5 Financial Mistakes To Avoid As A Young Professional

As working professionals we must be exemplary at our jobs and diligent with our finances. Unfortunately, the later goal is easier said than done. Although we may work hard at our jobs, managing our money in the most prudent way can take extra work and have negative effects if we fail to handle it properly, especially during times of an economic recession like we have today. Here are 5 financial mistakes to avoid as a young professional:

1. Overspending. As young professionals with a decent salary, we can be very tempted to overspend. Many of us may not have children or family members who rely on our incomes, so we may purchase numerous things we may not need with our discretionary (left over) income. Whether it’s new clothes, take-out food, weekly happy hours, or frequent travel, we may find ourselves spending a lot more than we anticipated at the end of each month. Although it’s acceptable to “treat ourselves” every now and then, we must make sure that we have set a budget on how much we want to spend each month and have a reliable way to track our expenses. The less we overspend the more money we have for other priorities like saving and investing.

2. Not saving enough money. If this pandemic has taught us anything, it’s that we should all have some money saved up. We never know when something unexpected will happen and it behooves us to have money available just in case our income drops or a large expense comes our way. Although we may be tempted to simply save whatever we don’t spend from each pay period, we should instead take a more proactive approach. Consider writing down how much money you’d like to save each month, then have that money automatically deducted from your checking account into a savings account. Saving money this way will ensure you meet your savings goal.  

3. Under-estimating our expenses. When I was younger and more financially immature, I seemed to always run low on funds at the end of each month. There were several times that I would hope and pray I had enough money in my checking account to cover my monthly bills. Don’t be like be, have a monthly budget and be as precise as you can when it comes to your monthly expenses. Oftentimes, we may know how much we spend on rent or electricity but we may underestimate or forget to save money for other expenses like car repairs, grocery bills, and transportation costs. Underestimating these items can give us a false sense of security and cause us to think we have more money to spend in our accounts than we actually do. Being more precise with our monthly expenses allows us to better account for how much money we can spend each month and ensures that all of our necessary expenses are covered, especially during this current pandemic where our disposable income may be different from normal.

4. Taking on too much debt. With today’s age it can be relatively easy to get access to a credit card, qualify for a car loan, or receive a student loan. Although there are many good uses of these items, we must not forget that they are still forms of debt. One of the biggest mistakes many young professionals make is taking on too much debt. We may graduate from college with tens of thousands of dollars in student loan debt. We may move to a new city and pay for expenses with a credit card. We may decide our current car is too old and opt for a lease or finance a newer ride altogether. We may even get married and decide to purchase home. All of these decisions may bring us joy but may also cause us to incur a lot of debt, which may make us financially vulnerable to changes in our income. If some unfortunate event happens and we are furloughed from our job or experience a decrease in our pay, it may be difficult for us to cover all of these debt payments. We are better protected financially when we refrain from incurring too much debt at once by vowing to pay off or pay down some of our debt before incurring more.

5. Having too much confidence in our investment abilities. As we start to mature and hang around other professionals in our work or social life, we may desire to build our net worth and start investing. Many of the advice we hear about investing requires us to pick which companies we want to invest in and purchase stock. Although there is nothing wrong with buying stocks, we must do so in a way that minimizes our risk. Unless you have a crystal ball to predict the future, it can be virtually impossible to predict  which stocks will increase in value over time (which make us money) and which may decrease over time (which may lose us money). Although we can try to speculate based on news events,  most of the “insider information” is known by wall street investors and active portfolio managers long before is it known by members of the public. Since we can’t guarantee that we’ll make accurate predictions regarding a stock’s future value its best to not have to choose. Many financially savvy people purchase index funds (a collection of many or all of the stocks available) since it spares us the burden of having to pick which investments will do well and which ones wont. Plus, if one company’s value goes down, we have so many other companies that can help cushion the blow and prevent us from losing too much money. Data from the past few decades show that index funds tend to outperform the majority of actively-managed funds, which virtually guarantees us a good profit on our money when we buy index funds. Try to avoid overestimating your own investment ability and consider purchasing index funds to minimize your risk.  

As a young professional, which financial mistakes have you avoided and which ones have been more difficult to bypass?

