How Can I Afford A Financial Coach When I'm Broke?
Are you living paycheck to paycheck? Are you struggling to get your finances in order but you don’t know where to start? Who controls your finances, you, or your habits?
Living paycheck to paycheck isn’t always a sign of not having enough money. It’s more likely a sign of poor money habits. Truthfully, you can be broke whether you make $35,000 or $200,000 dollars. Our money and how we handle it is more about our habits and priorities than it is about the amount of money we make. There are families out there that make $25,000 a year and they have a savings account and they pay all their bills on time. You’re not broke because of the amount you make. You’re broke because of how you spend your money.
You might be reading this and already shaking your head at me. You might be thinking “I know my budget and my money and there is no way I could afford a financial coach.” That’s a fair thought, you know your personal situation and bank account. So I’m going to give you a challenge, print out your last month’s bank statement. Go through all the transactions and highlight every time you went to Starbucks or a coffee shop. Next, highlight all the times you ate out and grabbed fast food. Lastly, highlight any time you stopped and grabbed a quick drink from a gas station or a drive-thru. Now, after all those highlights, tally up the amount of money spent. Maybe even do this for the past few months, just to help get a clearer picture.
I know someone who did this exercise once, she and her husband were just tallying up the amount of money spent on fast food and drinks from the gas station. They were struggling to even get the internet in their apartment. They didn’t think they could handle the extra bill. They went into the challenge with the confidence that they were going to find less than $50 in those types of categories. They didn’t have money, there was no way there was going to be a bunch of money spent on dollar drinks at the gas station and quick lunches at McDonald’s. They went through three months of expenses and found that each month they had spent over $300 on gas station drinks and fast food. Over $300 and what did they have to show for it? Convenience, for sure, but not much else. They were broke and living paycheck to paycheck and couldn’t even figure out how to add a $30 internet bill to their budget and in one challenge found that they were blowing over $300 on convenience.
That’s why we are starting with that challenge. We’re going to see how much money you can free up just by cutting something simple like Starbucks runs, fast food, and cheap gas station drinks. This challenge serves as a reality check.
Now, there is nothing wrong with Starbucks runs and easy dinner nights. You can need to budget those categories instead of just spending the money on them. That is why we focus on a zero-dollar budget in our programs. You want to tell every dollar what to do so you’re not wondering where it went.
James W. Frick said “Don’t tell me what your priorities are. Show me where you spend your money and I’ll tell you what they are.”
Going back to the couple I mentioned earlier, their finances would tell me that their priorities were soda, fast food, and convenience. If I had asked them their priorities, they would have said something along the lines of being properly prepared to welcome their first child and having a comfortable home to spend time in.
Their money did not match their words. As Dave Ramsey says, money is 20% head knowledge and 80% behavior. Most of us know the 20% head knowledge because most of the time it’s common sense. We shouldn’t spend more money than we have because you can’t have negative dollars. We know that. We also want to avoid bank overdraft fees so that helps in avoiding spending more than we have. We know that we need to pay our bills. We know how to add and subtract. When it comes to money, it’s our behavior that messes us up. It’s the saying yes every time we’re asked to go out for drinks. It’s saying yes to every dinner invitation at the fancy restaurant we get asked to go to. If we’re saying yes to something like that, we’re saying no to something else. Saying yes to the dinner invitation might mean saying no to having a savings account. For that couple, every drink they bought was saying no to having internet in their house.
If you want to win with money, you have to prioritize it. You have to prioritize the future over the now. You have to say no to things now so you can say yes to things later. If you want to have a retirement, you need to budget your money, tell every dollar where to go, and to sacrifice conveniences. You can have a Starbucks budget. You have a fast-food budget. You just have to prioritize the budget over the convenience.
Most people will find extra money just by creating their first budget. When you start to tell your money where it needs to go, you find that there’s more to direct. That’s before you even have to think about actually cutting anything. The budget has categories so you can decide that you have $40 for Starbucks for the week. Once that money is gone, it’s gone and then you wait until the next week. Knowing you only have $40 to work with at the neighborhood Starbucks makes getting the Starbucks easier. You know you can afford it. Plus, you never have to worry about if that is going to be the purchase that will potentially send your account into the negatives. Budgets are our boundaries for the things we spend our money on. It makes us decide if something is a need or a want. It created the rules and guidelines and most of us work better when we have some boundary lines. We know where to go and where to stop. It makes decision making easier.
So, how can you afford a financial coach if you’re broke? The same way you would pay for a personal trainer if you wanted to lose weight. You make your financial goals and financial health a priority and decided that something might be worth sacrificing and giving up in order to meet those goals and getting the help you need to create the plan.
You don’t hire a personal trainer if you know how to eat healthy and workout in ways that create weight loss. If you don’t have good financial habits, you’re not going to wake up one day with them. You need an expert to help get you on a plan that you can follow, similar to what a personal trainer does with their clients who want to lose weight.