Reopening and Your Budget

I was chatting with a friend the other day, and she was telling me about the wellness center and spa that she uses.   She was able to book an appointment for herself for the first time in over a year, and couldn't have been happier.  When she got there, she quickly discovered that the package she had prepaid couldn't be accessed due to system updates.  It wasn't really a problem because she had the cash and chose to simply pay it.  But this really got me thinking about how the reopening might impact our bottom line.

If we really zoom in on our household spending, most of us can find differences in our pre-pandemic versus pandemic budgets.  Many families have seen a higher grocery bill, but lower expenses in many other categories due to the closure of so many businesses.  Now that the world is back open, it seems people are excited to "get back to normal," but what does that mean for their budget?  While some people are proceeding with caution, others are so excited that they're rushing back out into the world in order to enjoy all of the activities they feel they've been missing.

A Question of Values

It almost seems like the pandemic put us all on a massive timeout.  It was actually pretty effective.  I mean, I certainly thought about things, didn't you?  I really tuned in to my own values and had a lot of time to communicate with my partner about them.  There are some things that enrich my life that historically haven't been given enough of my time.  That needs to change.  There are also some things that didn't make the cut. There are some things in life that I might need to break up with.  I know I'm not alone in this rediscovery of my personal values, but these discoveries are meaningless if they don't result in real change.  The kind of change that comes from inspired action.  The kind of change that comes from laser focus on the vision for your life.  You can have anything you so desire if you have unwavering belief in it (The Universal Law of Belief).  What is behind the curtain of this vision for your life, the one you have complete confidence in obtaining, is really a question of values.  What are you carrying into your future, and what are you leaving behind?  If you look closely at your schedule and your budget, you will see your values.  If the values you see between the lines of your schedule and your budget are in discord with the values you are holding in your heart, you are in a place of resistance, and it's time for a change.

Be Proactive

If you are using the 50/30/20 Budget, like I do, you should reevaluate the 30% Flexible Spending (Lifestyle) category.  What is truly available for you to spend?  It's time to get extremely deliberate here. We've all had more than a year to think and we've focused in on our values, and our communities are reopening!  It's time to allow our inner selves to come through the things we value and have a respected place in our budget.  I am so excited that my friend is returning to the wellness center she so loves.  She also greatly misses her yoga class and plans to return to that as well.  There are other things that took up space in her pre-pandemic budget that no longer align with her values.  She used to consume a lot of fast food out of sheer exhaustion and lack of preparation.  Now, she's gotten into a groove with meal prep and physically feels a million times better.  I'm sure she'll pull into a drive-through once in a while, but she's really reigned in her food spending (both groceries and dining out) and wants to keep it at its newfound level.  If you were spending time and money doing things that no longer align for you, let's cut them out and make space for the things you are truly excited to be doing again!  You get to choose which things make the cut, no one else!  If you align your desires with the flexible spending portion of your budget (and in some instances the goals section), you can also stay on track financially.  If we're reactive rather than proactive, we run the risk of spending mindlessly out of excitement and running ourselves into unnecessary debt.  We all deserve better than that, don't we?

Investigate Businesses 

If there are places you used to frequent, and they survived the pandemic, they might also be different than they were before.  My friend found that her prepaid treatments couldn't be cashed in for this recent visit because they were changing their system.  Some businesses have taken the opportunity to make changes, and others might have made them because they felt their hands were tied. You might find that prices have increased, offerings have changed, hours have changed; even the staff may have changed.  While no one can blame business owners for making the changes necessary for their business, consumers need to be aware of how these changes impact their own personal budgets.  If a dinner out costs 20% more due to price adjustments, we need to make appropriate choices for ourselves.  This could mean cutting in another area, dine out less, or choose a different establishment.  There are no wrong choices here, but doing our homework will give us the opportunity to make a mindful choice rather than one by accident.  

Reevaluate Needs

If you've been working at home for a year, like I have, yoga pants may have become the norm.  I still get dressed for work, but it really does look different when I'm literally not going anywhere. Also, with masks, I haven't really worn any makeup in a year.  In fact, I just had to buy a tube of lipstick, realizing that when I ran out, I didn't re-up it because I wasn't going anywhere.  There are a number of little things like this.  I know that when I physically return to my workplace, I need to make sure I'm prepared.  I am going to need to reevaluate my wardrobe among other things.  If I don't have the things I need for returning to the workplace, I will need to budget appropriately for that.  This cannot be an excuse to overspend.  The truth is that I don't anticipate needing much but in my world makeup, footwear, and slacks may need to be purchased.  Consider this for all members of your household.  If you have children that will return to a physical classroom after being remote all year, this could impact your budget.  Take stock now, so you can replace items little by little as needed.  

