Finances: Starting Over

I’m going to start this post off by stating I’m not a finance expert. I’m simply someone who has lived experience of having to climb out of a financial hole and who has read a lot of finance information and books.

This article is tailored to the person most like me - last year I had a negative balance in my bank account , bills I couldn’t pay, and was living paycheck to paycheck and now, a year later, having a $1,000 emergency fund, 3 months of expenses saved, and taking an active participation role in my financial living.

Living Paycheck to Paycheck

I lived paycheck to paycheck for more years than I want to count. During a large portion of this time, I was also working two jobs just to keep a roof over my and my animals heads. It was a brutal time for me. Even more brutal, was when I had to give up my 2nd job due to my declining mental health. I was in no way prepared to live on my one source of income and I was incredibly stressed out about what I was going to do. Thanks to things like credit cards and Economic Impact Payments during COVID, I somehow managed to barely make it from paycheck to paycheck.

Then, in April 2022, I was forced to go on short term disability for 2 months because of my mental health. Now, receiving only 63% of my normal paycheck, I was no longer even barely surviving. I stopped paying my credit card payments because I couldn’t afford them. My electric bill and internet bill were beginning to pile on top of each other each month because I couldn’t keep up with the payments. At one point, I was living with no food in my cabinets and no money to afford food.

Finally, in June 2022, I had recovered enough from my illness to return to work. When I returned to work, I had a negative balance in my bank account and no plan for getting that back into the positive. For my first 2 weeks, I struggled immensely financially until I finally got my first paycheck again.

It was at this time that I realized something had to be different. Something had to change for me or I was never going to get out of this crippling financial rut.

Where to start when you start…

It may feel overwhelming at first to know and understand where to even start. Typically, when your finances are in a rut or out of control, the easiest feel good solution is to look the other way. But you’ll never get better with this mindset. To clean up the mess, you have to face the mess first. It’s tough, but you can do it!

Track your expenses

The very first change, and the one ANYONE can literally begin doing right now, is tracking each and every one of your expenses. This is the simplest way to start and is done through little effort on your part.

I keep a running list in my Notion account that lists out all my daily transactions. I try my hardest to enter each transaction as I make it and not wait until the end of the day to calculate so as not to forget anything. This takes practice, I used to forget a lot in the beginning, but the more you do it, the easier the habit will become, and eventually you’ll be tracking everything with no slip-ups.

The important part of this step is getting to know exactly what you’re spending your money on. Being familiar with where your money is going, even if those places aren’t good, is the first step to having control over where you spend your money. The goal in this step is not to change anything or do anything differently, it’s simply to track each expense as it happens.

Set up your system

Next is the fun part - creating or organizing the system you will be using to get your ish together.

Personally, I will ALWAYS be a HUGE fan of Notion when it comes to organizing and keeping myself on track. The thing I love about Notion, especially for finances, is that you can view your data in so many different ways. You can create tables, lists, calendars, and more. To get started with a free Notion template or page, click here.

Some other good planning and documenting tools include Google Docs, Spreadsheets, a bullet journal if you prefer to put pen to paper, or a budgeting template that you can get online from places like Etsy.

Along with my Notion, I also use Mint to help track and organize my expenses. Personally, I track my expenses twice. I track them manually and I track them electronically. Although this may seem like too much work, this really helps me stay on top of my budget and helps ensure that I’m counting all my expenses in my manual tracking, even the expenses that may be deducted without a notification or alert.

Some other good options for electronic tracking besides Mint (free) includes YNAB (paid), Every Dollar (free & paid versions), and PocketSmith (free and paid versions).

Whichever version, electronic or manual, I STRONGLY suggest utilizing a system that has you manually track your expenses. Tracking each expense on your own makes you a lot more aware of what you are spending and helps you begin to see the whole picture of your finances.

Starting to Save For an Emergency Fund

Saving can be a touchy subject for a lot of people, especially for anyone living paycheck to paycheck. But believe me when I tell you, saving is HOW you begin to stop living paycheck to paycheck.

To start your new relationship with saving, you will need to open up a savings account. Pro-tip: Do not use one that you already have, create a new one that is separate from any other savings or checking account you may use. Personally, I prefer to use a savings account with my regular online bank, Ally, because of their high-yield savings accounts but MANY financial experts stress the importance of having a savings account that you don’t have normal daily access to - this makes it harder for you to just transfer money out of your savings account to your normal checking account and use it. Know your limits and your ability to maintain control when you feel tempted to use your savings. If you don’t think you can control the urge to use the money, get a savings account with a bank separate from your normal checking account. This is a good way to limit how easy the money is for you to use.

The thing with your new savings is this: YOUR NOT GOING TO TOUCH IT, NO MATTER WHAT.

This may seem like a thing of privilege but it’s really not. It’s the bare basics of how you begin to get your financial life back on its feet.

This new savings is going to be what we call your “Emergency Fund.” And it’s for only that - REAL emergencies. This fund will help you get out from under the paycheck to paycheck life by beginning to help you slowly save your way away from the cycle.

Time to make a decision… how much are you going to put into your savings from each paycheck? The important thing to realize here is that the amount does not matter. If you are living paycheck to paycheck, finding extra money can be hard but finding an extra $5 or $10 to begin saving for your future is do-able for anyone.

Start setting aside that $5 a paycheck.

That’s it. You can do it. I know you can.

Building a Foundation

The great thing about these skills is they start small, but they ALWAYS transform into something MUCH, MUCH BIGGER. I have never met someone who has began these skills who didn’t begin to see more positive change for themselves.

Being realistic about what you can do in a short period of time is important to. Don’t expect yourself to become a finance guru overnight. Start SMALL and build.

Completing these three skills will give you the foundation you need to begin making some serious financial changes in your life. They will help you begin to define your financial picture and begin to open up doors that allow you to make choices that will benefit you in the long run. All you have to do is start.

If you have any first beginner financial tips or tricks to share, please do so in the comments!