“Live life like a 3-1 count.” In baseball, this means the batter is in a favorable position to hit a good pitch. In life, well that means approaching every day with a mindset of positivity and confidence. With April being Financial Literacy Month and the recent start of the MLB season, what better way to kick off the month than talking about improving financial skills, confidence, and ultimately having a positive outlook on your own financial stability and success.
Baseball and finances have a lot of parallels and as a young professional who loves baseball, but doesn’t always like finances… I try to draw on these common themes to “step up to the plate” and map out my budget and goals. So what are three ways to get started?
- Tee-ball: We all start somewhere | No one is born hitting doubles or having a perfectly crafted monthly budget. Especially as a young professional early in your career, you may not have a good grasp on money coming in, going out, or your current debt situation. First step, do a financial inventory.
On paper, spreadsheet, whiteboard – it doesn’t matter. Write down a list of any income you get on a monthly basis – paycheck, side gig, tips etc. Next, take a look at recurring expenses – groceries, rent/mortgage, utilities – items that you truly need to survive as a working adult.
|Monthly Income||Recurring Expenses||Debt / Monthly Payments|
|Side gig||Rent / Mortgage||Student loan payment|
|Tips, etc.||Utilities, etc.||Credit card payment, etc.|
We’ll get to the “fun” expenses in a moment. Then, list out the debt you have and the monthly payments. This could be a car payment, student loan payment, or credit card payment. And finally, let’s figure out your disposable income. Add up your monthly expenses and your monthly payments towards your debt and subtract that from your total income. This represents how much money you have available to spend or save.
2. Summer League and I’m feeling free-ish | You’ve mapped out your financial inventory and you’re feeling pretty good. Fresh out of high school, college, or trade school and you have a paycheck! But as soon as the money comes in, it seemingly goes out. And the summer feeling of havin’ fun and livin’ large is taking a hit on your bank account and credit cards…
Now it’s time to take a hard look at your “fun” expenses. Write out ALL of the transactions over the past month that were not a part of your original inventory – whether you consider them fun or not. Is this number more than your disposable income? If so, you’re increasing your debt. Where can you cut back? It’s not easy right? I get it.
Let’s take a couple of practice swings and try:
1) eating out less;
2) reducing your entertainment expenses; and
3) finding cheaper (or free!) alternatives to your current lifestyle.
I know this can be hard, but the more disciplined you are now – the better your financial health will be in the future!
3. Let’s Grow: Farm Team Style | From the Minors to the Majors, one thing is certain – hard work pays off. As you work on your budget and find ways to curb your spending, it’s time to look towards the big leagues – reducing debt and investing for your future. Start by adding $10-$20 to your minimum monthly payments and see if this can be made towards your principal balance.
Now let’s look to the future. This is also challenging, especially if things are a bit tight right now. If your employer offers you a retirement plan – 401(k), 403(b), or other similar plan – make sure you are contributing at least 3% of your paycheck. In a perfect world, at least contribute what your company is willing to match. Otherwise it’s like you’re leaving a bonus on the table. If your employer does not offer a retirement plan, consider opening a Roth IRA and contributing $100 per month. It’s never too early to start and you’ll thank yourself when you’re in your 60s.
Now that you have a few ways to get started, it’s time to step up to the plate. Don’t worry if you start off with a few strikes – the name of the game is to start small! Building good habits is like good plate discipline – download a monthly budget template, take 30 minutes on a weekend to look at your spending for the past week, set aside $50 per month and put it into a savings account. Every minute you’re learning about budgeting, saving, managing debt, taking stock of your spending – is setting you up for that 3-1 count and the confidence you need to knock your finances out of the park!
Not sure where to start? Just like baseball, we have the coaches for you. Our financial advisors and planners will be there every inning and step as you navigate budgeting, investing, saving, goal-setting, and more so you can make informed decisions for you and your family.