Learning to Simplify

5 Simple Tips for Beginners to Manage Finances

Scared of Math and Money

A friend recently asked me whether I had any tips to manage finances. At first, I pulled back at the thought of money and numbers… oh no darling, I’m no good with managing my money. Isn’t that the truth so many of us women believe? That we just don’t know how to deal with money. It goes back to school days where the stereotype that guys were better at math than girls.

Well, it doesn’t have to be this way. Since becoming an adult (which for me personally came like a flood and included: getting my first full-time job, getting married, moving out of my parents’ home, getting my first car all within a year and a half) I’ve realized that I’ve gained a little wisdom when handling money. So here are 5 simple guidelines to help you manage finances to start getting out of debt and saving up for your goals.

Psst…. read to the end for a free budgeting spreadsheet!

My Story with Money

Now let me tell you where I come from financially so that you get a better picture. I was in university for 6 years, including a semester in Switzerland and a summer course in France. That racked up quite a bit of student debt since my parents weren’t able to put away money for our university tuition. By my second year in university, I also developed an unhealthy and expensive habit of eating out, sometimes for all three meals and treats in between. (I am not proud of it and wish I could go back to those years to knock some sense into 18-year-old Alisa). Anyways, moving on.

Thanks to my degree, I was able to get full-time work in September following my graduation just that June. Woohoo! I saw the tons of money and made a wise decision to put $1000 into repaying my loan. Great decision, Alisa! Except that a year and a half later I found the love of my life and began putting together a wedding. Goodbye hard-earned money and responsible adulting…. Anyways, after the wedding and all the expenses it requires, plus the costs of moving to a new home and buying EVERYTHING, I am back at the repayment stage. Except now, I’m not living at home and mooching food and rent off my parents. Sigh, those were good times.

My hubby and I sat down to discuss how we’re going to manage finances together. We want to live well and enjoy life now while we’re young, but we also want to be responsible and save for the future. So below is a list of the guidelines we’ve been following to consistently stay within a budget. It allows us to both pay off debt AND put money away into saving and investment accounts. You ready?

5 Simple Steps to Get a Handle on Your Budget

1. Check Monthly Subscriptions and Cancel Them Where Possible

Eliminate what you don’t need when it comes to monthly recurring expenses. It may be only $5 here and $20 but it adds up quickly. This includes subscriptions to music and video streaming, makeup boxes, software, and more. Review what you have and see if you actually need it. This goes for coffee runs too. I used to have Starbucks 5 days a week, which was about 5$ each time. I’ll let you do the math there 😉 Now, I just go every once in a while and really enjoy it. The rest of the time I make drinks at home. However, if coffee is important for you and you really enjoy it, go ahead and enjoy it. Do keep in mind though that you’ll have to take that money out of something else in your budget.

2. Meal Prep to Save Hundreds of Dollars

Oh my goodness groceries are so much cheaper than eating out! As someone who used to eat out daily, sometimes all three meals, trust me on this one. I regret how much money I spent on all those times eating out instead of paying down my school loan and saving for the future.

A few tips for reducing your food costs and thus being a master at managing your finances: buy more grains (high-protein grains preferably like lentils, quinoa, buckwheat). They are cheaper than meats while still get the job done of keeping you satisfied. Another protein source could be canned fish, just take care to avoid any extra additives in there. Frozen veggies and fruits are also my go-to. They’re inexpensive and don’t go bad. To store all this food or take it with you to work, try using containers from Chinese food take out. They’re free and usually have a pretty good seal (you know the black ones I’m talking about?).

If you’re wondering how to start meal prepping and are interested in reading more, check out these posts:

Meal Prep 101

Meal Planning Using the Big 4

Eating Out vs. Cooking at Home

3. Pay Down High Interest Debt First

Look at all the credit cards, loans you have. Focus on paying down as much as possible that highest debt, while paying the minimum on the other cards/loans. Once you’ve eliminated that one target, set your next goal. It feels so awesome to pay something off completely!

4. Pay Yourself Every Pay Day

(Warning: This part is controversial, so make sure you weigh the odds and do what’s best for your situation) Even if you’re paying off loans, set aside some money for yourself. Whether it’s to buy a car, have a wedding, buy a house, etc, it’s good to have money set aside for a rainy day. Dave Ramsey, who’s helped thousands of people get out of debt, does a great job of explaining this. He recommends having $1000 in savings at first while paying off debt, then growing that to a month- 3 months of pay.

5. Make your money work for you

Once you have some money set aside, don’t let it just sit idly there. Look for safe investments so that over time your dollars can make more dollars. I read a book called “The Richest Man in Babylon” by George S. Clason that really inspired me to do this. Now, I don’t normally read books about finances, but this one was written in a story format. It’s about a man in Babylon who used a systematic approach to get out of debt and become wealthy. I definitely recommend you read it or listen to it on audio (psst… Amazon gives a free audiobook when you sign up for their book service). You could always buy a paper copy (click on the image of the book below).

Cover of the Book "The Richest Man in Babylon" by George S. Clason

Ok now, just how to make your money work? Through investing. Right now we’re using a program called Lending Loop. If you’re new to investments, check this out. They take the fear out of stocks and markets and make it super user-friendly. It’s a peer to business lending program. We’ve put in some money there and have been getting a consistent payback, which we just reinvest. After all the fees and taxes we’ve been getting 11% return on our investment. Woohoo!

Should you invest now or focus on paying off your loans?

This is my hubby’s take on loans vs investing, which to me makes lots of sense. Look at what % interest you’re paying on debt and compare it to what you’d earn if you invested it instead. Imagine you have paid all your bills and you have an extra $400 left over. Should you pay down your loan or invest it? That depends

Let’s say a credit card charges you 19% interest, but an investment only gives you 5% interest, then it would be better to pay the credit card first. If however, you could get 5% loan and investment that gave back 11% then investing that extra money would make more sense. You following me?

Let’s summarize:

A simple way to manage finances in your household, with the goal being to get out of debt and start saving, here are the steps you should follow.

1. Eliminate monthly recurring expenses

2. Cook more at home (ahem, meal prep!)

3. Eliminate high interest debts first, focus on one at a time

4. Save money by ‘paying yourself’ every pay day

5. Start investing (aka. make your money work for you)

Bonus: Budgeting Template

The moment you’ve been waiting for 😉 Now, you may be wondering how you could manage finances for the day to day expenses and track how well you’re doing on your debt reduction and savings. I’ve got an awesome (and FREE!) resource for you that you can download right now. My friend Cori, over on thismaagnificentlife.com has created a simple budgeting tracker that you can download and customize to fit your needs. Simply click on the image below or the link and you’ll be directed straight to this golden nugget.


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