How to use money to buy more happiness

There’s no guarantee that having money will make us happier but as someone who has been through periods where I was broke and others were I was a financially stable, I certainly prefer the later. Although having money doesn’t guarantee us happiness, Jonathan Clements’ book How to Think About Money teaches us that there are certain ways we can use the money we have to increase our happiness.

1. Spend money on others. I know this seems odd, but numerous studies in his book show that we get more happiness and lasting enjoyment when we spend money on other people instead of buying things for ourselves. Most of us have a few people in our lives that we care about. Using our money on those people in a way that brings them joy can make us even happier than we anticipate. Using our money towards a social cause we are passionate about or helping a group of people who is less fortunate can give us the sense that we are promoting goodness in the world which can provide a lasting feeling of happiness and self-contentment.

2. Focus on experiences rather than possessions. If we have money and would like to purchase something for ourself, his book states that we get more gratification when we spend money on experiences instead of possessions. In other words, we can get more satisfaction and lasting joy when we forgo buying “things” and choose instead to create memories and lasting experiences. So instead of buying the latest iphone, designer clothes, or new shoes, we would get more “bang for our buck” if we instead used our money to travel to another place, go to a fun concert, or participate in an exciting activity.”

When we use our money on experiences we get 3 sources of happiness. The first source of happiness is anticipation of doing the fun thing (knowing you have an experience planned brings us happiness from the day we decide to do the activity until the time the activity begins). We get another source of happiness by actually “doing” the activity (we have fun during the experience). Lastly, we get happiness from memories of the experience (even after it ends, the memory of that experience brings us happiness). Moral of the story: spending money on experiences and good times can make us extremely happy and that happiness has a lasting effect

3. Delay purchases (to build anticipation) If we do decide that we want to spend money on ourselves and buy some “thing” instead of an experience, there is a way to do this so that we get maximal happiness from the purchase. We should first: delay the purchase to build anticipation. I know this sounds counterintuitive in our age of impatience and desire for instant gratification, but it works. According to Clements’ book, we adapt to both good and bad things in our life relatively quickly.

For example, we get a new phone and are happy but after a couple weeks, it no longer makes us smile inside when we pull it out to text. We get assigned to a different division at work and at first it seems challenging but before we know it, we adjust to the demands and it no longer seems as difficult as it once was. The same thing happens with purchases. Because we adjust to things in our lives relatively easily it behooves us to delay this adjustment and build anticipation, since as we learned in the previous section, the mere thought of knowing we are going to get or experience something enjoyable actually makes us happy. We can put a timeline in place and tell ourself that we’ll buy that thing in a week or during our next pay period and the anticipation of being able to get that thing during the allotted time will actually bring us more lasting happiness than if we were to just buy it as soon as possible.

4. Opt for frequent small purchases instead of infrequent larger ones. Along the lines of delaying purchases to gain additional happiness from the anticipation of something, Clements’ book teaches us another thing we can do to gain more happiness from the things we purchase: Opt for frequent smaller purchases instead of infrequent larger ones. As stated above, we adjust to things in life relatively quickly. In order to gain more happiness from our purchases we may need to make more purchases overall. Since it isn’t feasible or financially responsible to buy expensive things all the time, it is better to choose to buy smaller things more often instead of one large big thing every blue moon. For example, instead of buying 4 things on Amazon at one time when you get paid, purchase 1 item a week.

My point? There are a milieu of hidden gems in Clements’ book How to Think About Money, but I loved these 4 tips on ways to spend money that could increase our happiness. What do you think? Which tips might you use?

5 ways to ensure you’re financially protected against the unexpected

As we continue to advance in our careers, we must ensure that we have protected ourselves financially. If unexpected expenses, life events, or pandemics, come our way, we must make sure we have the financial means to cover our bills and take care of our families without worry. Here are 5 ways to protect yourself financially:

1. Keep your fixed expenses low. One of the first things you can do as you are getting your finances in order is keep your fixed expenses low. Fixed expenses are regular expenses (like your monthly rent or mortgage payment) that don’t vary much in price and occur each week or each month. Keeping these expenses low allows you to save and invest more money towards your future goals. It also gives you a cushion financially in case something unexpected arises. If you have the unfortunate luck of losing your job, undergoing financial hardship, or simply living through this current pandemic that has wrecked the economy and lowered your salary, it is much easier to adjust to the changes and make any necessary spending cuts if your fixed expenses are low. If your fixed expenses are high it is much harder to weather the storm and cover your bills during times of hardship. Keep your fixed expenses low.

