Imagine yourself in this all-too-familiar shopping scenario on payday:
Ah, it’s Friday – payday! You are counting down the minutes until you can race out of your office to grab cocktails with the girls as you plan out your shopping adventures for the weekend.
You just got paid, and you are feeling ALIVE with your purchase possibilities. Payday means your shoe fund has been replenished, the first round of martinis are on you tonight, and you can finally grab that Fendi bag you’ve been eyeing since last payday. Patience is a virtue, and you have decided you are a master!
But soon, the excitement and warm fuzzy feeling wear off – after the tenth swipe of your credit card to be exact, when you say a prayer the charge goes through.
You just got paid. Where did all your money go?
I’m not here to shop shame you. I’ve been there more times than I choose to remember. Since then, I’ve picked up a trick or two to help curb my shopaholic tendencies, and I’m going to share them with you today.
What if I told you that the key to being #fiscallyfabulous is to S-H-O-P with every paycheck?
You read that right, trendsetter.
I have figured out a way to S-H-O-P every time I get paid. Plus, I feel responsible, confident, and fiscally fabulous by doing so.
Here are my 4 shopping secrets every finance fashionista should know:
S: Save at least 10% of your earnings
Saving 10% is a general rule of thumb for financially savvy fashionistas everywhere. Why? Because it is widely accepted as a reasonable, manageable sum to put away for future you without affecting your present cash flow needs.
(Disclaimer: I’m saddened to inform you Gucci’s latest handbag is not considered a “need.”)
Style tip: If you have direct deposit, send that 10% automatically to a separate savings account – one with no card linked to it. Soon, you won’t even notice those future-you funds coming out of your paycheck!
Just getting started? I recommend you start by saving 2% of your earnings, then double it every month until you get to your goal savings amount.
“Think of learning to save money like learning to walk in heels. You start out practicing in kitten heels – not sky-high platform Louboutins!”
-The Finance Fashionista
Be patient with yourself – remember this is a marathon, not a sprint. If you have high-interest debt, you will want to address it first before stock piling your cash. I’ll touch more on that in a minute.
H: Hone in on your priorities
This step was the most difficult for me to follow. I had to dig deep and do a good bit of self-reflection. In the process, I got a serious (and much needed) reality check.
Want to know your priorities? Check your spending history of the past 3 months. Matcha lattes included.
What do you see? How do these past transactions make you feel?
In my case, at first I felt frustrated. When I saw where the money from my paycheck was going, I realized my spending habits did not accurately represent my values and priorities that I KNEW were the most important in my life.
My thoughts, actions, and shopping habits were disconnected from my priorities.
MY LIFE was out of alignment.
It certainly explained my constant suffering from feeling “scatter-brained.” I was telling my brain I valued one thing, but spending my money, time, and energy on something totally different! My mind might as well have been a giant bowl of shopaholic soup.
So, you’ve determined you’re misaligned. Now what?
Make a list of the 5 most important things in your life. I’ll start:
- My loved ones
- God (or The Universe, if that’s your thing)
- Traveling and experiences
- Helping and inspiring others
- My fur babies
Notice nowhere on my list does it say “UberEats,”” Saks 5th Ave,” or “Amazon Prime.” Gasp.
Are your purchases in line with your priorities?
Style tip: Keep your list on your phone, in your purse, or clipped to your car’s sun visor so you see it every time you apply your lipstick.
Every time you’re about to make a purchase, ask yourself:
“Does this item help me achieve my long term goals and truly reflect my priorities?”
– You, as you gently put down those overpriced sunglasses at Lord & Taylor
P.S. If you’re like me and traveling shows up in your top 5, check out my guide here on how to take your holiday without the pang of buyer’s remorse.
O: Open up and maintain an investment account
I consider this my favorite step, as it’s the easiest and least painful of all!
I may have alluded to how important this step is in my recent blog post on compound interest and Birkin bags.
These days, you don’t need hundreds of thousands of dollars to start investing. Some investing platforms have $0 minimums!
Just getting started? Open up an IRA (Individual Retirement Account). This account will allow you to start investing while deferring any taxes until you start drawing from your funds in retirement!
Plus, you won’t be tempted to shop with these future-you funds (the taxes and penalties on early withdrawals are quite unflattering).
Not sure how much of your paycheck you should be investing? Just like the amount you put away in your savings account with every paycheck, the amount you invest should not pinch your current cash flow.
In fact, I’ve come up with 100 ways you can boost your cash flow to start investing ASAP. Get my free list here.
Want to fast-track your investing goals with one-on-one training? Contact me to learn more about my fiscally fabulous consulting services.
P: Pay down your high-interest debt
High-interest debt is like a zit on your forehead. You can try to cover it up with makeup or by giving yourself bangs (please don’t do this), but it’s still there. It’s preventing you from feeling confident and taking full advantage of the opportunities in front of you (read: chatting up that cute guy at the bar).
Your high-interest debt has to go ASAP. Get rid of it like that trucker hat you had from your self-proclaimed “Ashton Kutcher phase.”
Our high-interest debt is eating away at our future-us funds and our ability to live a fiscally fabulous life. Buzzkill, much?
I want as little of your paycheck as possible to be going towards it.
One of the greatest geniuses of all time said it best:
“Compound interest is the eighth wonder of the world. (S)he who understands it, earns it; (s)he who doesn’t, pays it.”
-Albert Einstein
Here’s an example:
If you’re paying 24% interest on a credit card balance, but your investments only earn 7% on average annually…
I have bad news: You’re actually LOSING money. Ew.
Paying off such hefty debt is easier said than done, I know. If only we could zap it with some Clearasil.
To get a jump start on tackling this blemish in your financial life, here is a fabulous list from Wells Fargo with initial steps you can take. I also recommend you consult a financial professional. Shoot me a note and I’ll recommend a few.
So, are you ready to S-H-O-P with your next paycheck? What other steps do you take to keep your shopping, spending, and saving on track? Share your #fiscallyfabulous tips below!
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