One of the questions I’ve been getting a lot lately is, “Rachel, what do I do with the money I make? Or how do I plan for big life changes?”
In fact, just this past week, a few people have told me about their big up-and-coming life changes and asked for some guidance on the next steps. So, you might be reading this blog because you’re experiencing some big life changes like a big tax return or saving for a wedding or a house, getting a sudden inheritance, or making more money in your business now. I’m right there with you. We just moved and haven’t even decorated yet! I know what it’s like to go through tons of life changes but let me guess. Now you’re trying to figure out your next step. In this blog, I’m going to share with you a couple of awesome steps that have been really helpful for me.
Important disclaimer, this is not financial advice. Let me say it again. This is not financial advice.
I am simply sharing with you what I wish I had known sooner. In the last 10 years, I went from being a single mom on welfare to owning two multiple seven-figure businesses. What I will share with you guys is NOT the path I took. However, in hindsight, I wish I had! I made so many mistakes along the way with saving, spending, and investing, or a lack of some of those things at times. But one thing that I really, truly learned over the last 10 years is that finances are confusing! They’re not exactly taught to us in school. So you might be reading this and thinking, “How do I save? Where do I save? How do I get started? How do I invest?” Today I’m going to share with you two paths that are super, super helpful to help you figure out your next steps, especially when it comes to your finances.
I’ll say this one more time. None of this is meant to be financial advice, but rather some best practices that I’ve discovered that I wish I had implemented sooner. I’m also sharing what we have done to fix our financial health as well.
Alright, so there are two paths that I really love to focus on. And every one goes through a different season in their finances. Now you may have experienced a growth in finances in your business, and you’re starting to wonder, “Okay, now what? Do I splurge on a hot tub? What do I do with all this new money coming in? I’m not used to this.” But on the flip side, sometimes we also have to take a slow and gradual path towards saving and investing, and that can be the right path for many people. Important note. Nowhere in this blog will you hear me say that you need to skip coffee or avocado toast or any of the amazing little delicacies or luxuries we enjoy daily! Rather, I’ll be outlining two different paths that can be really powerful to support you in setting yourself up financially.
Path 1: When You’re Looking At Major Life Changes
Alright, so there are two paths we’re going to focus on today. The first path is what to do when you’re facing big life changes. These are big shifts, and we experience big shifts at different times, whether it’s saving for a house, or maybe you’ve recently sold a house, or you’re planning a wedding. Maybe you got a new job, promotion, or tax return. You’re excited about it. Alright, so the first thing I want to share with you guys is that this blog is brought to you in partnership with CIT Bank. And we’re going to talk a little bit about them because they have an incredibly exciting promotion that I’m so excited about and super honored to share with you today.
Okay, so you’ve got a tax return. You just sold a house or are saving for a house, you’re planning for a wedding, you just got a promotion, or maybe you sold a business. These are all examples of major life changes that can leave us with large sums of money just sitting in our bank account. So sometimes we might be sitting and just having all that money in our checking account, not really doing much for us. So if we’re going to go the path of major life changes, if that’s you, you know exactly what I’m talking about. It might be time to open a money market account with CIT bank. CIT bank has an incredible promotion on their money market accounts. Ready for this? If you fund your CIT Money Market Account with $15,000 and maintain that balance for 60 days. You will get a year of Amazon Prime valued at $139 for free. Just for putting your finances that are funding your major life changes into that money market account for 60 days. Plus, CIT bank has some amazing things going for them like great rates, no fees, awesome perks, including a year of Amazon Prime worth $139, and so much more! You can check it out in the link beneath this blog as well as in the pinned comments. If you’re reading this and wondering, “What’s a money market account?” Essentially, when you are beginning to save and invest, your money market account allows you to use it as a regular checking account but still accumulate interest on the money that you’re putting into that account. Now, if you’re not in a position to put a large sum of money into a Money Market account, that’s okay! You may be perfectly positioned to start on the second path!
Path 2: For When You Need To Go More Gradually
Now, this is the path that I absolutely love, and I will break down all the steps. The second path is slower and more gradual. Now what’s interesting is as you read this blog, there’s a chance that you may actually see a need for both of these paths, depending on exactly where you are focusing your energy and what your next few years look like. Now, most of us experience those big life changes a few times a year or even a few times a decade. But if you’re in the place where you need to go a little more slowly and gradually, I’m going to share with you some steps that are really, really powerful! It’s simple but not necessarily easy, especially if you are new to the world of saving and investing. So here are the steps that I wish I had taken on the slow and gradual path.
Create a Budget – This is super, super, super important. There’s a quote I once heard that I absolutely love “A wallet expanded does not easily contract.” Meaning that if you create your budget here, now, today,– as you get a promotion, as major life changes happen, as your business grows and you make more money, you want to actually keep the budget that you created based on your finances here, now, today.
Create a plan to generate an extra $1,000 per month – Now, if you’re a freelancer, which is my expertise and something I absolutely am passionate about, that might be one or two clients per month. You will then be generating an extra $1,000 per month, but step three is absolutely essential!
Stick to your original budget – This is key because otherwise, you’re just gonna spend all the way up to the expanded wallet, and that extra increase in your finances isn’t going to ultimately affect your ability to save and or invest.
Invest that extra $1,000 per month – If you invest this $1,000 extra per month for 20 years at just 5%, you’ll have $415,000 in your account in 20 years! That’s fantastic! In 30 years, that’s 840,000! But even cooler, in 40 years, you’ll have $1.5 Million saved simply by creating a budget generating more than that budget and saving the difference!
Now let’s say your business does well and you get a few more clients, and you’re generating an extra $2,000 per month. Now the interesting thing to keep in mind is that a lot of times, we have this belief that if we wait longer, it’s going to be easier to save and invest. And I also fell into that trap as we built our business because I didn’t follow the steps I just shared. So whenever we got, let’s say, a tax return or closed a big client, I was like, “PAYDAY KA-CHING! This is so fun!”
There was actually a point in our business where (and this is even hard for me to admit) we were generating $86,000 per month in our two businesses combined, and I was blowing through the money almost faster than it came in. It was difficult to make payroll! I literally thought I was Oprah, like giving people cars and sending families on vacations.
The truth is you have to learn to budget, save, and invest based on where your finances are today otherwise, we don’t just magically get all of those skills and habits over time or by making more money. This is actually part of the reason why it is estimated that about 70% of lottery winners go broke! It’s because they didn’t create a change in their saving habits and their lifestyle habits.
An absolutely fantastic read to understand how to save, invest and truly build wealth that sets you free is a book called The Richest Man in Babylon by George S. Claisen. Now, I will give you a heads-up. This book has a lot of stories that are incredibly out of date. But the principles and lessons in this book still apply today. The rules for wealth and money outlined in this book are so fantastic and well put together I 10 out of 10 recommend reading it.
However, if you’re reading this today and you’re like, “I just have this gut feeling it’s time for me to start saving. It’s time for me to start investing.” First up, follow the steps I shared. Next, check out CIT Bank in the link below and see all their amazing features. For example, many accounts require that you have a $2,500 minimum deposit. CIT’s minimum deposit is $100 to get your account started, so it’s truly accessible for people who are building their wealth oftentimes for the very first time. Check it out. I’m super excited for you, and I can’t wait to see what will happen with some diligence, discipline, and taking some small steps to set yourself up for financial success! I’ll catch you guys later. Bye for now.