2. Reduce (and eliminate) your debt. Along with decreasing your fixed expenses, you should also work to eliminate your debt. The sooner you pay off your credit card bills, car loans, and student loans the sooner you’ll be debt free and have less money from your paycheck going to these expenses. It’s much easier to adjust to a reduction in income or a financial hardship when you have fewer bills and expenses to cover. Plus, paying off your debt leaves more money in your pocket each month that you can use to save or invest for the future.

3. Insure yourself against catastrophe. As we’ve all seen during this pandemic, you can’t always predict when financial hardship will occur or how long it will last. Aside from keeping your expenses low and paying off your debts so that you are better able to handle any income changes or unexpected expenses, you should also make sure you’re insured. We can’t always predict when large expenses will occur and may need some assistance if they do occur. Just like all people need health insurance, all working people should also have disability insurance. You need disability insurance so that if you are injured, sick, or unable to work at your full capacity for a prolonged period of time, you can get money each month to cover your bills. People with a spouse, kids, or family members who depend on their income should also have life insurance so that if they pass away unexpectedly, their family members are covered.

4. Save money for unexpected emergencies. Although you can’t always predict when unexpected things will occur, you should prepare for this possibility so that you are ready if it does occur. Part of protecting yourself financially means having an emergency fund with enough cash to cover 3-6 months of expenses. It may take some time to save up this amount of money, but putting a certain percentage of each paycheck into a separate bank account for emergencies will ensure that you are protected financially. Many people who had emergency funds before the Coronavirus pandemic found themselves in a much better position to handle the economic impacts than those who did not have an emergency fund.

5. Make sure your retirement is funded and diversified. Another thing you can do to protect yourself financially is make sure that you have invested money for retirement in a way that increases your profits and decreases your risk. Many people who were not investing money toward retirement when they were young have fewer years to let compound interest work in their favor and may have to work even longer and save even more money to be able to retire after several decades in the workforce. Others have invested a great deal of money towards retirement but have done so in a way that makes them extremely vulnerable to changes in the real estate market or stock market. Both groups of people may be even more impacted than others during this current pandemic. The goal is to have your money invested in many different companies across a variety of industries (ideally through index mutual funds) so that you are in a good position to gain interest on your money overtime but better protected in an economic downturn.

My point? While none of us have a crystal ball to predict when unexpected things will occur, we can do the things above to protect ourselves if and when hardship arises.

6 Things To Do With Your Stimulus Check

Of note, a version of this article first appeared on Doximity’s OpMed.

The federal government has started sending out stimulus checks of $1200 to all Americans with an adjusted gross income of less than $75,000 a year for singles and 150,000 a year for married couples. Although the amount of the stimulus decreases for those who make above $75,000 a year and is completely phased out for those who make over $99,000 a year, many people will be seeing a bank account boost, if they haven’t already. Here are 6 things you should consider doing with your stimulus check:

1.     Pay bills and buy necessities. With over 22 million people filing for unemployment over the last 4weeks, many people are seeing a sharp reduction in their income and may be relying solely on government assistance. This $1200 may be just what people need to cover all their bills during this time. It may also help newer physicians and healthcare workers with any extra expenses we might be facing such as increased transportation costs to and from the hospital or increased food costs as we pay for more take out & delivery services. Others people may have children or a spouse they are helping to support and may need to use this money to pay a babysitter or cover other childcare fees. Regardless of what the expense is, we should all use this extra money to cover any bills we would have had difficulty paying otherwise.

2.     Create an emergency fund. Saving money for an emergency fund it a little bit like trying to eat healthier or lose weight. We know we should do it, but we’re always tempted to put it off. Why not use this stimulus check to finally get the ball rolling? Although many of our jobs are salaried and thus our income seems guaranteed, an emergency fund is still useful. You never know when the car might break down, the house needs repair, or our cell phone stops working. While these inconveniences may not bankrupt us, having money set aside for these seemingly inevitable, unpredictable expenses is a good use of our money. According to finance guru Dave Ramsey, the minimum amount of money in any emergency fund should be $1,000 and many financial planners advise patrons to have about 3 months of expenses in cash available at all times. This stimulus check is a good starting point.

