This is a post that I knew I needed to write, but one that I have struggled to find the words for. There’s something about finances. It’s like politics or your beliefs, it’s just something that no one talks about. Behind the blog and a beautiful curated life, there’s been a great amount of change, learning, and growth over the past year, particularly in the area of finances.
I kind of have a love-hate relationship with money. In my college years, I found myself working with the homeless community, seeing the misappropriations of wealth, and began to resent money. It seemed that the things I desired in my life were contradictory toward the upper middle-class lifestyle in which I had been raised and grown accustomed. I longed to live simply, make ethical purchasing decisions, and grow my own garden. I wanted to run as quickly as possible from my roots. In the process, learning about finances and managing money went out the window. As long as I had money to pay my bills, a bit in savings, and could maintain a standard of quality living, I’d be fine.
However, last year, I found myself in dire straights. These unhealthy extremes of relating to money had taken their toll. Owing an unexpected amount of taxes at my yearly tax return, I had nothing left to my name.
I was broke.
At the age of 26, this was the first time my finances had ever looked like this. It seemed that there was no end in sight and that it was going to be a long road out.
Finding balance and a healthy relationship with money has been a journey and process. It is one that I have continued to work on. Today I thought I would share with you to how I went broke and saved $10 K in one year.
Here are a few tips and tricks I learned along the way:
1. Get creative and find ways to save.
For the first few months, things were tight, really tight. I found creative ways to save and learned some invaluable lessons. Going out to eat, not meal planning, and purchasing coffee at the local coffee shop, cost me hundreds of dollars a month. By cutting down on excess spending, I found my bank account going in an upward direction again. For food, I found that there was something to be said for meals made with ingredients from the pantry and the freezer. I found new uses for produce that started to turn. For zucchini going soft I would make zucchini bread. For herbs that would start to go bad, I learned I could blend them up and freeze them in ice cube trays. These would melt down later in sauces, marinades, and salsas, providing robust flavors. As soon as berries would burnish I would freeze them to make smoothies for a refreshing drink. I used coupons for any purchase I made (and yes, I found coupons for everything from high-quality, local groceries). For meetings and building community, I invited people to my home, offered a pot of loose-leaf tea, a cup of coffee, or hosted potluck meals. When I wanted something new to wear, I headed to my closet, opened up Pinterest on my phone and reworked my existing wardrobe into new looks. When I would find myself bored or needing something to do, I would pull a loved book from my bookshelf, head to the local library, or go exploring outside.
2. Strategize and record your expenses. Repeat this process regularly.
I learned the importance of recording my personal expenses, tracking business writeoffs, and knowing where my money was going. In the past, my negligence in recording expenses as a business owner, kept me owing a much larger amount in taxes. Invest in a good accountant. While it is an additional expense, a good accountant is worth their weight in gold. Over the past year, I’ve spent some quality time filling in spreadsheets, categorizing expenses, and keeping budgets. (If you’re looking for a great article on this as a small business owner read this article from my friends at The Fresh Exchange.) With regular weekly expenses, I planned out trips to save on gas, did meal planning, and set a strict food budget. I learned the importance of building credit and have used a credit card that help me earn free flights. With a minimal annual fee, this reduces travel expenses to see family and is paid off at the end of every month.
3. Think like a college kid.
When you were in college nothing sounded better than a free meal, watching a movie in with friends, and a good cup of coffee. Allow people to treat you when they offer and be willing to dine with others at a community table when offered. Not only will it stretch out the grocery bill, but will help you emotionally as you are surrounded by love and support from those in your community.
4. Learn the difference between feeling poor and being poor.
During this year, I have learned that poverty is a state of mind, far more than it is a financial state. Learn the power of what you carry, who you are, and do not focus on seeing your status and happiness level based on the digits in your bank account. There will be moments that comparison will leave you crying in the middle of the night. Remember that at some moments, numbers are just that, numbers. There will be people in your life who will always have more than you and people who will always have less. You are a powerful person who can take this circumstance, experience growth, and never find yourself in this place again. At moments, there will be times where you feel as if you’re missing out. Cultivate memories in the simple mundane moments with those you care about.
5. You determine your income ceiling.
As a freelance designer, this was a hard lesson to learn. Because I had worked in the non-profit and religious sector, I kept my rates too low for new clients. Because of this mindset, I found myself not being adequately compensated for my time and efforts. Research the going rates for designers in your area and don’t be afraid to charge what you’re worth. If you’ve been working as a designer for multiple years with a degree, your experience and knowledge is worth paying for. I have gone back to clients who I work for on a regular basis and negotiated better pay this year. I have also reissued contracts and added hourly fees when design revisions exceeded the estimate I originally proposed. While it can be an intimidating process to ask for more money, it is one that is worth it. Your work has value and gives life to the world. Don’t undermine your talent to win a project bid or proposal. Join networking meetings, facebook groups, update portfolios, and let people know when you are open to taking new clients. Through community, connections, and keeping an ongoing resume of work here, I have been able to open multiple streams of income unlike before. Think of creative ways to market yourself and collaborate with others in your industry.
Because of these simple disciplines, I have been able to move to California, travel for a month straight, and save $10K in a year. For those of you who are in a dire place, know this too will pass. You can make it through this, live generously, and have all your needs taken care of.