Hi friends,
I grew up paycheck to paycheck and thought my financial anxiety would melt away when I started making more money. But making more money didn’t magically make me financially literate.
I still had no idea where my money was going and I had zero financial goals. Financial literacy is about knowing what’s going on with your money so you can tell it what to do. When you don’t know what’s going on with your money, you can’t make plans or decisions and you certainly can’t build wealth. When you start paying attention to what’s coming in and what’s going out, you have more freedom, more options, and less fear as you pursue your goals.
The good news is that getting on track with your finances starts out hard but then becomes fast, fun, and easy (eventually).
Here are three simple habits you can practice to get on track financially right now!
Save 3-6 months of expenses
Saving 3-6 months of expenses will give you a great buffer for any unexpected life events like unemployment, a car breaking down, a medical emergency, or even helping family or friends who have fallen on hard times.
But how much should you save exactly? Well, the only way to know that is to calculate what you spend on an average month, then multiply that number by three or six. Drag your last three bank statements out of the darkness and into the light, then tally up how much you spend every month on living expenses.
Pay off high-interest consumer credit cards
Paying off your credit cards will raise your credit score, reduce your debt burden, and reduce stress around your finances. Got a lot of debt? Use the “snowball method” of paying your debt from smallest to largest to keep the momentum going.
Moving forward, try to avoid using credit cards unless you know you can pay them off every month in full.
If you don’t have any credit card debt, then tackle your other debt like your student loans or your home.
Increase your income AND reduce your spending
In the famous words of William J. Bernstein, author of ‘If You Can: How Millenials Can Get Rich Slowly‘- “if you can’t save, you’ll die poor.” Saving can be difficult for creatives making an inconsistent living, but it’s the most important thing you can do to get your finances on track. Create space in your finances by increasing your income and reducing your spending so you can save. Accept some short-term pain for some long-term stability by saying yes to that extra job, and no to that trip to Cancun. Not forever, just until you’re back on track.
In conclusion
Save, pay off debt, save.
As always, get out there, get to work.
-The Werking Writer
Pursue a Career in Screenwriting without the Stress
The Werking Writer School trains screenwriters to become creative entrepreneurs who can confidently navigate building a professional network, attract managers and agents, manage their personal finances, pitch a television show, and consistently produce original work they’re proud of.
