Abundance Bound: Removing Ramen from the menu, one hungry grad student at a time.
Whether you’ve worked through the money plan we discussed two weeks ago, or you’ve jumped into this blog for the first time and are curious, let’s work through how to live a daily money plan. I have to admit, creating the plan was the most difficult part. Once you’ve written out your income and expenses and searched for opportunities to save money and raise income, it’s now time to live the plan. How do you live daily on a money plan?
Here’s what you’re not going to do: you aren’t going to write down every single expense for three months. I can’t find a semi-normal human being who can endure that gauntlet. Don’t get me wrong….I know people who can live this way, but you and I wouldn’t have them as friends. You also aren’t going to learn to live on fourteen cents and eat only Ramen noodles (unless you like Ramen noodles, in which case you can eat as much as you’d like because they’re incredibly economical).
My goal isn’t to help you find your noodle diet, and it isn’t to make sure the bills are paid.
A real money plan helps you achieve your dreams. Many people never get what they really want because they’re lost in the weeds of life, dealing with details while the big picture slips from view. A money plan doesn’t begin with watching your daily spending or doling out envelopes of money for each area of your financial life. It begins with you realizing that your money is your life and if you want success, it’s going to take discipline and drive.
Working your money plan, then, begins with this question:
Step #1: “What do you really want for yourself financially?”
Many artists aren’t driven to their work for monetary gain. Some tell me that they have no monetary goals whatsoever. They want to be a better artist. Are there classes you could take or coaches you could hire? Would these cost money? Yes, they would. Some say they want physical health. Does gym equipment or a gym membership cost money? Absolutely. Regardless of the goal, there probably is a monetary component. Write down your dreams, and then do the simple math to find out how much per month you should add to a fund to achieve your goal.
Whatever your financial goals, these become the focus of your money plan. Why? When your plan is to achieve something you really want, you forget about the mechanisms of managing money and instead focus on the result, which creates better money management. Now you’re ready to begin working through the techniques to make these dreams reality.
Step #2: Deposit your checks.
You begin working the money plan by depositing your income into an account. If you have a constant client and can set up direct deposit, all the better. However, for most artists, this isn’t possible. Instead, make sure the check is deposited. Don’t cash it and keep a portion for “fun” or “just in case” expenses. Deposit the entire check so you can begin to work your plan.
Step #3: Work through your expenses.
Once deposited, work the expenses you’ve written out. You know your committed expenses. Pay those first to ensure you still have a roof, utilities, and the ability to work.
Step #4: Make your dream account deposit.
Set up an account and deposit your monthly amount to this fund. Growing this account will become your progress bar toward your financial health.
I’ve simplified our overall process here to help you get started. There are a few more directions, but one important step as you’re starting out is to create a buffer account. As an artist, you may be intimately familiar with inconsistent paycheck frequency and size. A buffer fund provides income during the lean months. I’ll discuss coping with inconsistent income more in another article.