money every week.
My goal is to help you think even a little bit about your money choices every week. That way, your money life remains in balance with the rest of your life, and you can continually evolve and adapt your choices as your life changes.
I want to encourage you to think, and to talk, and to choose. If all I do is help you and your loved ones think more purposefully about your money, this website will be a success.
Maybe your goal is also financial independence, or the power to choose. The power to live on purpose. Maybe it’s something else entirely. Whatever it is, discovering your motivation is the crucial first step.
It’s so important that I’ll encourage you to think about that motivation every day. I’ve learned that money is something that we all need to think about as a regular part of our lives. Not that we should only think about money. Or that we need to obsess over money. Simply that we can’t ignore money.
How sad is it when we realize our hard earned money has just vanished? That at the end of each month, we have less money?
Most of us could use someone to talk to or something to read to help us learn about personal finance for lawyers and professionals.
I hope Think and Talk Money can be that place for you. I can’t, and won’t, tell you what to do with your money. It’s your life, after all. But, I will strive to help you think and talk with purpose about your money.
Here we go.
12 responses to “Personal Finance for Lawyers and Professionals”
Bill Molander
Well written, Matt! Best wishes to you in future endeavors.
Hey, I think your ideas are very interesting. Thanks for your thoughts. Maybe keeping money journal is a good idea for me too. A fresh outlook and clean slate for starting out the new year makes sense too.
Smart young man! He listens to people! He takes what he hears and learns from it! Great stuff here! Your law students are lucky to have you as a money mentor!
Great question! I invest in index funds and think that’s the best choice for many of us. We’ll have to revisit this topic in a future post. Stay tuned!
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