Money Management and Being ND

This month I have teamed up with Nick Krenz from Brightside Wealth Advisers. 

Successful money management comes down to making wise choices with your money and living within your means. Right here, most NDs have checked out of reading further, but if you keep going, I (Sheila) will break down Nick’s expert advice while acknowledging NDs’ challenges. I (Sheila) know that you know what to do with your money; it is the doing that creates barriers, but you can do this.

It doesn’t matter how much money you make or how good you are at investing if you understand your decisions and how they can impact you. Making decisions is a massive challenge for NDs so 

• Collect only as much information as you need. Ask yourself guiding questions before you start any research, like what is my objective in saving, spending, or investing? 
• Get advice from an expert or a trusted person.

Creating and maintaining good money habits is one of the best things you can do to help practice good money management. Activities like budgeting, tracking monthly expenses, systematically saving, or setting up bill pay are all excellent money habits. NDs have memory issues and avoid tasks they view as boring, so the list above sounds overwhelming. Try automating any of these that you can.

Budgeting: Budgets can sometimes be too restrictive and get us thinking negatively about money. However, the concept of budgeting is essential, making sure we’re earning more than we spend. At the same time, there may be better approaches; if budgeting is correct for you, great! One good thing to remember while budgeting is to categorize your expenses into “needs” or “wants.” Housing, utilities, and insurance are all “needs.” Whereas travel, concerts, and a daily coffee at the coffee shop are all “wants.” Budgeting may be correct for you if you have many impulsive purchases. How to help yourself control these impulsive purchases: 

• Grocery shop via an app and have the groceries delivered or pick them up curbside. 
• Avoid online shopping, especially when you are feeling upset or anxious. Find another way to deal with these emotions since you know you will have buyer’s remorse later. Here are some ideas: talking to a friend, doing something crafty or artistic, going for a walk or bike ride. 
• Shop with a friend/family who will keep you from spending too much. 
• Put a sticky note on your wallet or credit card about why you want to save money, like buying a house or new car or maybe retiring early. 
• If the impulsiveness is out of control, talk to your doctor. Some medications can help. 

Expense Tracking: If budgeting isn’t correct for you, tracking expenses is essential. An expense tracking app like Mint or something similar makes it easy to do and gives you an excellent visual representation to see where you’re spending is going. Get into the habit of looking at this often. Try setting a reminder or making a weekly appointment with a trusted person to keep you accountable for looking at it. Entering your credit or debit cards and bank accounts allows the app to see your income and expenses and categorize your expenses for you. It sheds light on if you’re spending too much in a category and want to re-prioritize that spending elsewhere. For example, one month, you spent too much at the grocery store and couldn’t save as much as you wanted.

Credit Score: While often forgotten or overlooked, your credit score is vital throughout your life. Credit scores determine your ability to buy a car, buy or rent a house, or even to get a credit card in the first place. It can mean the difference between a 5% loan or an 8% loan, which could be a difference of thousands of dollars, depending on the purchase. It may be a slippery slope for NDs who may be impulsive to have a credit card but unfortunately, to build credit, you have to get and use credit. Having a credit card and treating it like a debit card is one of the best things you can do. Put as many of your monthly bills and regular expenses on a credit card and pay it off at the end of the month. This habit builds good credit and demonstrates to creditors in the future that you’re responsible, and may result in better interest rates.

My daughter (Sheila) is currently saving up for a house. Part of that process is building her credit. She has been avoiding credit cards for years because she knows she is impulsive. She has done something similar to Nick’s suggestion above to build her credit. She set up one monthly automated payment to use her credit card and an automatic payment to the credit card for the same amount. She used a bill with the same monthly amount, so she doesn’t have to remember to check on it during the month. Additionally, she asked me to hide the card from her. What creative solutions can you develop for yourself? 

Saving: Always work to save yourself first. Meaning, carve out a portion of your income to go to savings. Whether for long-term or short-term savings, starting this practice as soon as possible and being very consistent doesn’t matter as much. One strategy is to set up an automatic transfer at your bank that moves a specific dollar amount from checking to savings on paydays. That way, it’s happening automatically, and it’s less noticeable. An excellent short terms savings goal is to have 3-6 months of your expenses in a savings account or somewhere else safe. That way, if an emergency expense comes up or a loss of income happens, you have a cushion and can avoid going into debt. An excellent long terms savings goal is 15% of your income. That doesn’t mean you have to start at 15%; instead, it’s a good goal to build towards over time. If 5% works in the budget now, great. Each year, or as you get a raise, bump it up 1-2%, and before you know it, you’ll be saving 15% of your income for your future. Try to schedule an annual appointment with yourself or a trusted person for accountability to make adjustments as needed in the amounts you are saving. 

Loans: Borrowing money is unavoidable, from buying a car to school to mortgages. Loans are complicated and require research and understanding of your commitment before proceeding. These days, like everything else, loans cost more. It’s essential to clearly understand the terms of any loan you’re considering, from the interest rate to the length of the term to the payment amount. 

• Take the time to work with the bank or lender to ask questions.
• Be sure you understand everything that’s required of you throughout the life of the loan.
• Get answers in a format you understand – if that is a graph over time, ask for that. 
• Bring a trusted person.
• Make sure you know how much of the repayments are going to interest versus paying off the principal. 

Debt is not inherently bad, but it is essential to stay on top of and manage it along the way.

Paying Off Debt: Paying off debt can be daunting, especially if multiple loans are involved. In a case like that, write down your different loans, how much is owed, the minimum payments required, and the interest rate. Develop a plan to attack one specific loan at a time aggressively. For example, identify the highest interest debt and make that your target. Pay the minimum payments on the other debts and pay as much as possible against the highest-interest loan. Once that’s done, CELEBRATE!

Then, take that success and intensity into paying off the next highest loan.

Investing: Investing can be intimidating. Take time to educate yourself and read about investing beforehand; learn about the stock market, the risks involved, and what you should expect. Or, at the very least, talk to a trusted person who isn’t making money off you and understands investing. That said, long-term investing is integral to sound money management, and you will thank yourself for your future! Many NDs have trouble picturing the future. Draw it out or add reminders to remember why it is crucial. Investing should be for longer-term savings goals like retirement, buying a house in 5 years, etc. Anything with a time horizon of great than at least three years. Anything sooner than that, like buying a car next year, you’re better off saving at the bank. One of the best places to start investing is through your employer’s plan, like a 401k. These are great for a lot of reasons. 

• Many decisions are made for you.
• There’s less to consider. Second,
• Your employer may offer a match; that’s FREE MONEY. 
• Be sure to save as much as you need to get the match from an employer. 
• 401ks are also great because they typically have a very narrow scope of good investments to choose from. 

Be careful to avoid getting in over your head or making decisions in a rush. This savings is a long-term endeavor, and patience is often

rewarded. Seek out the help of a professional if needed; most good advisors will offer a complimentary consultation meeting. (Nick is being polite here -Yes! Get a professional’s help. It is okay that you aren’t good at everything. Asking for help in this situation is one of the best things you can do for your future self!) 

Money management encompasses so many different aspects. It’s unreasonable to be an expert in all of them or always make the right decision every time. (Hint, hint – Ask for help – I know it is hard for many NDs and doesn’t feel natural, but this is the place to do it.) Money can be very emotional, and mistakes are going to happen. That’s okay. How you respond after making a mistake and returning to good habits will dictate your financial future more than the mistake itself. Living within your means, paying yourself first, and working to build good life-long habits will undoubtedly lead to financial success.