EP200419 RichOnPlanning - PLANNING MATTERS - CentsAble Chat & Budgeting W Bobbi Olsen

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I am of Rochon planning North Carolina's financial and retirement landing resource got questions or concerns and only after everything we've been through a lot of people do a lot of people's situation has been drastically changed while people are looking for guidance.

We are here to help and assist with any kind of planning, decision consideration strategy were here to help and provide guidance give us a call 91930058869193 005-8860 can also visit us online rich on planning.com we do offer a complementary review of valuation even capable of doing those virtually, there's a button right at the top of the website where you can request the time at your convenience for a comprehensive virtual financial retirement and investment review right@richonplanning.com or give us a call 919-300-5886 and again we are here to help now got a very special guest on the program today. She is the host of another podcast series called sensible chat and that CE and TES like dollars and cents since able chat name is Bobby Olson and she is a financial and budgeting coach, helping people make ends meet. Get a better handle on their budget and really changing the perspective when it comes to money and finance in people's lives privileged to be joined by Bobby Olson. Bobby welcoming the program. Thank you so much as a pleasure to be a pleasure to have you. Now budget coach and an host of a program that helps people understand more about breaking the cycle of living paycheck to paycheck of teaching positive money mindsets. The message I think resonates with me. Certainly, being a Dave Ramsey smart investor program I appreciated. My hope you're making a difference in touch a lot of people. I will I'm trying.

You know that's my goal. I just kind of. I remember having the helpless feeling and I just want to take that away from everybody else because I just I you know it for so long it plagued me and I know how that feels and I'll I just want to take that away as much like I think those who have lived through it. Make the best teachers. Let's respect what you've been host of the sensible chat podcast for quite some time.

Sensible chat.com what is the core message that you are conveying to your listeners. There basically that you know budgeting can change your life. It can relieve your financial stress and basically just that no matter how you sensible because it's no matter if you just have the sense to spare, you are able to change your financial life and really take control of it cents with a C by the way sense like dollars and sensible yeah I was cute so let's talk about the budget. I know that budgeting can be super helpful in getting better control of our money, but you've talked about the fact that it's also a great emotional assistance that it can actually help relieve stress. Yeah, it relieved my stress big time and that's why I'm such a huge proponent of it and I have a you know basically a five way is that it does sell the first one is that it answers the question can I afford it and I don't know about you but I just not question alone used to stress me out to no end and having a budget that is up to date all the time because I'm tracking my spending and I have a plan for how to budget my money but once it's budgeted.

I have a look every single day broken down by categories of how much I have spent so if you ever asked me if I can afford it. I can honestly answer that question out but I never did you find that in the beginning.

Budget answered know a lot, but as you were more disciplined and started answering yes more and more. Absolutely I was just to say I didn't always like the answer but it was clear what it was off I went out and spent anyway. I only have myself to blame. You know I couldn't say I didn't know right so are there any other ways that you find that helps relieve stress. Absolutely it gives you a definitive timeline for reaching your goals. You know when I was trying to pay off debt. One of the biggest things that kept me motivated was having that timeline and knowing exactly what date. If I followed my plan. This would be the date I was out of debt and that just really relieve the stress for me because you know it can be tough sticking to a budget just like it can be tough sticking to a diet but if you really keep that why in mind and that motivation it helps you know reduce the stress a little bit and you know another thing that it does is it helps ensure that you don't overspend because you know there's a lot of us that just go out and spend and then at the end of the month we go. How did I go this far over.

I mean I'm spending more than I making, and I had no idea and it so hard to track if you just have a bank account they do I have money left my bank account.

Well yeah of course I do. But does that mean that if I go out with my friends for drinks tonight and I'm to have gas money tomorrow and you know this because of the stressful things. So the budget really helps ensure that you don't overspend and unless again like we talked about before. I mean, you may overspend but you're going to know your overspending before you do it you know the cause and the problem there is there's only one. One source to blame, absolutely. And another thing is it in helps you that you and helps ensure that you pay your bills on time. You know, before I started budgeting I just kind of tried to pay the bills when they came in and you know first of all, it was stressful to make sure that I had enough money to pay all the bills but then at the same time.

It was like you know you have so many due dates. You have to keep track of and all this stuff and he gets to be too much.

So when I started my budget. I had it for each paycheck.

So if I get paid on the 15th. While all the bills that are due between the 15th and the first to pay them all in one shot and I know I can do it because I budgeted for everything and it's done in one shot. It's over.

No stress for next two weeks you have about. I have told a number of people that the key to beginning financial success, and then having that budget taking care of his opening your mail. For some reason-I've met people who seem to feel like if if they didn't open the mail than it did not exist that Bill was not the hellion know that that is not a great position to be in but staying on top of it.

