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7 Smart Habits That Will Transform Your Personal Finances

Interview with Rachel Cruze

Episode Description

As a business leader, you’d never start a year without a working budget or a sense of your profit margin, would you?

But when it comes to our personal finances, we don’t have the same kind of awareness and discipline. We see money in an account and we spend it without thinking. We don’t have a sense of where our money is going or what it’s getting us in return.

That’s why I’m thrilled to have Rachel Cruze joining me for this week’s episode of the Building a Story Brand podcast. She is a personal finance expert and bestselling author. And as the daughter of Dave and Sharon Ramsey, her heart for the topic runs deep!

Rachel told me that the habits we create around our personal finances are crucial because they add up. She says, “If you can make the wise ones over and over, and that becomes part of your norm, suddenly money stress and money worry starts to lower, because you’re doing it well.”

Listen now to discover the seven habits you can develop in your personal finances to build wealth, give back, and have peace of mind about your money. Or keep reading for a recap.

[ LISTEN NOW ON iTUNES – EPISODE 28 ]

Habit #1: Quit the comparisons.

For many of us, the temptation to spend comes from seeing the lives of others around us and comparing our lives to theirs.

Social media only amplifies this. The “Joneses” we want to keep up with aren’t just next door anymore. They’re on our phones and in our feeds. But social media is only, in Rachel’s words, a “highlight reel” of other people’s lives. We just see the new landscaping, the stylish renovations, or the amazing wardrobe of those around us. But we don’t see the stress, the credit card payments, and the arguments.

That’s why it’s critical to quit comparing your life to others. As Rachel says, “Comparison doesn’t just steal your joy. It steals your paycheck.”

Instead, focus on what you’re grateful for. This takes all the wind of out of comparison because you’re mindful of what you have, not of what you don’t have.

Habit #2: Steer clear of debts.

Debt is the norm in our culture. For some of us, the idea of buying a car without a car loan sounds impossible. But Rachel quotes another Ramsey personality, Chris Hogan, who says “Debt’s a thief. It not only steals your income, but it also steals your peace of mind.”

So yes, we should strive to pay off any existing debts. But we should also embrace a lifestyle of living below our means. As Dave Ramsey says, “We move at the speed of cash.” Sometimes that isn’t very fast, but it is more secure.

Habit #3: Make a plan for your money.

And now we have to talk about budgets.

As Rachel points out in the podcast, we assume people “on a budget” aren’t fun. “I can’t go out to eat with you guys; I’m on a budget,” or “We can’t take that trip; we’re on a budget.”

We tend to frame budgets as a limitation on our freedom. But true freedom comes when you actually know where your money is going. To quote Rachel:

“A budget gives you freedom. It gives you permission to spend. It gives you permission to do the things that you value.”

By deciding your plan in advance and knowing you have the money, you can enjoy the fun stuff — a nice meal, new outdoors gear, that leather sofa — guilt free.

And for couples, nothing will iron out disagreements more easily than a budget. You may still argue about money. But the emotions won’t run nearly as hot because you’re only talking about a plan for your money, not money that’s already spent.

As Rachel points out, “When you can agree on where your money’s going, you’re agreeing on not just money. It’s your dreams. It’s your goals, your fears, your values. Everything’s lined up.”

If you’re thinking simply about a budget, the major categories you should aim for are:

1. Give
2. Save
3. Spend

It’s important to budget in this order. Why? Because a lot us say we want to give or save more, but claim there’s nothing left after we pay our bills. Rachel would say your budget is upside down. Put giving and saving first, and then you can spend.

Just bear in mind, if you’re new to budgeting, that your first month is going to be a disaster. But after a couple of months, it will start working. So stick with it!

Habit #4: Think before you spend.

This is for all of you who can’t walk past the $1 bins at Target without $20 worth of stuff jumping in your cart.

Of course, all our small impulse buys of five bucks here and twenty bucks there add up quickly. (You’ll notice once you start budgeting!)

That’s why Rachel recommends you think before you spend.

This takes the “impulse” out of the impulse buy. Just a few moments of thought: Why am I really buying this? Will this truly make my life better? Do I want this item more than I want to save for that big goal? Am I just buying this to try attain a certain status?

Rachel and her husband have a certain dollar amount that they won’t go over until they sleep on it. That extra bit of time removes the emotion from the equation and allows them to make a clear-headed purchase (or not).

Habit #5: Save like you mean it.

We all know we should save money. For kids’ education, for retirement, for projects we don’t want to have to borrow to finance. But then we look at what’s leftover after we spent all month and find there’s nothing to save!

That’s why Rachel recommends you save like you mean it. Prioritize saving by giving it the same kind of necessity as, say, your cell phone bill.

It’s a big ask. But Betsy and I don’t think of it as “saving.” To us, it’s like buying peace of mind.

Plus, you can start to see how these habits work together. Get great at budgeting, so you save more. Save more so you can steer clear of debts. Focusing on even one good habit will help you develop the others.

Habit #6: Talk about money, even when it’s hard.

You’ll notice Rachel doesn’t say, “if it’s hard.” She says “when it’s hard.” Because it will be.

Despite all the facts and figures, talking about our personal finances is always emotional.

Despite all the facts and figures, talking about our personal finances is always emotional.

For married people, it’s as important to be as open about your finances as you are about every other part of life. Hiding purchases and not communicating will erode your relationship. Better yet, your relationship and intimacy will deepen dramatically when you’re aligned and working together toward any goal, including a financial one.

For single folks, here’s Rachel’s advice:

“Find someone in your life that’s good with money and show them everything, which is very uncomfortable. Show them your income. Show them your taxes, your investments, your debt. Have other eyes looking over this, because it’s a very lonely process, trying to do well with money.

Habit #7: Give a little until you can give a lot.

On the podcast, Rachel mentioned a fantastic quote from John D. Rockefeller. He said, “I never would have been able to tithe the first million dollars I ever made if I didn’t tithe my first salary, which was $1.50 a week.”

That’s the idea behind the seventh and final habit, which is to give a little until you can give a lot.

As Rachel told me: “People think, ‘Well, if I just had more money, I would be able to give.’ I don’t think giving is a math issue. I think it’s a heart issue. Where’s your value system?”

Develop the habit of giving now, even if money is tight. It could be a $5 donation to a cause you love. As your resources grow, your giving will grow too, because you’ve established the character and habit of giving.

If saving money can give you peace of mind, then giving money can buy you freedom from the control that money can have on you.

Yes, these are habits for personal finance. But as you can see, developing them will mean examining your emotions, your reactions, and your relationships along the way. That’s because money, perhaps more acutely than anything else, magnifies our character.

These habits can guide you and help you make some major gains in 2017 to eliminate debt, save more, give more, and finally have a sense of peace and alignment about your personal finances.

Answer a few short questions on our downloadable worksheet and apply this episode to your life and business. You’ll remember more of what you learned and have clarity for how to put it to use right away.

Executive producer: Tim Schurrer
Additional production and editing: Chad Snavely

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