I am genuinely excited about seeing businesses around me opening back up.  I can't wait to attend a Broadway play or book a massage.  Honestly, it all sounds wonderful.  What also sounds wonderful is operating at the speed of my budget and continuing to be mindful with my money.

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The Budget: The Ultimate Life Design Tool

I've been recently considering the relationship between myself and the mind.  For many years, the mind has been desperately clutching for control, like a new driver grips a steering wheel.  It would yell, scream, and use fear to control my actions, believing that it was keeping me safe from harm.  While I'm grateful, this control-seeking behavior wasn't at all necessary as my inner-self has always been capable of steering this ship I call my life.  I've spent years studying, meditating, practicing, and finally, it seems the mind in me has come to the understanding that it doesn't have to work so hard.  It can relax a bit and know that we're always okay.

Personal finance is generally the mind's game, and I can assure you this mind of mine has been primed.  It has trained endlessly as if preparing for the personal finance Olympics.  I've memorized rules, strategies, account types, theories, orders of operation, and admittedly derive huge pleasure from the act of doing so.  But it seems I've entered a space where the mind is beginning to enjoy sharing responsibilities with my inner-self, and I feel as though it's inviting my inner-self to play with it in the financial arena as well.   One area where I see this coming up is in the budget.  The mind has had the budget on lockdown for a long time, and I am eternally grateful.  This beautiful budget has allowed us to save a full 20% downpayment for a gorgeous piece of New York real estate.  We won't be touching our retirement accounts or emergency savings for it either, and we feel incredibly blessed.  It seems that by the end of summer, we should be in the process of moving.  With the move comes a new budget to sort.  We have ideas about what that will look like already, though I can't help but feel you can't entirely know the details until you've started to experience them.  These milestones and life transitions come with a tremendous opportunity to invite your inner-self to the table.  Certainly, the mind has its goals: pay off the mortgage early, get teacher loan forgiveness sorted, pay off the rental, and it'll certainly get its way.  Achieving financial goals is one form of joy!  But there is more joy to be had in redeveloping a new budget.  

Of course, we'll return to our 50/30/20 Budget and start by plotting our monthly bills into the categories of "fixed" and "flexible" expenses.  Then we'll move on to "goals."  This will involve a bit of a dreaming conversation.  We already contribute heavily to our retirement accounts and will be pensioners, but how quickly do we want to pay off this new mortgage?  How much extra do we need to contribute to the mortgage from day 1 in order to meet that goal?  We will have these same conversations with some of our other major goals.  This is where the mind and the inner-self meet. They're co-pilots.  The inner-self knows my heart, knows my joy.  The mind is my chief strategist and gets to plot possible courses.  They need to become in sync and for couples, both individuals need to also become in sync.  I have to be honest, I'm really excited to have that particular monthly money meeting.  I'm going to create a fabulous spread, and prepare to co-create the life we both want to be living.  After we decide on our goals and understand how much of our income needs to go toward these things each month, we're going to automate them.  This not only makes things easier in terms of items on the monthly to-do list but also energetically.  We won't have to put so much energy into these goals, but rather just address them briefly at our money meeting and move on to the part of the budget that largely goes to designing our lives.  There are a handful of actual bills that go into the flexible spending section of the budget, but its alternate name is "lifestyle spending."  This section is theoretically 30% of your income when using the 50/30/20 Budget and has the opportunity to be your inner being's playground.  What are your values?  What kind of life do you want to design for yourself?  Do you want to take a photography class?  A sip and paint? Learn the guitar?  Study ballet?  Do you want a massage this month?  Take in a play or concert? Do you want to stash a little money for an upcoming vacation?  There are no wrong answers.  Designing your life should be one of the components of a healthy budget.  Your budget isn't supposed to be a restriction. It should be a place where your mind and inner-self conspire to design for you the best life possible in a manner that is sustainable now and in the future.

Honestly, there's also a bit of identity in this.  Sometimes, when you are working toward a goal, and it gets to become a long slog, you can start to feel like your whole identity is wrapped up in a combination of work and the goal.  Sometimes, it's a matter of staying the course for a short period of time until you can check off that goal, and switch gears.  Sometimes, you may want to reevaluate prior to meeting the goal.  We for one, have stayed the course, realizing we were so close to meeting our goal.  I wouldn't change any of that.  Though, in reflection, I can see that I was beginning to feel as though working and saving were absorbing more of my sense of self that I prefer, which I fully intend to shake. Again, it's worth asking "Who am I outside of this goal? Outside of my job? What am I doing to support myself in being that person?  How is my money supporting me in developing my life in the direction of the things I value?"  I have been thinking about these questions for some time and have fairly clear answers.  If your answers are less clear, that's okay.  Give yourself some grace.  But do ask the questions.  You owe it to yourself to step into who you are truly meant to be and live a life of joy in the process.

