Your personal finance journey is bound to have lots of ups and downs. There are many things you’ll have to tackle, including some major growing pains. Whether you’ve had tons of preparation or not, I’m here to help you stay on the right track. If you’re afraid because you have no idea what you’re doing, don’t worry! You’re not alone, a lot of people have been in your shoes before. The good news is that it’s easier than ever before to have access to amazing financial education resources. Now, without further ado, let’s get into how you can handle the growing pains in your personal finance journey.
A Good Budget Is Your Backbone
Budgets are the backbone of a financially-savvy lifestyle. Not everyone uses them, because they find them to be too tedious, but you have tons of budgeting techniques at your disposal. If you need help and want a basic overview of how to start a budget, check out my guide. If you actually do want a more defined budget, to maximize your savings, check out my article on zero-based budgeting. Alternatively, there are free tools like Personal Capital which can help you budget and track expenses with ease.
At the end of the day, personal finance is exactly that – personal. It’s important to keep your spending in check and monitor it to some extent. The precise methods are entirely up to you and whatever makes your life easier. However, the best solution for most people tends to be keeping it as simple as possible with a well-made budget.
Budgets Should Rarely Change, But They Eventually Do
Now, once you create a budget and iron out the details, it should rarely change. Don’t fall prey to the trap of lifestyle creep. As your income increases, keep your spending the same (or lower it). Your spending should not increase unless there is a very good reason.
Common Growing Pains That Mean Changes In Your Finances
Which brings me to my main point. There will be growing pains that mean changes in your finances must happen – including in your budget. Let’s break down some of the most common growing pains!
Moving
When you move, some things will have to give. Now, moving doesn’t necessarily mean you’ll have long-term changes to your finances or budget, although that is often the case. Either way, moving will cause a lot of short-term expenses that can really hurt your nest egg. To minimize the impact, plan your move carefully and try to save up for it ahead of time. If you can, find ways to cut costs during the transition. Once you have moved, it’s time to tighten up the budget again and get things back in order.
Getting Married
Getting married is obviously a huge event in anyone’s life. When you get married, your expenses are likely to increase. However, your income will also increase – hopefully by more than your expenses increased! The important thing here is to communicate properly and honestly with your spouse about money. If you’re able to talk about it, you should be able to handle it together. The biggest problem I see is when couples stop discussing finances together, so their financial security starts to fall apart over time.
Having Children
Children are expensive, there is no way around that. Fortunately, there are many things you can do to help prepare, as I know we all want what’s best for our kids. Kids are going to be some of your biggest expenses of all time, but also the most rewarding thing you’ll have in your life. Talk to your partner and do your best to plan for the changes that will come with children!
Changing Jobs
Obviously a promotion is a good type of growth. However, sometimes demotions happen, or you’re laid off and have to take a lower paying job for a period of time. I’m here to say that’s okay – it happens to tons of people. The best thing you can do is try to land on your feet and get back in the job market to get the pay you deserve.
ZipRecruiter is one of the best job boards out there to help you with your search. On top of that, getting a little more frugal wouldn’t be a bad idea, or you could start a side hustle to make up for the loss of income. The same applies if you decide to quit your day job. You can replace it with another source of income, or do your best to find a new employer fast. If you’re quitting, I highly recommend you line up another substantial source of income before you put your notice in.
Health Issues
Health issues are something we all have to face at some point. If you currently have health problems, then this should be a significant part of your current budget and you’ll have to adjust for it. For those who don’t have any current issues, plan for them in your future. As part of retirement planning, you should always factor in healthcare expenses and everything that entails.
Ways To Manage Growing Pains
Fortunately, there are tons of tips that can help you manage growing pains. Ultimately, it’s up to you, but take some of these ideas to heart.
Understand What You Can Avoid
There are certain issues that you can avoid in their entirety, or at least work on mitigating. Remember what you’re responsible for and how you can impact it. Obviously, if it’s something you can’t control, then you have to do your best to prepare for emergencies.
Make Saving And Investing A Priority
On top of that, your future self will be in a much better position if you start investing in index funds and ETFs now. This doesn’t have to be complex or anything, just use a brokerage like M1 Finance to invest in some of the low fee ETFs! With time, and consistent investing, you’ll be amazed at how much you can build up.
Back Off The Debt
Another thing you can do to help with your growing pains is to back off the debt. You can work on eliminating your current debt, but you should also avoid taking on new and unnecessary debt. Something like a mortgage is perfectly reasonable, but don’t rack up thousands in credit card debt needlessly!
Emergency Funds Can Help With Debt Management
Emergency funds are amazing tools. As the name implies, they’re perfect for emergencies. When you have a problem, it’s nice to have the money to take care of it on hand. At the same time, this lets you prevent taking on new debt. Basically, if something bad happens, an emergency fund will let you take the hit without having to go into more consumer debt.
Constantly Challenge Yourself
Do yourself a favor – constantly challenge yourself. It will force you to grow to new heights, and it can help you handle problems better in the future. Growing pains are a natural part of life, so why don’t you get a leg up on them and push yourself to be the best version of you that you can be!
Conclusion
Your personal finance journey will be a long one, and there are sure to be some growing pains along the way. However, as long as you stay disciplined and focus on your long-term goals, you should do just fine. If you have any tips, or an experience to share, let us know in the comments!
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