MEO Breaks Down the Nine Steps to Reaching Financial Freedom

importance of financial literacy for mothers
MOMMY TALKS PODCAST Episode 4
  • MOMMY TALKS PODCAST

Life is difficult and you cannot protect your children from it. But it is your responsibility to equip them for what life will be, which is nothing more than a series of difficult challenges.

Expanding with Asha, LLC focuses on assisting you to increase your financial literacy. This will help improve your family's standard of living and bring you closer to a life free of debt. This nine steps will help you do just that.

Step 1. Add Up All Your Debt

Women start off with no experience as mothers and manage to level up, mastering their parenting skills after each challenge along the journey. Adapting the same approach to the sphere of finance can be beneficial for any mom. Although you may not have experience, you can become better at managing your money with every obstacle you overcome on your way to financial stability. Debt is a serious obstacle to financial independence for many families. Banks, financial institutions, and payday loan companies all realize that a mom’s desire to please her child(ren) by purchasing the newest video game or the latest iPhone is greater than her fear of going into debt. And they all speculate on it.

Reconsider your view on debt as not being that big of a deal. Instead, focus on changing your perspective and look at it for what it truly is, which is money that you are giving away to help build wealth for someone else's family, especially if you are only accumulating it for liabilities. Consider these words from Albert Einstein and realize how relevant they are today: “Compound Interest is the eighth wonder of the world. He who understands it, earns it...He who doesn't pays it.”

When you add up all of your debt and pay it off early, you can cut the amount of interest you stand to pay in half. This may sound like a lot but it is a crucial step in getting off the hamster wheel of financial dependence.

Step 2. Identify Where Your Money Is

Lexington Law, one of the leading credit repair firms in the United States wrote an article stating, “Americans made $78,635 before taxes and spent $61,224 in 2018. This means that American spending habits lead us to spend 78%of our incomes every year. Americans spend on things from essentials, like housing and transportation, to nonessentials, like entertainment.

Here’s exactly what the average American household spent:

You should be aware of where your money is coming from and where it is going, at all times. Because when you can’t tell such information, you are basically giving up control of your financial situation to the person that is able to identify where your money is. As my mentor always says, “The person who knows your money, owns your money and that person should be you.”

A nice method to gain self-control over extra spending is to create a household budget. You can go over your budget monthly to see where you can cut costs. TheBudgetMom's blog goes in-depth into the budgeting process. Make sure to check it out if you’d like to expand your knowledge, plan more smartly, and cut your bad habits.

Step 3. Determine If You Are Actually Making Enough Money

Does it seem like you're not currently earning enough to feel comfortable? It usually does for the majority of us. There is no one answer to how much money you need to live comfortably. But there is one oft-used rule of thumb in budgeting: the 50/30/20 rule. This rule calls for half of your income to go to necessities, 30% for splurges and fun, and 20% to savings and investments.

After creating a budget, you can compare your needs and the possibilities available to you by understanding your money. If your sustenance is only enough to cover the basic needs, you should definitely search for other sources of income. Although the state of our economy due to the Coronavirus pandemic has caused many to face the fact that they haven't been managing their finances successfully, there are still people who are not being affected at all.

The only secret of their financial stability is being open to the endless possibilities they have to generate wealth for their families. Emma Johnson, an American journalist, blogger, radio host, author, and media personality, best known for her blog Wealthysinglemommy, highlights that single moms still have ample opportunities to become successful businesswomen and live wealthy lives.

Step 4. Adjust Your Attitude

Like dieting, the biggest budget blunder is subscribing to the "cut 'til it hurts" mentality. To become successful at managing your finances, you will want to take a deep look into what eats your money. A third coffee a day or dinner delivery from the restaurant seriously threaten your financial prosperity.

Refusing compulsive purchases are a good contribution to a wealthy life. When creating your budget, it's easy to look at your expenses (like utilities, food, transportation, clothing, and entertainment) and start slashing. Although this budget may look good in theory and build savings quickly, you have to ask yourself if you'll be able to stick to it? What will it do to your quality of life?

A workable budget will help you guide your spending so that you can build your savings while still enjoying your life. Unless you are in dire financial trouble, there’s no reason setting a budget should be painful.

A good budget helps you:

  • Understand how and where you spend your money
  • Increases your savings
  • Prevents or reduces impulse spending
  • Protects against the financial effects of the unexpected, like unemployment, accidents, sickness, aging, and death

Creating a budget also helps you identify your bad attitudes and habits which is another relevant stage to the life of prosperity. Analyze your purchases for the last month and consider which of them made no sense. By doing this, you can save significant sums.

Step 5. Make Simple, Logical Changes

Once you have a picture of where your money is going, it's usually clear to see where you can make changes. You don't have to make big changes that sap the enjoyment out of life. Small sacrifices can add up to significant savings.

You might decide to make coffee at home or bring your lunch to work more often. Maybe you don’t need to subscribe to every streaming service. Or you could catch up on classic movies at home instead of seeing the latest blockbusters in the theater (added benefit: pajama dress code).

