Mom's Got Money

1. Develop a Boss Money Mindset to Achieve Financial Freedom

Money is just currency. It's just some pieces of paper or numbers on a screen. The money itself means nothing. It's the person holding it who assigns it value and gives it life.

Shift your mindset. Developing a boss money mindset is crucial for achieving financial freedom. This involves replacing negative thoughts about money with empowering ones and recognizing your own capabilities as a mom to manage finances effectively.

Set ambitious goals. Write down your biggest financial goals in present tense, as if they've already happened. This powerful exercise helps you envision your future success and guides your daily financial decisions. Examples of ambitious goals:

• Being 100% debt-free, including mortgage
• Fully funding children's college education
• Donating large portions of wealth
• Creating generational wealth for family

Embrace personal freedom. The pursuit of wealth should be driven by the desire for personal freedom, leaving a legacy, and practicing extreme generosity. This perspective shifts the focus from material possessions to creating a meaningful impact on your family and community.

2. Calculate Your Net Worth to Understand Your Financial Position

Your net worth, not to be confused with self‐worth, is quite simply what you own minus what you owe.

Understand your starting point. Calculating your net worth provides a clear picture of your current financial position. This involves listing all your assets (what you own) and liabilities (what you owe), then subtracting liabilities from assets.

Track progress over time. Regularly updating your net worth calculation allows you to visualize your financial progress. Even if you start with a negative net worth, seeing improvement over time can be motivating and help you stay committed to your financial goals.

Use net worth as a guide. Your net worth calculation can help you:

• Identify areas for improvement (e.g., reducing high-interest debt)
• Set realistic financial goals
• Make informed decisions about major purchases or investments
• Track your progress towards financial independence

3. Master Family Budget Meetings for Financial Success

If you don't have a family budget meeting, how are you going to solidify your financial goals as a family?

Regular communication is key. Hold family budget meetings to discuss financial goals, review spending, and make joint decisions about money. This practice ensures everyone is on the same page and working towards common objectives.

Structure your meetings. Effective family budget meetings should include:

• Reviewing past month's spending
• Discussing upcoming expenses and financial goals
• Allocating income to various budget categories
• Planning for savings and debt repayment
• Addressing any financial concerns or questions

Implement sinking funds. Create separate savings categories for specific future expenses (e.g., Christmas gifts, car repairs, vacations). This helps prevent unexpected costs from derailing your budget and reduces financial stress.

4. Improve Cash Flow by Focusing on the Three Budget Anchors

Cash flow is the money you have flowing in and out of your bank account every month. What you want is more money flowing in than out.

Target the three anchors. The three main expenses that can make or break your budget are:

1. Housing
2. Transportation
3. Food

Optimize housing costs. Consider downsizing or renting if homeownership is straining your finances. Aim for housing costs to be no more than 25-30% of your monthly take-home pay.

Reduce transportation expenses. Consider buying used vehicles and paying cash when possible. Avoid long-term car loans that can lead to negative equity.

Control food spending. Plan meals, cook at home more often, and limit dining out. Allow for occasional treats to maintain balance and prevent feeling deprived.

5. Boost Your Credit Score to Unlock Better Financial Opportunities

Your credit score is just a number. It's kind of like how math is just math. And budgets are just budgets. The credit score you have attached to your name says exactly nothing about the type of person you are.

Understand credit score factors. FICO credit scores are calculated based on:

• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• New credit (10%)
• Credit mix (10%)

Improve your score. Key strategies to boost your credit score include:

• Paying bills on time, every time
• Keeping credit utilization below 30% on each card
• Avoiding applying for new credit frequently
• Maintaining a mix of credit types (e.g., credit cards, loans)

Monitor your credit. Regularly check your credit report for errors and signs of identity theft. Use free resources like Credit Karma or Credit Sesame to track your score and receive alerts about changes.

6. Negotiate, Earn More, and Invest Wisely to Build Wealth

Personal freedom is the absolute top reason why I work so hard to save money, earn more, and invest.

Master negotiation skills. Practice negotiating in various situations, from lowering bills to asking for a raise. Be kind and confident when negotiating, and always do your research beforehand.

Increase your income. Strategies for earning more include:

• Asking for a raise or promotion at work
• Switching jobs for a higher salary
• Starting a side hustle
• Developing new skills to increase your value

Invest for the long term. Consider low-cost index funds as a starting point for investing. Understand the power of compound interest and consistently invest over time to build wealth.

7. Protect Your Family with Emergency Funds and Insurance

The best‐case scenario is that you build a large emergency fund and you never, ever have to use it.

Build an emergency fund. Aim for 6+ months of expenses saved in a separate, easily accessible account. Start with a smaller goal (e.g., one month of expenses) if you have high-interest debt.

Obtain adequate insurance. Key types of insurance to consider:

• Term life insurance (10-12 times your annual income)
• Health insurance
• Disability insurance
• Homeowners/renters insurance
• Auto insurance

Create an emergency binder. Compile important information (e.g., account details, passwords, medical information) in a secure location for easy access during emergencies.

8. Navigate the Childcare vs. Career Dilemma Strategically

If you want to be a stay‐at‐home mom because it's something you believe in and want to do, I think that's amazing. I'm a huge advocate for stay‐at‐home moms.

Consider all factors. When deciding between staying at home or working, evaluate:

• Total compensation package (not just take-home pay)
• Long-term career prospects and earning potential
• Childcare costs and quality
• Personal fulfillment and family goals
• Retirement savings and benefits

Explore flexible options. Consider part-time work, freelancing, or job-sharing to balance career and family responsibilities.

Outsource strategically. Whether working or staying at home, identify tasks to outsource (e.g., housekeeping, meal prep) to reduce stress and create more quality family time.

9. Cultivate Healthy Financial Relationships with Family and Friends

Vulnerability puts you in control. Vulnerability is something that you, as a mom with a boss mindset, can utilize to get back in the driver's seat and take charge of your next steps.

Communicate openly. Share your financial goals and challenges with loved ones to gain support and understanding. Be prepared for both positive and negative reactions.

Set boundaries. Learn to say no to financial requests or expectations that don't align with your goals. Prioritize your family's financial well-being over pleasing others.

Align with your partner. Have open discussions about money history, values, and goals with your spouse or partner. Consider implementing separate "fun money" accounts to reduce conflicts over individual spending.

10. Embrace the Art of Giving for Personal and Financial Growth

Every single time you give away money, I believe you will get it back some way or another.

Practice generosity. Incorporate giving into your budget, even if it's small amounts. This cultivates an abundance mindset and can lead to unexpected positive outcomes.

Start small. Ideas for incorporating giving into your life:

• Set aside a monthly "surprise giving" fund
• Buy coffee for a stranger
• Donate to local charities or causes you care about
• Offer your time or skills to help others

Consider formal giving strategies. As your wealth grows, explore options like donor-advised funds or establishing a family foundation to maximize your philanthropic impact.

Last updated: July 22, 2024