How to stop worrying about money
Whenever I think of money, I can't help think of Britney's song "Oops, I Did it Again". There's a line in the song where she sings "You see my problem is this, I'm dreaming away wishing that heroes, they truly exist."
Even though the song is about leading a guy on and not taking responsibility for your actions, it's also reflective of the relationship I and many people around the world have with money. Sometimes we play with money without a genuine intention behind our spending habits and don't take full responsibility for our actions.
For example, have you ever wished you could be financially independent and be wealthy enough to buy your dream house, travel the world, raise a family (perhaps with the help of a nanny from time to time) and treat yourself to some Manolo Blahniks as you wish? Yet for some reason, it's a struggle to turn that dream to reality. You complain to your girlfriends that you're underpaid, you're secretly drowning in debt and you're frustrated you can't travel anywhere you want to, whenever you want to.
According to a General Social Survey conducted by the Federal Reserve in 2016, you're not alone. Only 25% of American women out out earn their husband and 54% of women have no money left after paying their bills.
You could argue this is partly due to inequality in the workplace and a gender pay gap. A recent Wells Fargo study showed millennial men earn on average $77,000 per year, compared with $56,000 for women. That's a whopping $21,000 pay gap per year. The astounding impact of this difference is not only felt on an annual basis. It affects the lifetime income of women and maybe even you. It's estimated that by age 65, women will have lost an average of $431,000 in lifetime earnings owing to the gender pay gap.
I've heard that the best thing a woman can do in this situation is to do one or two things. Firstly, ask for a pay raise to close the gap. Or dare I say it, go old school, marry well and have your man as a back up plan (even if you're educated in your own right).
In my experience, if you're able to do either or both and it genuinely works out for you, great! For example, Beyonce is successful in her own right and I'm sure it doesn't hurt to be married to Jay Z who is financially more successful than she is.
However, this approach doesn't make you independent. You'll either be dependent on a man to bail you out or dependent on a boss to pay you what you deserve.
If you want to be independent, the best thing you can do for yourself is learn how to transform coins into stacks of notes. This is what I like to call being super-wise with your money. It's an ability to increase your net worth, in spite of how much you earn.
The amazing thing about increasing your net worth is that you don't need to understand the stock market or even wait for a promotion to come. You have the power to do this right now.
All you need to do is to get into the habit of saving more money and speed up the process of paying off your debts. The sooner you do this, the more money you'll have in the future. Every penny and bit of interest adds up.
For example, according Wells Fargo only 50% of millennial women have started saving for retirement versus 61% of millennial men. When asked how much they were aiming for in retirement savings women aimed lower with a median goal of $200,000 versus $400,000 for men. This illustrates that many women are less confident about their earning potential and are less strategic about the cash they do have.
I invite you to consider that you too may be making choices around money that are equally sabotaging your future. That's why when you buy something you know you shouldn't have, you can't help but think "Oops, I did it again".
Why Setup a Yearly Forecast
No business would survive or succeed if it didn't have an annual forecast. The forecast helps everyone from CEO's to middle level managers better plan the financial future of the organisation. It helps them decide the best time to cut down budgets, the best time to invest in new resources and the best time to increase pay raises.
While you personally may not be worth multiple millions of dollars, you are in someway a business in your own right. Your education and the time you spend working is your investment in yourself, and you want to want to better plan the financial future of your life.
You can use a personal yearly forecast to visualise your current and future financial circumstances. It's a crystal ball that can pre-warn you if your spending habits will run you into serious debt. And it also gives you the opportunity to change your future by making smarter decisions around how much you spend and save way ahead of time.
This forecast is an integral part of my life and has helped me to better invest in my business too.
Why it's helpful to have a monthly budget
While a yearly forecast helps you to see into the future and strategise the best decisions you can make about money today and in the near future, it doesn't help you change your habits. This is what your monthly budget is for.
Budgets are sort of like an accountability coach. It will honestly tell you if you're spending money according to your priorities and goals or if you're wasting it on unnecessary things.
For example, when Ian and I first moved in together, he'd sometimes complain that money was a little tight. I thought this was strange as he was earning more than I, and yet he had more anxiety about money than I did. When I asked him to look into his expenditures, he realised he was unconsciously wasting money on a ton of things he didn't need. For example, he'd spend on average £215 ($270) monthly on cafes, "healthy" fast food spots and local restaurants every Monday to Friday. He believed it was way easier to buy lunch during work than to make lunch at home.
After realising that his lunch bill was bigger than his monthly shopping bill he knew he had to make a change. Since then I make his lunch using dinner left overs and lunch now only costs £61 ($77) a month, saving him £154 ($193) which is £1848 ($2320) per year. He's able to re-allocate unnecessary expenditures like this to pay down his debts within a matter or months, not years.
You too can master the art of budgeting, saving and spending, and before you know it, you'll be debt free and have resources to invest in your own business, or revenue generating activities.
If you'd like to increase your income by getting successful at work, sign up for my free Be Successful at Work and Influence People training.
You'll learn how to:
#1: Become so brilliant at your job, you get a promotion faster and get opportunities you didn't think were possible.
#2: Become so talented at what you do, everyone you work with listens to what you have to say.
#3: Become so influential, your words change the way your company does business and your impact makes the world a better place too.
Click the image below to sign up.