3.     Pay down your debt. If you have any consumer debt like credit card bills or car loans that have an interest rate of higher than 8%, use this money to pay down the debt. The sooner you are able to eliminate your consumer debt, the quicker you’ll be able to build wealth and become financially independent. Instead of sending hundreds of dollars a month to a credit card company or car dealership, after paying off the debt you can instead use that money to increase your savings, invest, and fund future trips and vacations. With the Coronavirus pandemic, you may even be able to refinance loans at a lower interest rate which will allow you to pay off the balance you owe even sooner.

4.     Spend it when the economy bounces back. Whether it’s gifts for your kids or a much-needed family vacation, one of the things you could do with the money is simply spend it. Now for those who already buy way more things than they need, perhaps this isn’t the best idea, but for others who have a budget in place and are meeting all of their saving goals, using some of the money to “treat yo’self” may not be a bad idea. Many of us have been on the front lines of this pandemic and have sacrificed a great deal to help care for others. Despite the increase in hours, workload, and mental stress, many jobs don’t include any sort of bonus pay for times like these. Instead of feeling like you have to always put others before yourself, why not consider going against then grain and spending part of the stimulus money on yourself or those you love? Perhaps you’ve delayed buying those air pods you see your colleagues wearing at work. Maybe you’ve always wanted to travel overseas with your family, party in Las Vegas with your friends, or go wine tasting with your significant other. We all work hard and deserve a break. Why not use part of this check to do something nice for yourself?

5.     Prepare to invest it when good opportunities arise. Although the economy is down right now, it won’t be this way forever. Once the pandemic begins to subside and the prevalence of the virus decreases, the economy will start to bounce back. Why not use this money to prepare for when it does? Using this stimulus check, along with any additional money you may have received from your tax return or previous savings might leave you with a nice sum of cash to invest in various opportunities. Perhaps you’ve considered investing in an intriguing business idea, purchasing a rental property, or simply want to increase your investments in the stock market. Using this stimulus check as a jumpstart for your future investments might be a good use of this money.

6.     Give some of it away.  I’d be remiss, and a bit selfish, if I didn’t mention that one additional thing you could do with your check is give part of it away. For those of us who are in a good financial position, giving part of the money away to our friends and family who may be less fortunate may also be a good use of this money. While many of us have financial goals or fancy trips we’d like to save up for, we can all think of at least one person in our life who could use a little extra cash around this time of the year. Perhaps we could commit to giving at least a small portion of the money away or buying someone we love a nice gift. As the biblical saying goes, “We are blessed to be a blessing.” Why not use this money to provide a small token of love to someone else?

5 reasons I’m still investing in the stock market during the Coronavirus

With the Coronavirus pandemic, many cities across the country have shut down. While some people are working from home, many others have been furloughed or lost their jobs altogether. With this rapid decrease in economic activity, the stock market has taken a huge hit. Many people who had a big chunk of their network in stocks, have seen a sharp decline in the overall value of their investments. In the midst of all of this change, I’m staying the course. Here are 5 reasons I’m still planning to invest in the stock market:

1. I’m in it for the long-haul. Despite the low valuations of stocks at the current moment, the market will eventually recover. While the value of stocks may not bunce back in a couple months, over time the market will normalize. Since I haven’t sold any stocks, I haven’t actually lost any money. Unlike people who are close to retirement, I’m young and have just started my career. I have lots of working years left and don’t need the money I put into retirement accounts any time soon. By the time I retire, 20-30 years from now, stocks will be worth a lot more than they are right now. Thus continuing to invest in the stock market will increase my net worth over time.

2. It’s difficult to time to the market. Some investors my argue that since the market hasn’t recovered yet, people should temporarily stop investing money and wait until things recover to resume investing. I disagree. While that strategy sounds plausible on the surface, it’s difficult to implement in practice. Despite our best knowledge, it’s hard to “time the market.” No one really knows when the stock market will hit its lowest point and when it will be on the upswing. If you mistime it, which is highly likely since we don’t have a crystal ball telling us the exact date things will improve, you run the risk of buying stocks for much higher than you otherwise would when you start investing again and end up “losing money.” Since most of us don’t need money from our retirement accounts right now, we should keep investing as we wait for the stock market to rebound.

3. The price of stocks is cheap right now. With this economic downturn, many companies are not operating at full capacity or bringing in as much revenue as they once were. As a result, the economic value of these companies has decreased. Since the valuation is lower, the price of their stocks is lower. This is great news for me because it means it’s cheaper to buy stocks. Although I don’t invest in individual stocks, I can still get more bang for my buck through index mutual funds. Before the coronavirus, a few hundred bucks a month might have only allowed me to get a small percentage of stock in each of the major publicly traded companies. Nowadays, those dollars go much further. It’s as if I’m buying a lucrative investment at a discount. When the market finally does bounce back, the value of my investment will have increased exponentially. Since I can’t time the market to figure out exactly when the stocks will be at their lowest price (or available for purchase for the biggest discount), I “dollar-cost-average” and invest money each month into an index fund so that on average I will have gotten these stocks at a decent price.

4. It lowers my taxable income and student loan payment. Regardless of what the market does over time, continuing to invest in stocks through my employer benefits me in the short term. Since I mainly invest in index mutual funds (a portfolio of all of the stocks on the market) through my employer’s retirement fund, doing so lowers my taxable income. This means I don’t pay taxes on the money I invest towards retirement and thus less money is deducted from my paycheck for taxes each month. Since I pay less in taxes I will have more cash to spend after each check. Plus, lowering my taxable income by continuing to invest in my job’s 403b/401K also lowers my monthly student loan payment since my payment amount is a percentage of my taxable income. As someone who’s loans will be forgiven in 10 years, paying less each month for student loans means I pay less on my loans overall before they get forgiven entirely. This is a win-win.

5. I can write off the losses. There is no doubt that we are in the midst of a recession. As we continue to practice social distancing, companies are unable to operate at full capacity and their stocks may continue to decrease. This means that those near retirement may need to sell part of their stock portfolio to continue to fund their retirement, and thus may end up selling it for less than it was previously worth. While this may sound disheartening, there are certain things that can be done to minimize the burn. One of them is the fact that we can write off the losses against our taxable income. If you happen to sell some stocks at a loss, you can deduct that loss from your taxable income next year, if you itemize your taxes. Meaning a loss in value doesn’t really become a true loss. You get to recoup some of that money next year when you file your taxes.

My point? Despite the market downturn, I’m still planning to invest in the stock market. Doing so allows me to buy valuable stocks at a discount, lower my taxable income, increase my net worth over time and lower my student loan payments. I’m investing for long-haul and these benefits motivate me to stay the course.

4 Reasons you should start a side hustle

As young professionals we have a lot on our plate. We work crazy hours under high-stress conditions with limited time off. Although getting better at our jobs and making time for our families can be a feat in and of itself, I challenge you to consider 1 more thing this year: start a side hustle.

Starting a side hustle allows you to:

1. Explore one of your interests which may add balance to your life.  Outside of our careers, many of us have hobbies we enjoy and other skills we are good at. Instead of keeping these interests a secret or putting them on the back burner, why not explore them even more? Many of us know people who were working full time in their career, but launched a successful podcast on the side or started a coaching business. Perhaps some of our colleagues also work as weekend photographers or hair stylists in their free time. Some of the people we knew in college may have even dabbled in real estate, become public speakers, or authored a book. You can do something like that too. Whatever it is you choose, these additional things, outside of our careers, allow us to explore other interests and may add more balance to our lives.

2. Relieve stress and prevent burnout. As our careers become even more demanding and the work hours pile up, we can find ourselves feeling over-burdened. Although no job is completely void of stress, there are things we could do to decrease the stress we feel or at least lower its impact on our overall health. Oftentimes exploring our other interests, whether its art, photography, music, writing, speaking, or even exercising allows us to gain a new skill or explore a hobby that can decrease the stress we feel at our job.  

3. Standout from other young professionals and make yourself more marketable. As we enter this new decade in the age of social media and internet marketing, good branding is essential. While being competent at your day job is important, having multiple skills and things that you do well can help differentiate you from others. As you begin to stand out, you will likely garner more interest from other clients and patients which can lead to even more opportunities and higher levels of influence in both your main career and your side hustles.

4. Add additional revenue stream(s). One of the best things about exploring other hobbies and become skilled in multiple areas is that it could put extra money in your pocket. With the proper marketing, these skills and hobbies can open up additional doors for us and lead to lucrative opportunities and sponsorships that could be a reliable second or third source of income. Although your day job may pay you well, creating an additional revenue stream from a hobby or task you enjoy can increase your monthly income and make you less reliant on your day job. Plus, getting paid to do something you enjoy, and are good at, can make you even happier and increase your overall life satisfaction.

My point? Although our jobs are noble and can be rewarding in and of themselves, consider branching out a little. Think of other hobbies you enjoy or skills you possess and explore them even more. Doing so might add more enjoyment to your life and prevent you from burning out in your career. It could also help you stand out from others and may even lead to bigger and more lucrative opportunities in the future.

Tell me, would you consider pursuing a side hustle in 2020?

6 Step Money Challenge for 2020

As we embark upon this new decade, many of us are committed improving our finances. We may have vowed to stick to a budget or have a general goal to live below our means. While these are noble goals, let’s challenge ourselves to do even more. Here’s my 6 step-money challenge for 2020:  

1. Buy 1 or 2 finance books to read. There are many different ways to consume information but I’m a firm believer in the benefit of books. While I enjoy blogs, books can be a one-stop-shop for the information you seek. Having books allows us to highlight certain passages and tips that make the material a consistent resource we can refer to throughout our journeys. Plus, it provides a single resource we can use to learn about a several different topics or go in depth on one particular area. There are plenty of good finance books but I think the white coat investor has a list of recommendations organized by various categories that can be useful. When I started on my personal finance journey my favorite books were Rich Dad Poor Dad, the White Coat Investor, and the Total Money Makeover. I’ve just purchased How to Think about Money and tend to refer to Ken McElroy’s The ABCs of Real Estate Investing as I’m thinking over new real estate deals. There’s always more to learn and books are a great way to do that. Pick a couple finance books to read this year.

2. Download a finance podcast. As someone who is intellectually curious and loves to be efficient during my “off” time, I consume a lot of finance information via podcast. Whether it’s the “Hippocratic Hustle” giving me insight into ways other female docs have increased their income, “Docs Outside the Box” giving me new ideas on ways to create additional revenue streams, or the “White Coat Investor” providing step-by-step instructions on how to do a backdoor Roth IRA, podcasts can be a great way to learn about various finance topics without requiring a huge sacrifice of your time. Most episodes are 30-45min or faster if you alter the playback speed. Whether you’re commuting to work, cooking dinner, or working out at the gym, there are plenty of good podcast options. As you continue along your journey of increased financial literacy, download a finance podcast and commit to listening to 1-2 episodes a week.

3.  Join an in-person or online group. Along with increasing your knowledge via books and podcasts, strive to be more active as well. Whether it’s participating in a finance-focused Facebook group, joining the Bogleheads F.I.R.E. (financial independence retire early) online community, or going to real estate investor meetup groups in your city, surrounding yourself with likeminded people can be beneficial. In fact, it’s this active engagement that can propel us even further along in our journey. These groups and online communities challenge us to share our goals with others and inundate us with people traveling a similar path. They also provide a slew of contacts that can keep us motivated and accountable. As you continue along your journey, commit to joining at least one finance or investor group.

4. Create a spending plan for the next month. There couldn’t be a money challenge without a point on living below your means. While many of us would like to increase our savings and invest more, this can be quite challenging to uphold. Sustainable change involves altering our behaviors and putting boundaries in place that keep us focused on our goals. One of the best ways to do this is by creating a spending plan for the next pay period. While most of us know where large chunks of our money are spent, there still may be things that go unnoticed. The challenge for this year is to create an active spending plan that outlines which things we will purchase, and which bills will be paid on certain dates. It also includes automating our payments so that a percentage of our income automatically goes to various savings accounts or investment funds. If you haven’t already done so, create a spending plan that automates payments and “forces” you to live below your means.

