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My Embarrassing #RealMoneyTalk Moment

   Posted On: January 9, 2018  |    Posted In: Millennials  |     Posted by: Broke Millennial®

This post is sponsored by Intuit Turbo.

Peach and I sat down the other night to discuss our 2018 individual and joint financial goals. We’re getting married this year, so it’s the first time we’re truly looking at our finances from the perspective of being a team as opposed to two individuals who live in the same home, share a dog, but don’t have joint bank accounts.

I felt nervous to share my goals with Peach because one still brings a flush of embarrassment to my cheeks.

“In 2018, I really need to be better at budgeting my money,” I said in a rush, as if I hoped he wouldn’t completely hear my confession.

“What?” Peach said, “You do so well with your money.”

“I did when I had a steady income, but last year I kept raiding my savings to pay bills while waiting for freelancer checks to come. I don’t want to have to keep doing that this year,” I admitted. “Plus, I have some really high savings goals that I won’t be able to hit unless each penny is accounted for.”

It’s true, I was terrible at budgeting my money last year.

2017 was my first year living on the variable income of a freelancer. Prior to 2017, I held a full-time job and had a side-hustle. Since I’ve never carried debt, all of the my side hustle money went directly into savings or investments, and I still saved a decent amount of my regular paycheck as well.

I knew becoming self-employed would mean a significant change in my financial life, but two problems quickly presented themselves:

Problem #1: Money you’re owed doesn’t count

Any fellow freelancer reading this can relate, it may seem like you’re earning a lot on paper in a given month, but it could take 30, 60, or even 90 days for that money to actually land in your bank account. Theoretically, I was living within my means, but that money wasn’t actually in my account yet.

I pulled money out of my savings account more than I care to admit to cover a shortfall while waiting on a paycheck. To make myself feel better, I always made a note to pay myself back when I got the anticipated paycheck, and, with one exception, I did. But this cycle induced a lot of anxiety, not only because I was technically living beyond my means (a sent invoice isn’t money and it’s not real money until it’s actually in the bank) but because I’m a personal finance expert. I make my living giving other people financial advice. Yet, here I was struggling to figure out how to switch my previously great budgeting style to accommodate my new life transition. You can imagine the levels of frustration, self-doubt, and imposter syndrome that began to sneak in telling me I was a failure and a fraud.

Problem #2: I had six-figure salary taste on an unpredictable income

After starting at around $23,000 in income my first year in New York in 2011, I’d progressed to earning just shy of $100,000 in 2016. My full-time job paid $70,000 and I grossed around $30,000 in side hustle gigs.

Then, after much deliberation, I made the switch to being self-employed.

Suddenly, all my money came from what had previously been the side hustle gigs – and I had no clue in January of 2017 how much I would be grossing that year. And yet, I was still making choices and spending as though I knew I’d be making somewhere between $70,000 and $100,000.

Admittedly, $70,000 was my goal. I wanted my first year as a self-employed person to gross at least $70,000 because it’s how much I earned at my old job. This metric would prove to me that I’d made the right decision when I left. (*Spoiler: I did gross more than $70,000 in 2017*)

It’s time to (finally) be honest

Telling Peach, and now admitting the situation to you, is my way of holding myself accountable in 2018. I’m going back to the basics and starting January by tracking every penny I spend. Peach and I are also both creating budgets that detail exactly the bare minimum we need for our monthly living expenses (he has student loans and I run my own business, so they aren’t all the same expenses) plus our savings goals. Then each month I can determine my discretionary income based on the freelance money that has actually hit my account instead of using about what I’ve earned on paper.

We all make mistakes with our money, especially as life changes, and we need to adapt from what has worked in years past to our new situations.

Helping you start your own #RealMoneyTalk

Whether or not you’ve been a money maven for years or are just trying to get your feet on solid ground, we can all use a financial tune-up. Enter: Turbo.

Turbo (yup, from the folks who bring you TurboTax) is a free tool to help you see where you truly stand financially. Turbo uses a three-pronged approach of gathering your verified income from your tax data and showing you both your credit score and debt-to-income ratio in order to create your financial health profile. With this information, Turbo is able to tell you if you’re in good financial standing, and give you customized financial advice for your particular situation. This more holistic approach to your financial life can empower you to feel confident in your financial choices and better unlock the resources at your disposal.

And because we all love a good benchmark, you can also use Turbo to compare yourself to other people in your life stage who reside in similar areas.

Best of all – you don’t have to be a TurboTax customer to get free access to Turbo.

Remember — You’re not alone in trying to better your financial life

One of my goals is to help people take the stigma out of talking about money. I’m joining with Turbo to help others talk more openly about money by sharing my own story on social media. Join us by sharing your biggest money failures or triumphs using #RealMoneyTalk on Twitter, Instagram, and Facebook. You can also read other’s money stories here.

Photo by Abigail Keenan on Unsplash

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9 responses to “My Embarrassing #RealMoneyTalk Moment

  1. Creating and following a budget is one of those things that, if you’re spending below your means, can easily be overlooked. We don’t make a full-fledged budget anymore; instead we review our spending every few months and make sure we’re still on track to hit our savings goals. This works fine for us, but any time we have any sort of income fluctuation, we need to review our budget.

    I think all this goes to show that just because someone looks like they’ve got it together doesn’t mean they do, at least not as much as one might think :)

    Good luck with your goals this year!

  2. Wow! I so appreciate you doing this. I’m encouraged to share my own #realmoneytalk. Just the other day I told my wife “my goals” and felt like crap bc she all of the sudden stopped me and ask “what do you mean ‘my goals’ I thought we were a team” :( I realized how selfish I was being with our money.

  3. Don’t be so hard on yourself! Transitioning from a full-time income to self-employment income is tough. I went through the same issue when I was self-employed in 2015. I found myself doing the same thing (spending based on invoiced amounts versus the cash I actually had on hand).
    My solution was to build a cash buffer separate from my regular checking and emergency spending accounts. I’d keep an extra $1-2K in there to serve as a stop-gap when those freelance checks took longer than expected to reach my account. Worked like a charm.
    What’s important is that you’re aware of this habit and are holding yourself accountable in 2018. Best of luck!

  4. It’s so great that you are sharing this. Tracking your money is something that few want to do but it’s vitally important to financial success. If the PF bloggers are not doing it, imagine how rarely everybody else does. Good luck in 2018, I’m sure you’re going to crush it. I can’t wait to hear how much you’re benefiting from this change in a few months.

  5. Don’t feel embarrassed on having to pull money out of your savings for bills! You started a journey that very few do in working for yourself, and that requires a lot of initial sacrifice! Having a written budget makes everything much simpler because it holds both parties in a relationship accountable to each other.

    Thank you for sharing this and I can’t wait to see how 2018 goes for you and your husband!

  6. Thank you for your honesty and sharing the lessons you learned in the past year. It is not easy to move from a fulltime job into self-employment and you did it! At least you were honest with yourself, your partner and to us. Keep up the good work!

  7. Congrats on getting married soon! And don’t be so hard on yourself :) you are an inspiration to many! I got married last year and we are still working on merging our finances… it is a learning curve for sure but weekly financial sit-down meetings have been life savers!

  8. You are in the right community to share your financial whoopsies. We all would be lying if we didn’t have or are currently wrestling with money issues.

    I know for a fact I am not as brave as you to leave W-2 income for 1099.

    You know what to do. You have the talent. You got this!

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