As I continued on my money journey, I realized that tackling my debt and building my assets wasn’t enough to truly change my relationship with my finances. I had to engage with it. And I had to engage with it a lot. My ultimate goal was to live in partnership with money and feel like we were on equal footing.
Here’s what I did:
Made a budget:
For a long time I didn’t see the value of keeping a written budget. Instead, I kept a budget in my head- which wasn’t a budget but just a vague estimation of what I was spending. Looking back, I don’t know why I was so surprised when my account was at near zero (real zero, not cushion zero) or I didn’t have money to pay bills.
How could I be financially prepared if I didn’t even know what I was spending money on?
I finally sat down and made a monthly budget. First I broke down all my monthly income sources and then split my expenses into 3 categories- Non-negotiable, basic living, and extras.
Non-negotiable expense are things like rent, insurance, loan payments, savings- the items in my budget that are my top priority and necessary to live.
Basic living are things that can be shifted slightly, but not much, like my cell phone bill and groceries.
Extras are all the other stuff I spend money on a month that I can adjust, like eating out, drinks with friends, Spanish classes, and my gym membership.
As I filled in each category I looked at how it impacted my income. Since my savings and debt repayment was at the top of my budget, I could leave those things alone. As I worked my way down to the extras, I figured out what I could cut so my expenses were less than my income.
Making a budget showed me two things. One, that I had enough for what I needed and wanted. It rewrote the story in my head that I was always scrambling to get by. If I stuck to my budget, I wasn’t. Two, it helped me prioritize my spending. When my expenses got to be higher than my income, I chose what I could give up. I was controlling my money, not the other way around.
What I do now: Anytime anything shifts in my financial life, I immediately change my budget. New client? I add that income into my budget. New expense? It goes into the budget. My budget is a living document. It doesn’t stop existing just because I worked on it once 6 months ago.
I look at my budget at least once a month (usually more) and see if I am really spending the way I have budgeted. If not, I look at areas that need to be changed- either on my budget or in my spending. I am always holding myself accountable for living, or not living, in alignment with my budget.
Raised my rates:
Having a clear sense of my budget made me take a hard look at what I was earning. One reason I felt so stuck in my money life was because I wasn’t earning enough. I did some research and realized that my hourly rate was half- HALF- of others in my industry with my experience. It was shocker- had I really be devaluing my skill and knowledge that much? I knew I had to raise my rates.
The next step was to figure out how much to raise my rates. I listed all my clients and their current rates, number of hours a month I worked for them, and then played around with different income scenarios. What would be enough that would meet my needs while also being accessible for my clients? I finally found a number that felt kind to myself and kind to my clients. At the end of that year, I sent my rate increase letter and started the new year with a new rate. (You can read more about that process here)
What I do now: I charge what my services are worth from the point of view that I am an expert in my services (because I am!). Before, I set my rates out of fear that no one would want to hire me so I had to entice them with a good deal. Now, I stand firmly in the viewpoint that I am really good at my job and, because of my knowledge, I am a valuable asset to people’s business.
When I quote my higher rate, I quote it from this place of confidence. Interestingly, after I raised my rates and started charging from this viewpoint I had a surge of new clients and my practice became full. I realized that when I spoke with confidence about my skills and services potential clients felt confident about their money. Confidence is contagious.
Started paying my quarterly taxes:
I used to do my taxes with the distinct feeling of panic in my chest. How much would I owe? Did I have enough to pay it? What if I didn’t? Wanting to avoid the panic feeling, I would put my taxes off until right before the deadline which only added to my stress. Worst of all, tax time is my busiest time of the year so I was steeped in everyone else’s taxes while worrying about my own.
This year (yes it took me that long!) I finally got real about paying my quarterly taxes. I couldn’t handle the stress of tax season on top of the stress of my client’s taxes anymore. At the beginning of the year I looked at my projected income and expenses and calculated about how much I would owe for taxes. Then I looked at all the projects I knew I would be contracted for and bookmarked 4 projects to go towards my quarterly taxes.
Every quarter I pay my taxes. In fact, every quarter I am excited to pay my taxes. There is a great sense of satisfaction knowing that I’m ahead of my taxes instead of behind them. It sounds super dorky but I’m actually excited to do my taxes next year to see how well I did at estimating my payments.
What I do now: Paying my quarterly taxes is a new practice for me so my biggest most important action this year is actually making the payments. Every quarter I review my Profit and Loss report and calculate my quarterly taxes. Since my income has gone up this year I am not calculating my payment based on previous year information but rather on right now data so I know I won’t fall behind.
Starting tracking my money in an accounting program:
I was a bookkeeper for 6 years without tracking my own money in Quickbooks. If you are a freelancer, you feel me- as they say, “The mechanics car doesn’t get any work” and for many years I thought I didn’t have any time for my own books. I hit a wall where I finally realized I needed to stop thinking of my own business as something I didn’t have time for and start keeping my own books.
Now, I use QuickBooks everyday to track my finances. This means every single day I know exactly how much money I have, how much money I owe, and how much money I have coming to me. There is no mystery to my finances, I see everything.
My daily workflow in QuickBooks averages 15 minutes a day. Having an intimate daily relationship with my money keep me in check and on track for my goals. Engaging with my finances daily is the most important and impactful step I’ve taken to transform my money relationship.Having an intimate daily relationship with my money keeps me in check & on track for my goalsClick To Tweet
So where am I now? Today, I really like my money. I don’t make 6 figures a year or (okay, let’s get really real here) even half that. But my money takes care of me. My money teaches me about my unconscious habits and what’s swimming underneath them. It’s good to me and I’m good to it.
We have healthy conflict and healthy resolution. Money pushes me to stretch in new directions and to live more fully according to my values. It’s a challenge and it’s a security. It’s a really good friend.
What do you need right now to start living in partnership with your money? How can you support yourself in meeting that need? Who can support you in your journey?
GOT MORE QUESTIONS ABOUT BUDGETS? TAKE A LOOK AT: