Avoid These Financial Mistakes

Ever wondered why your financial management feels like juggling too many balls at once? Discover how simplifying your banking system to just three or four accounts—spending, bills, savings, and a personalized spending account for couples—can transform your financial chaos into clarity. Join me, Danielle Reese, on this episode of the Better Budgeting Podcast, as I share practical solutions to common financial mistakes and reveal how maintaining discipline in budgeting, even with a hectic schedule, is key to avoiding unnecessary expenditures. You’ll learn how to keep your finances organized and ensure every dollar is used wisely.

Building financial stability doesn’t have to be overwhelming. In this episode, I guide you through the steps to create an emergency fund, starting small and incrementally increasing your savings, all while addressing the mindset needed for financial discipline. Paying bills on time to improve credit scores and the pitfalls of forward spending on credit cards are crucial topics we’ll cover, along with practical advice on managing cash flow issues. Tune in for personalized financial guidance and support that will help you achieve your financial goals and build a safety net for a secure future.

Danielle is a money coach helping women and couples who have been trying to figure out their finances FINALLY create a clear plan so they don’t have to worry about waiting to refill their bank account the next payday.

She is the founder of The Financial Freedom Society on Facebook and her signature money coaching program, The Better Budgeting Playbook. You can sign up for her newsletter by clicking here.

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You can connect with her on Facebook or Instagram.

Chapters

• 0:08 Common Financial Mistakes and Solutions
• 8:17 Building Financial Stability and Discipline

Transcript

Speaker 1: 0:08

Hello and welcome to the Better Budgeting Podcast. I'm your host, danielle Reese. I'm a money coach and the founder of the Better Budgeting Playbook, and this is my one-on-one coaching program for women and couples who have been trying to figure out their finances, finally create a clear plan so they don't have to worry about waiting on payday anymore. I became a money coach in 2020 after paying off over $60,000 in debt, rekindling my marriage, becoming financially free and wanting others to experience the same. If you'd like to work with me, you can check out the link in the show notes there. Also, we have the Financial Freedom Society on Facebook. It's a free Facebook community focusing on debt payoff, saving strategies, budgeting and money mindset. You can find the link to that community in the show notes as well.

Speaker 1: 0:55

Guys, I feel like I have been put through the ringer. The last two weeks we have been so busy and just trying to get accustomed to the homeschooling life and managing the business and a household and just all. To get accustomed to the homeschooling life and managing the business and a household and just all those things, and I will tell you that I am worn out. Okay, I am worn out and I would say that I'm pretty proud of myself because I have not reverted to my old ways of eating out or, you know, shopping mindlessly because I want to and I'm like, oh, things are so stressed, I just want to shop. I have been very good at keeping at my budget and managing life's crazies, and if you are feeling me and you feel like you've been doing a heck of a job, I want you to give yourself a good old pat on the back, okay. But if I was not doing well, I would say we've got a podcast topic to talk about, don't we? All right, so we're going to talk about these common mistakes to avoid in your finances. I see it all the time when clients come to me, then they start talking about their finances. I could tell you that at least two out of three people that are new clients of mine that come to me have one of these on this list. So let's get started.

Speaker 1: 2:12

Common mistakes in your finances. Numero uno is having too many bank accounts. Okay, money flowing to too many places causes confusion and frustration. Okay. Just last week I helped a client. Going to too many places causes confusion and frustration. Okay. Just last week I helped a client. She had 12 bank accounts and we brought that down to four. Now there was a lot of mindset talk that we had to have around this, because for her that chaos was organized and she couldn't see that teaching her a better way with less accounts to manage is less frustrating.

Speaker 1: 2:48

Okay, so if you notice that you are constantly moving money around before payday, then I would suggest that you need a better system, and if you notice that there is too much in one account, you need a better system. I noticed that a client may have, like, a car bank account or a mortgage bank account and they deposit money into this and it just gets automatically deposits and then they go and notice that, oh, my goodness, I have five months of car payments or five months of mortgage in this account because I just lost track of it. If that is something that you are doing, it is a financial mistake. You are wasting so much money. Maybe we shouldn't use the word waste. We are not utilizing our resources in the best way. Let's say that, okay, you could probably get an emergency fund together. You could probably pay off some more debt if you are utilizing stuff correctly. So this is the simple system that I teach. Okay, it doesn't get more simple than this.

