Have you ever felt that a change was coming in your life? I've been feeling that way for a few months now, just never knew what the change would be (good or bad). Naturally, I thought about possible changes but all seemed to revolve around bad changes (like someone close to me dying or getting sick) and very few good changes seemed possible (like getting a windfall). I soon got tired of wasting my time imagining worst case scenarios and decided I needed a new hobby, like reading. So off to the library I go.
I am someone who likes to educate myself on all important aspects of life and tend to select 1-2 areas to "perfect" at a time. I started checking out books on personal finance (my favourite topic) as I am always open to new suggestions and information on this subject. Then I found the book that made me go "Ah-Ha".
All Your Worth - By: Elizabeth Warren & Amelia Warren Tyagi. This is a personal finance book like no other that I've read. They have introduced me to a financial formula that is so simple yet effect and I had to throw out all other strategies I currently have in place. And wow I feel great about our money. Really great! So great that I can't remember a time I felt happier in my marriage.
Blake and I were not getting along with the previous budget we had in place as I thought and hoped we would. I believe in this strategy more than any other budget we've ever had in place. It's really simple, let me explain:
The suggested formula is "Must-Haves" (like your mortgage, groceries, utilities, car payments, etc) are 50% of your net income, "Wants" (like clothes, make-up, vacations, etc.) are 30% of your net income and "Savings" is 20% of your net income. It's that simple. So what if you have debt? There's a plan for that!
Initially, debt repayment is going to be replacing your 20% Savings until its gone. But there is a 4 step process. Step One - $1000 Emergency Fund. What happens if your car breaks down and it costs $300 to fix it. You pay for it with your $1000 Emergency Fund, not your credit card. You must than replace this money first before going to Step Two. Step Two - Debt Repayment. 20% on your debt and it should take you no time to pay this off. Step Three - 6 Month Security Fund - This should be the equivalent of 6 months of your "Must Have" expenses so that in the event of an illness or job loss you have the means necessary to pay for it. Step Four - Savings. 10% should go into funding your retirement, 5% paying down your mortgage, 5% into other savings (like your children's education).
Bottom line, you need balance in your life. Budgets don't work and they are not fun. This can work and you can still enjoy life! My husband and I are 100% on board with this strategy and you know what it feels great to have fun! Take your "Wants" money out in cash and enjoy it. This is a strategy for life and you tweak it as you meet your milestones.
I highly recommend this book!
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