By Melissa Lowery

Personal Finance is personal for a reason. Some of us have a more adventurous lifestyle, others would rather work hard now and play later. There’s no right or wrong answer. Your finances just need to work for your lifestyle and align with your goals. Here’s how to begin personalizing your money so it suits your needs and works for your style.

Budgeting: 

Decide what your goals are and prioritize them. I personally like to choose no more than 3 financial goals to focus on at a time. Once I achieve those or get close to them, I can add additional goals to work towards. Examples might include: travel to 2 new countries this year, pay off your credit/debit card as soon as possible, start your own business, and/or start saving towards your emergency fund. Having different goals and priorities is what makes our finance so personal.

Create a budget. You can use an excel spreadsheet, pen & paper, an ebook, an app, or whatever else works best for you. Your budget should tell you 3 important things: your total after-tax income, total essential expenses (not including your hair/nails & other discretionary purchases) & lastly, your discretionary income.  

Prioritize discretionary income to align with your goals. So discretionary income is the money you have leftover once taxes are taken out & you’ve paid all your essential expenses or basic necessities. Let’s say for example you bring home $3000/month (or $1500 each paycheck, assuming biweekly pay). After you pay for rent, utilities, car expenses, minimums on your credit card, & save towards your emergency fund, you have $700 left. If one of your top 3 goals is traveling this year, you’re going to put maybe 30%  of that into a travel fund (transfer $210 into this savings account). Let’s say another one of your goals is to pay off credit card debt. You may put 20%  of that into one of your credit cards that month (transfer $140). If your last goal is to save more towards your emergency fund, you may put another 20% of my discretionary income into your savings account (transfer $140). 

Remember music subscriptions, TV subscriptions, nails, hair, clothes, shoes, going out to eat, Amazon orders, concert tickets, donations, etc are discretionary purchases. Make room for the line items as well when you’re divvying out your discretionary income to align with your goals. In the example above, I’d have $210 left to put towards miscellaneous expenses like the ones listed above. 

Lastly, hold yourself accountable & keep track. I highly recommend automating your finances so you don’t have to think about this every month. You have to decide what your personal style will be when it comes to your money. Do you want to be as hands-off as possible? Well then, automation will be your best friend. Do you prefer to make these changes manually so you feel more in control? No problem! You just have to make sure you’re reviewing your money at least once a month to stay on top of it. Our money routines and plans are great but allow yourself to be flexible when things come up. It’s definitely ok! Our money journey is a marathon and not a race.

Debt Payoff Personalisation: Which would you prefer?

If one of your top financial goals is debt payoff, including credit cards, student loans, personal loans, e.t.c., I can recommend two top strategies. If you’re a person that likes small wins to keep you motivated for big goals, you’ll probably prefer the snowball method. This method directs you to focus on paying your smallest balance first & then moving on to the next smallest balance. Dave Ramsey is a huge advocate for this method and it works really well! If you’re a person that wants to save as many dollars as possible, you may prefer the avalanche method. This method directs you to focus on paying the account with the largest interest rate first. In the long term, you save more money this way but that can depend on how much debt you have & how much you can afford to spend each month towards it. Whichever method you decide, stick to it & don’t get discouraged. Debt payoff takes time & consistency. 

Savings Routines: How much should you save? How many accounts?

Savings is also really personal. Depending on what your financial goals are and how much you can afford to put away each month determines a lot; however, you should also assess where in your savings journey you are. You should have 3 - 6 months of savings put away as an emergency fund. That’s a golden rule at this point, so it should be a goal of yours. In addition to that, you can also have other savings goals that are unique to you. As I mentioned earlier, one of your top financial goals could be traveling. So it’s a good idea to create a separate account to put money away specifically for traveling. You should have an account for each savings goal. Separating them protects you from mixing the money and confusing yourself. You want to visibly see how you’re tracking towards your goals. You can also decide if you like saving weekly, bi-weekly, or monthly. Maybe you like to save your spare change and dollars every week. Maybe you want to automate a savings amount into your savings account once you get paid. Maybe you want to manually transfer a set amount each month. Either way, it’s important to develop a routine so it’s consistent and you’re always moving towards your goals.

Follow: @thecapitalwoman

For more content around personal finance and generating wealth.