Speaker 1: 3:55

I like three or four bank accounts. That's it, no more, no less. Three or four, okay, one's for spending, one is for bills, one is for savings and if you are a couple, you're probably going to have that fourth account for personalized spending. So somebody gets their own spending account, somebody else gets their own spending, or maybe you just don't want to do that at all. Right, like my husband and I will have these conversations. And I actually have another client that he has the conversation where he just loves to spoil his wife conversations. And I actually have another client that he has the conversation where he just loves to spoil his wife. So he wants to have his own account so that she doesn't know when the flowers are coming. And my husband and I were just talking about this a couple weeks ago when it was my birthday. And then he's like I just don't want you to see what I'm buying you. And I was like, well, if you buy on Amazon, I'm not gonna know what it is, just that it's from Amazon and I will look for that box honey. So if you are worried about having smaller amount of accounts for that reason, there is a solution to it. But I find that when we simplify, we've got a spending account, a bill account and a savings account.

Speaker 1: 4:56

By the way, there is a whole podcast episode all about this. It it's called Keep your Money Clean Queen. It's actually Keep Yo Money Queen Clean. Wait, I think I really messed that up, but we're going to leave it All right, but it is way back in the episodes. It's a really great episode and I talk about how to separate this out and essentially, all bill money goes into the bill account, all spending money goes in the spending account and all savings go into savings account and you don't swipe out into the bill account. All spending money goes in the spending account and all savings go into savings account and you don't swipe out of the bill account. We don't do any of that over there. We're going to go and do all of that in our spend account where we keep the transactions over there. That is really the only thing you have to kind of keep tabs of from week to week. Otherwise, on a monthly perspective, all your money is in that bill account and your bills can be automatically withdrawn or you can go ahead and just pay them out of there. Whatever is easiest on that front. But I really find that when you have way too many accounts, it is just chaos, absolute chaos, and we can bring that chaos down a little bit by minimizing the number of accounts, all right.

Speaker 1: 5:59

Number two is skipping an emergency fund. Please do not skip out on an emergency fund. Let me just say it again Please do not skip out on an emergency fund. Did you know that two out of three Americans cannot cover a thousand dollar emergency fund? So let me just put this into perspective here If you are a household of four right, and you have you and your husband or you and your wife as one income, like one person, right, and then your children go off into the world, it's saying that two of y'all are not going to make it All right, you're going to be derailed with any expense under $1,000.

Speaker 1: 6:41

Any emergency, because you don't have $1,000 in your savings account, and that's just like super duper wild to me, because $1,000 feels like it's nothing anymore. Am I right With inflation here at the United States, like you just feel like? Well, $1,000 is just, it goes in a blink of an eye. And that's why it's so important to start with your emergency fund. Get that out of the way before we go and we start working on debt. Now I'm gonna put in here a little asterisk, because there are more than one way to skin a cat, which awful saying by the way, I have no idea, I'm gonna figure out where that came from but awful saying. But it's very true. There's more than one way to go about this.

Speaker 1: 7:25

Sometimes y'all need to get your debt in order in order to have cash flow to build up the emergency fund. So if you don't have a lot of cash flow maybe you feel like you're not eating out a whole lot, you're not doing a lot of extra spending, there's just not a lot left then maybe you need to focus on putting that extra towards a card to get that thing paid off. I say a card because typically credit cards are the ones that are the most frequent on the lower balances and higher balances, but there are significantly less than cars and mortgages and personal loans typically. So that's why I'm saying a card. So sometimes you got to knock out one or two of those real, real fast in order to flip and come back to the emergency fund. But if you are not in that state, if you have cut everything out, that's where you go. You started that step. But if you are like, no, we eat out. You know, I have definitely buy on Amazon quite frequently.

Speaker 1: 8:17

If you are having those type of conversations, then you start with the emergency fund. And the next question you're probably thinking well, danielle, how much do I start with? Okay, very simple. We want three to six months of expenses saved up. And let me tell you I don't know about you, but if I was told that I need to go run a marathon, then I would die. And then it's the same thing with our emergency fund. I don't want you to look at this pile of three months of expenses because that could be $1,000 for somebody, that could be $30,000 for somebody. But I want you to start with $100, then 250, then 500, then 750. Work your way up to the number that makes sense for your family.

Speaker 1: 9:04

I've always heard how do you eat an elephant Another really weird thing to say but how do we eat an elephant? One bite at a time. How do you climb a mountain? One step at a time. So when you're looking at three months of expenses, it's freaking huge right? I want you to start small. I just want you to put the $5 in the savings account and just keep it there. Keep it there, test yourself, can you keep that there? And then, yeah, I can keep that there. Great, we're gonna bump it up. Now it's $100. All right, can I keep the $100 there? Yes, I can. Great, keep moving and putting more money into the savings account and eventually we're going to continue to save, but we're also going to be paying off some debt.

