When I started this blog, I decided that I wasn’t going to talk that much about money. Not because I thought it wasn’t important, but because I just assumed it was such a popular topic that it had all been covered before. What could I possibly add to the conversation? Now that I’ve been writing for almost a year and considering my Sanity Plan, I realized that it is too important to neglect.
I’ve been a personal finance nerd since my early 20’s. I grew up in an incredibly money conscious household, which can be both positive and negative. On the plus side, I have a baseline education and understanding of all types of savings strategies and money mentalities. And on the negative side, I see most things as a financial transaction (which can be stressful and a burden).
So, back to my original question. How does money fit into a Sanity Plan?
The key here is determining what your financial goals are. You can meditate on the topic. You can follow other people on their financial journeys to see what goals and ideas resonate with you (here is someone I’ve followed for years). But ultimately it comes down to determining what you really want from life and then decide how managing your finances will help you to achieve that.
Standard of Living
For my family, money represents a certain standard of living that is important to us. Our lives are pretty hectic, so it is extremely important to us to have enough money to take vacations and relax. My husband and I also enjoy going out to nice dinners on date nights.
Having a nice home with enough space for our growing family is important to us. We were able to afford our home because we bought it way under value as a short sale in 2011.
We also place a high importance on eating high quality foods. Not necessarily all organic, but high quality fresh meats and produce can really increase a grocery budget.
In order to maintain these standards, there are many other things that we are willing to forego. And we still have to keep an eye on these expenditures to make sure that we are meeting our future savings goals.
Our other major financial goal is financial freedom. And I certainly realize that financial freedom is defined differently for everyone. So, here is what it means to us:
Financial freedom is the ability to do what we want without having to worry about the cost.
I want to be able to buy an outfit without having to worry about spending the money (this is a particular trouble spot for me). I want to pay off our home and other major debts, so that I don’t have to have a large monthly payment over my head. I want to have a significant amount of savings not earmarked for retirement to be used for things like starting another business or taking time off from work in order to simplify our lives. I want to be able to follow my passions without having to worry about whether they will bring in enough income.
My husband believes that he will want to work in some capacity well into old age, although not necessarily in a full-time capacity. For him, this is partially a trade-off for the fact that he wants to splurge a little along the way. I personally look forward to slowing down in my 60’s, enjoying time to pursue hobbies that don’t require making an income, and spending time with my family (and maybe grandkids!).
How Do We Get There?
Once your goals are defined, the next step is to incorporate strategies to reach them. I would break it down into a couple of different focus areas:
Income – Consider the sources of your income. Can you increase your income? Can you generate passive income?
Savings – Set up and automate regular savings goals that align with your life goals.
Mindset – Become aware of your spending habits. Develop a mentality that focuses your mind on financial trade-offs in the moment.
In my opinion, the last one is the most important. As I mentioned before, I had a jump start on this because of the family I came from. For those of you that didn’t grow up in a family like mine, it will take work to develop a money conscious mindset. But it is one of the best ways to influence your financial health and reach your goals.
I will be doing a series of financial pieces relate to this topic in the future and will link to them below as they are published. Feel free to reach out if there is a particular topic that is of interest to you.
What are your savings goals? How do you see them fitting into your Sanity Plan?