If one of your goals this year is to create real change in your finances for a stronger future (or simply to get a better handle on everything), then you’ll need to polish up your performance on these six essential steps to crown yourself Cash Queen.
And we’ll be there to celebrate in the front row, for sure!
Step 1: Track It
Before you can create a budget to reign in your spending, you have to know exactly what’s coming and what’s going out from every account, card, automatic debit payment and loose change. This step is crucial because with out an accurate view of every cent you spend then a budget can become useless.
For at least 8 weeks (2 x 1 month cycles) track every cent in a money tracking spreadsheet such as a cash notebook (easily found at your local newsagent) or an online system like Mint. We’ve recommended a few other money tracking Apps in this article.
Our loving tip here is, don’t lie. Be honest and respect the process. You can only go up and improve your position if you’re genuine about creating change.
Step 2: Build A Budget
After getting a clear view of what’s going in and out of your financial life, it’s time to plan accordingly with a budget. But how much should you realistically spend, save and squander?
Financial Expert, US Democratic Elizabeth Warren, says we should follow the 50/20/30 rule: 50 per cent of your income should go to living expenses (think non-negotiables like rent, groceries, school fees, insurance, electricity etc…); 20 per cent to financial goals (such as savings for a house) and 30 per cent on non-essential items (think shopping, eating out, travel, magazines, charitable donations etc…).
This is where all your research from Step 1 comes in handy, and you can amend how you spend your pay cheque.
Step 3: Dump Toxic Debt
If you’re spending money on paying off interest instead of paying down debt, then your financial goal from Step 2 should be to dump any toxic debts that are eating away at your hard earned cash. This includes debt such as personal loans, car loans, University fees, credit cards etc…
It is counter-productive to be trying to save money to get ahead, when you’re fighting off banks and loan sharks at the other end because of late fees and slow payments. Focus on paying it all off as quickly as possible and be free of bad debt once and for all. Don’t give up on yourself, you can and will do it.
(Note a Mortgage is not included in this category as it’s an asset that can be used as equity.)
Step 4: Stash The Cash For Emergencies
Some finance experts believe we should all have a minimum of three months salary saved in an emergency fund for those life events that pop up. Think: car crash, health issues, family emergency etc…
Why only three? Because any larger and it becomes a sexy pot of cash you will want to dip in to and spend on a holiday or that new Chanel handbag. Keep it comfortable.
You could use a money saving App such as Qapital to help you save without you doing anything, or open a high interest savings account and set up a direct debit to save the funds automatically.
Step 5: Boost Your Income
Saving money and tracking your spending is an excellent foundation to start your reign as Cash Queen, but nothing says “Crown Of Jewels” quite like earning extra money from a side hustle.
But as a working Mama, the thought of taking on a second job can be an awful one, so here are a few other ways you could earn extra cash to boost your income:
- Sell pre-loved clothes, shoes and bags on eBay
- Get creative and sell handmade items on Etsy
- Have a garage sale
- Drive Uber
- Ask for a raise
- Raise your fees (hey, you’re worth it!)
- Ask for cash instead of birthday, Easter or Christmas presents
- Sell your kids unused toys, bikes, scooters and books on Gumtree or Facebook Marketplace
- Tutor, Babysit, Walk Dogs etc…
- Passive income (see below)
Step 6: Create Passive Income
Ok, so now you know how much money goes in and comes out of your life. You have a budget. You’re hitting your financial goals and you’ve started boosting your income with a sweet side gig. Go you!
Have you considered a passive income? That is, automating sales of a product to create an income stream without you having to invest any extra time or energy on selling it (outside the original set up time).
Examples of potential passive income streams include:
- rent from investment properties
- dividends from investing in stocks
- online business (creating a product to sell automatically – no staff required)
- affiliate marketing (great if you’ve already got an online business and want to promote others for a commission aka another income booster!)
These are just a few ideas.
Don’t believe money management is for someone else or that it’s too hard. No-one ever starts at the top and knows everything automatically. Give yourself permission to take one step at a time to create change and cultivate the life you want as the Cash Queen.
*Information provided in this article is for information purposes only and does not take into consideration your personal situation. For detailed advice, please see professional coaching, counselling or consulting from an authorised financial adviser.