Speaker 1: 9:55

So common mistake that I see quite often is just skipping emergency fund, just willy nilly, just going with no pants on and out in the wild world with no safety net. All right, we don't want to be doing that. Here's the next one I would say this is probably the most common one, to be honest and that is not paying your bills on time. Oh, don't be doing that, because if you want your credit score to increase, just pay your bills on time. Amazingly, that is one of the heaviest categories for your credit score is do you pay your stuff on time? So if you can do that, your credit score is going to go up. And that is just one of the financial mistakes that I see. Because I don't mind having a credit score, I don't mind using debt as a leverage for opportunity and wealth. I've stated that many times in these podcasts, this whole show.

Speaker 1: 10:49

But we have to look at the reasons why people aren't paying their bills on time. All right, I've separated into three categories. One is lack of funds you don't have the money to cover the bills, so you just don't. You just don't pay something, okay. Two is lack of organization you pay them strategically, but they're still late. This might be just a day late, two days late, maybe five ish, okay, but you plan to pay those bills. You're just like oh, the payday came at the wrong time. I need the payday to be two days earlier so I can pay this bill on time. The third person is lack of determination. As long as I pay it before the debt collector calls me, I am fine. Okay, all of these can be solved. All of them can be solved. It does not just take a budgeting sheet to solve them. We got to work around the mindset. We got to work around being disciplined. But if you can pay your bills on time, you will find a lot less stress in your life when it comes to your finances.

Speaker 1: 12:03

Forward spending on credit cards All right, listen. I got a client that they had sent me a text about buying something they were going to pay it on a credit card, because in a week and a half maybe it was a week, I don't know, it wasn't that long they were like we're going to get the money then from our paycheck and we'll just go ahead and buy it. And I was like, bless, okay, I know that the paycheck is coming, but what if it doesn't? Because I've had clients where paychecks don't deposit the way that they're supposed to right. What if it doesn't deposit? What if you lose your job and the money that you could have used on mortgage, food, all the other necessities, instead of being able to save it for when you have lost your job, right, and you're in this transition period of trying to find a new job, it's got to go to that credit card or that credit card just sits. And now you've got a substantial balance on the credit card. Maybe it's not substantial, maybe it's only $50. Maybe it's $700. I don't know, maybe it's a toolbox from Lowe's, who knows? Okay, regardless, you have to be willing to take that risk and for me and my clients, I'm teaching you no, no, no, no. We do not want more chaos and stress in our lives. We are not going to just exhibit these type of behaviors and this habit Absolutely not Okay. So forward spending on credit cards is just a massive mistake and it can get so messy so quickly and I just do not recommend doing that.

Speaker 1: 13:40

Now, if you do have that problem where you feel like Danielle, there's just no cash flow, it's sometimes I'm feeling really really rich and sometimes I'm really really broke, let me help you. In the show notes is a message that you can send me anonymously and I will answer it here on the next podcast recording that we have. But you have that option. You can send me a message on Facebook or Instagram. You can check out the website wwwdaniellereesecoachingcom and you can go there and you can send me an email. There's lots of ways. Just connect with me. All right, connect with me and then, if I feel like you're a good fit to join the Better Budgeting Playbook where I can help you and organize your finances and really start talking about money mindset and why you're spending the way that you're spending and why did you go into this debt and how do we get out of it and how do we stay out of it. If you really want to deep dive into that, then I've got a heck of a promo for you.

Speaker 1: 14:37

Right now it's September of 2024. I have my fall promotion going on and that is $100 to start coaching. That's it. It is a four-month commitment, but your first month is only going to be $100. And to get started with coaching personalized coaching and to have a plan in place and start feeling that stress reduced for you financially, it's well worth that investment of $100. It allows you to put skin in the game, right? You need some of that to say okay, well, I'm not just going to let this slide Like I'm actually paying someone to do this with me. So it allows you to have skin in the game. But it also allows you to feel and test out the waters, because I understand that it's scary to take money and spend it on anything else that's supposed to help you with your finances, when things have failed in the past, when you are unsure about what your next paycheck is going to look like or how you need to allocate it. I understand and that is why I'm putting it such a low investment to just enter into the program so that you can get results quickly.

Speaker 1: 15:45

If you follow my steps and my guidance to help you, man, life can look really, really different come Christmas time. So if you are interested in that, just connect with me. You can also fill out the application in the show note so that we can get started right away. We can help you out through the fall season into Christmas and start the new year. Could you imagine like setting a resolution for the new year, of saying I'm actually going to save $10,000 this year and actually follow through, because you have a plan that works and your mindset is there and you're you got it all together. Imagine that for a second Amazing Well that starts now. That work needs to start now, in September of 2024. So if you want help, please connect with me and you'll hear from me next week, all right, so thank you so much for listening to the podcast. You take care, bye-bye.