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Things I want our kids to know (about banking)

Of the many hats worn by both my partner and me, "teacher" is one that we both wear with pride.  By the time this is published, there will only be a couple of days remaining in our school year, and another cohort of youth will cross the stage with diploma in hand and enter into the realm of adulthood.  Parents and teachers have all done our best to prepare our youth for the world beyond high school.  Many are working summer jobs, and attending college in the fall.  

This initial stage of adulthood is one of major discovery.  Everything is new.  After I graduated from high school, I moved several states away into an apartment for the very first time and began school part-time (which I did for one year before going full-time).  I really didn't have much concept of paying bills and am lucky that I lived with someone that could provide me with a bit of guidance.  I am also lucky that the job I landed just after that move was in a local credit union.  I really didn't know much about banking at the time.  So, while I learned how to help members, I was also able to learn how to navigate banking for myself.  Had I not started working at the credit union and had the guidance of someone that had experience managing their accounts and bills, I'm certain I would have been completely lost.

I know that lately, I've been writing a lot about how our mindset impacts our financial lives because I believe that one of the cornerstones of building a healthy financial future lies in developing a positive relationship with money.  The other component is knowledge.  While I believe that mindset is a huge component, there are a few things that we simply need to know.  So with that, there are a few things I want our kids to know (about banking).

Free is key!  When you go to a bank or credit union and ask to open an account be prepared to bring your ID; you will also need to give your SSN to them.  Make sure you ask for the "free checking" account.  Oftentimes, banks and credit unions have a free version of the checking account and a version that has a monthly fee involved.  You want the free one when you are just starting out.  

Minimum Balance Requirement:  When you open a checking or savings account, find out if there is a minimum balance requirement.  Ideally, you want the one that doesn't have this.  But if there is a minimum balance requirement, how much is it?  Are you required to keep $100 in the checking or savings?  Is it more?  What happens if you drop below that?  Will you be assessed a fee?  If so, how much is that fee?  Is that fee waived if you set up direct deposit to go into the account?

Direct Deposit:  Ask the person at the bank or credit union for the information for direct deposit.  Use this information to set up a direct deposit with your employer.  This means that on payday, your pay automatically goes into your account without you needed to collect a physical check and go to the bank or credit union.  Warning:  Be very careful with the direct deposit information.  The same information that you will use to automatically put money into your account, can be used by someone to automatically take money out of your account. If this information falls into the wrong hands, you could have issues.  By no means should you be overly paranoid about this, but you should be aware of the need to safeguard this information.

Automatic Savings Transfer:  Consider setting your account up to automatically transfer a little money into your savings account every single payday.  Be consistent.  It is important that you build up a savings account so that you have money in case of an emergency.  Set a goal for this!  Aim first to build your savings to $500, then $1000.  Emergencies happen!  Take action to protect yourself.

NSF Fees:  NSF stands for "nonsufficient funds."  This means that you tried to spend money using your debit card or a check but there wasn't enough money in the account for it.  If you do this, the bank or credit union will charge you hefty fees each and every time you do it.  Oftentimes these fees are near $40 EACH!  You seriously don't need to be buying yourself a $42 soda!

Online Banking/Mobile Banking:  This should be a free service.  Get set up for it and have them show you how to use it.  Put the app on your phone, that way if you are about to make a purchase you can log in very quickly and make sure the money is there so you can avoid an NSF fee.  This can also allow you to transfer money to and from savings.  Let me repeat myself:  Get the APP!

Overdraft Protection:  The bank or credit union can help you protect yourself from NSF fees by setting you up with overdraft protection.  What does this mean?  If there's only $10 left in your account, and you spend $20, the bank can set it up so that your account will automatically transfer the difference from your savings if it's there.  Additionally, find out what the fee is each time you use overdraft protection.  It's usually around $5 each time, which adds up!  If you use the mobile app or online banking to make the transfer yourself it should be free.  So, that's the best choice.  However, a $5 fee for overdraft protection is way cheaper than a $37 NSF fee!

Listen, there's plenty more to know and these are just the highlights, but you can do this.  This is your future.  Take it upon yourself to become educated about your money while you're young.  I promise you, it's a choice you won't regret.

To my regular readers: I know this was a different sort of post for me.  As graduation season is upon us, I've had the opportunity to reflect and kept feeling as though there were a few things I wanted our kids to know (about banking).  If any of you are parents or educators and would like to hear a few more things I'd like our kids to know about, let me know in the comments.

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