To set a good budget, you may have to do some research, make some calls, and ask some questions. But after the initial legwork, a good budget will be simple and flexible, and won’t require a huge time investment to maintain. A good budget works for you, not against you.

Analyzing your purchases may be a blow to the gut, but you want to be honest about where you can cut back. Instead of just trying to cut back, you should commit to doing so. It’s important to understand the difference between trying to and actually optimizing your finances. Figuring this out could help you see the reason why you are not yet where you want to be. If you feel like you’ve been tricking your brain with result-less efforts, once you finally commit to the process, you will truly change your family’s life.

Tips for successful budgeting

  • Be collaborative. Talk with your household, whether that’s your partner, your kids, your pet turtle or your roommate who needs to know why you started buying one-ply toilet paper. Make sure they feel they are a part of the plan. If everyone affected truly understands the rewards, they may work harder to make the budget succeed and be less inclined to overspend.
  • Be specific. If your goals are vague, you may never meet your objectives. You and other household members may have different ideas of what the end result should be.
  • Be prepared to compromise. If, for example, you want to pay cash for things and your partner prefers credit, you’ll need to discuss the pros and cons of both methods and decide on a middle ground. A financial plan is also a financial partnership!
  • Be realistic. If you set goals and objectives that are too hard to meet, you’ll be more likely to abandon your plan when frustration sets in.
  • Exercise willpower. You’ll face financial temptations every day but stay strong! Each family member needs to encourage the others to stick to the plan.
  • Be flexible. Your lifestyle and financial situation are always evolving. Don't make a budget that is so rigid that each new development requires an entirely new plan.
  • Keep good records. You can’t just “set and forget” a budget. Continue to track what you spend so you can see how well you are following the plan. You may need to make further adjustments to meet your goals.

Step 6. Pay Down Your Bad Debt

Surprisingly not all debt is bad debt; there will be some cases where you should incur debt, but only if it’s debt accumulated for an asset. The difference between an asset and a liability is that an asset represents the value of ownership that can be converted into cash, whereas a liability is the future sacrifices of economic benefits. Most of us have been conditioned to believe that the only debt there is, is the debt which we incur from liabilities, which is okay. Bu this is far from the truth and this is the debt that you should focus on paying off or down first.

When paying off debt, you may think that you have to pay it all off immediately. Of course that is ideal, but only if you are in a position to do so. It's okay to start with small steps, you just have to finally embark on this journey. By committing to tackling your debt realistically based on your current situation you will see more realistic results.

Step 7. Buildup Emergency Savings

Do you currently have an emergency fund established?

Emergency savings are vital nowadays. The Coronavirus pandemic has shown that the majority of us don’t have a cash cushion to cover unforeseen expenses. According to a new report from the Federal Reserve Board, 40% of Americans can't cover a $400 emergency expense. By not having an emergency fund in place, you are subjecting yourself and your family to added stress in the event of an emergency situation.

I'm not saying that you need to save half of every pay check. But by regularly saving a small part of your monthly income you could ensure that you don’t find yourself stressed out when an emergency happens. Again, parenting already has its difficulties and your finances shouldn't be an additional issue.

It’s suggested that you save at least $2,000 for an emergency fund. A service that I highly recommend is Stash, an American technology and financial services company based in New York. The company operates both a web platform and mobile apps, allowing users to incrementally invest small amounts. Start your account today by using my link; they will give us both $20 in our accounts for you starting. https://get.stashinvest.com/ashaukg8i.

Step 8. Invest Wisely

When you think of investing, the first thing that may come to mind is the stock market. While that is one way to invest that’s not what I am advising you to do. I suggest that you invest in yourself and start your own business. By having a business, you are able to shelter your hard-earned money and generate a passive income, which is an important part of your journey to becoming financially stable.

Mothers are becoming Mompreneurs every day without waiting for a man or the government to improve their life. Women empowerment groups are inspiring and informing women of the possibilities they have in business. I highly recommend any woman in business join one.

Step 9. Teach Your Children How to Handle Money and Stop the Debt Cycle

Financial freedom motivation and the value of money are essential. These qualities should be instilled in a child starting before the age of seven. Mom-life is not only about keeping a child safe and happy but also about teaching them how to manage their finances properly. Dave Ramsey, America's trusted voice on money, specializes in teaching his readers the practical value of money. He suggests ways of how to pay off debt and save up for the future. His daughter, Rachel Cruze, has grown up to serve her readers the same way.

This just proves that our children are more likely to copy our actions, rather than listen to our words. So just ask yourself: what you are currently teaching your children regarding finances by your actions?

importance of financial literacy for mothers

My goal is to spend as much time offline as humanly possible. I have two little guys that demand my attention outside of work and am aware that you have little ones that are just as demanding as mine are. If we're not connected on Facebook, Instagram, YouTube or Twitter, be sure to find me there. I'm always down to connect and answer any questions, feel free to reach out to me and my team at support@expandingwithasha.com!

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Hi! I'm Asha.

Born and raised in South Carolina, I’m a country girl who’s passionate about making a difference in the world. I’m an obsessive learner who spends time reading, creating, and selling online educational programs for mothers.

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