5. Pay off “bad debt” early. I’m a huge proponent of paying off consumer debt, especially when the interest rate is higher than 7%. Many of us understand the importance of getting the match to our retirement plans, but once that’s done, we are unsure on what to do next. The correct answer may vary from person to person but generally speaking, once you have at least a small amount of cash for emergencies, you should prioritize paying off consumer debt like high-interest credit cards or car loans. Although investing in the stock market is another great option, the guaranteed return from paying off debt cannot go unnoticed. Plus, paying off consumer debt faster will increase our monthly cash flow and allow us to invest even more towards retirement once the debt is paid off.

6. Give more to charity. Although we each have different priorities and plans for our money, one of the things I challenge you to do this year is think outside of yourself and give more. Even though it can be tempting to delay helping others until we have met all of our own individual goals, I challenge you to find ways to give in the midst of this journey. Oftentimes, we find the most happiness when we find ways to assist others. Giving has helped me stay grounded in the midst of success and allowed me to help others in a way that has increased my own quality of life in ways I never imagined. In 2020, I challenge you to find ways to give more. Doing so may impact your own life more than you may realize.

Tell me, what are some ways you will challenge yourself to improve your finances this year?

5-Step Money Challenge for the Holiday Week

1. Pick one charity or organization to donate to as a family. The holiday season includes a lot of celebrations but it also a time we give. Whether it’s putting a little extra in the church offering or giving our spare change to the solicitors outside of our local grocery stores, many of us express our generosity around the winter holidays. Why not take it a step further this year? Together, with your family members or close friends, pick a charity, organization, or church to give an extra offering to this holiday season. Doing so not only makes us less selfish but it allows us to enhance the lives of someone else.

2. Have a limit on how much you plan to spend during your next restaurant outing and stick to it. While sticking to a budget for an entire month can be a bit challenging, why not take baby steps towards this goal during the holiday season? We can do this by thinking about our next restaurant or social outing and coming up with a budget of how much we want to spend. Then stick to it. For example, if you plan to go to dinner with friends then look at the menu ahead of time, determine how much you plan to spend, and make a concerted effort not to go over that amount when you actually get there. Whether it’s a restaurant or some event in our city, try to use self-control by sticking to a budget, not matter how large or small it may be.

3. Vow to do 3 things that don’t cost any money. Because of the holiday season many of us get additional time to spend with the people we love. While we may be tempted to go out to dinner and do various things around the city, we must be conscientious of how much we’re actually spending. Part 3 of this challenge is doing 3 things during the holidays that don’t cost you an additional money. You could watch a Christmas movie on TV, listen to a holiday album, or bake cookies with ingredients you have at home. You could also video call family members that aren’t with you in person, decorate a Christmas tree with your kids, or play a fun board game with your family. Regardless of what you choose, pick 3 things to do that don’t cost you any extra money.  

4. Purchase at least one meaningful gift for someone you care about. Along with donating money to others, another part of the holiday season is showing appreciation to the people we care about. While we may be tempted to purchase new designer items or expensive electronics, this year deviate from the norm. Think of one inexpensive, but meaningful gift you can give to someone you love. Maybe it’s a book they’d like, a bottle of wine they’d love, tickets to a show or concert they’ll enjoy, or a framed photo of one of your favorite memories.

5. Pledge to learn a little more about personal finance. Along with giving to others and spending time bonding with those we love, as money savvy young professionals we should take this challenge a step further. This holiday week, why not pledge to learn a little more about personal finance as well? We may not have time to read an entire book or go make a budget for the entire year, but we can still start small. We can pledge to spend at least 1 hour increasing our financial literacy. For example, we could listen to a podcast episode on how to best pay off our debt or read a couple chapters in a book on different ways to save money for retirement. We could even skim a few blogs on different ways to get involved in real estate investing or learn how to lower our tax rate in the upcoming year. Whatever the topic or the method, we should vow to spend a little time this holiday season learning more about personal finance and different ways to build wealth.

Tell me, are you willing to try to 5 step holiday money challenge?