Knowing your budget, how it how it coordinates and reflects your your income. You know you can then put purpose to your dollars.

I was that person who did not open my mail and yeah I had late payments and all kinds of stuff and because I didn't open my mail.

I actually had a seatbelt ticket was $20 came to me in the mail didn't had ignored it. Never open the mail it by the time I got done with it because they sent me. I'm sure they sent me more and eventually I had a bench warrant out for my arrest, I had to go to court and the fine was hundred learners because I didn't pay open my you know mail for a $20 seatbelt ticket so yeah definitely open the ostrich approach with the head in the sand still leaves you exposed.

Why but it just didn't work know all but you have through that experience and in many others. I'm sure in the lessons that you are now teaching others of of this importance. Found some surprising ways to save money yeah and these are ones because I always hear you now take your lunch to work, you know, make coffee at home and that's great but I got tired of hearing those I wanted something else because I've never been the kind of person that you know buys lunch every day or drinks coffee at Starbucks every day so I already didn't yield those rent expense I could cut so I needed to find something else. And so the things I started doing my favorite one is to budget high for all your bills and expenses and the example that I always use is my electricity bill. Half of the year.

It's about hundred 30 bucks.

The other half of the year at 65 bucks so I budget hundred $30 every single month because first of all, I do not like surprises and I always want to make sure I have enough to cover that bill, no matter how much it is short so if I've gone 12 months of the highest of the hundred and 30. That's a pretty good gauge and so each month that it's not hundred $30. I can see the different of whatever you know.

If so, if it's only 65 bucks then there I got 65 bucks than I can say, so it works out well if you doing that with all of your bills and expenses they could be little amounts but they can really add up and now those pink if you're paying off debt that can go to your debt payoff and if you're not back in go to getting your head building your emergency fund. Whatever you're saving for shortcoming 65 bucks six times a year adds up. You're looking at almost $400 or absolutely and you know if you can't find a lot in your budget just to save outright and this is a good alternative to doing that like another another thing is in this is you know people.

A lot of times don't understand this one but I say that you can save by giving yourself an allowance and that means establishing an amount in your budget for discretionary spending. So this make sure that you have play money every month you're not completely cutting your throat but that's it.

You stick to only that amount that you set out for yourself. That way you don't pillage from the money you could've saved from things like budgeting hi from your expense is right because when I before I start giving myself an allowance I would just take that extra 65 bucks from the electricity and go squander it on whatever but I wasn't keeping track so everything I could've saved was going right out the window were going to have some fun regardless were to play one way or another. It's better to budget for it puts sense that some parameters are exactly because the biggest thing about budgeting is just to be intentional. I mean, your budget is a reflection of your own life and you can make it whatever you want, but the problem is when you're unintentional about it.

You wonder where your money went this way. Make sure you've got the money set aside for what you want. Just make sure that that's really what you want to spend it on absolutely any other surprising ways to save money. I just started doing within the last year is raising my rent because I felt like well you know if I honestly I've got a long time without a rent increase that is been very very shocking and so my husband and I were thinking well if we you know get a rent increase were in have to pay and I mean we've got great rents were not going anywhere. So I thought.

Will I not to start budgeting for now and beat you notes so that when it does, I'm already used to paying it. It's not a hit to the face and in the meantime I can just say that amount so I just add an extra 50 bucks to my rent budget and then of course after I pay my rent so that the 50 bucks there and I can put that into whatever savings category I want.

I like that and ends inflation is going to happen so you know one way or another.

We shouldn't be surprised. As things become more expensive going ahead and and being proactive in planning ahead of time is going to lessen the surprise we don't want to be surprised with our money. Yeah, I mean this is just a thing, because it's it's one of those things that you know. Yeah, like you said inflation happens and when it does, you have to deal with it.

I mean you find a way to deal with it. So the money is there. You just have to find it. I mean, who's not going to pay their rent increase. That's pretty much something that you're going to have to deal with so deal with it ahead of time and yet take the benefit and then another one that I love is saving the cash back rewards from from my credit card. That's an easy one. If you're using a credit card and of course you know if you're not paying it off in the month and you're not responsible for it and all that stuff. I don't recommend using one and I know that there's a lot of people are against credit completely but if you are using a credit card, save the cash back rewards instead of you know, spending them or getting them on a gift card or whatever and I actually have a fidelity rewards card which allows me to just contribute all of my rewards dollars directly into an IRA, which I love because I don't have the time to save for retirement so this is another way to put a little extra money aside for that fantastic really like that one.

I usually just roll those rewards and then pay a little extra on the balance from time to time but making measure even more intentional and using it to contribute to an IRA.

Hey that's win-win. Yeah, I love it. It's been really great for us and especially during a time when you know stocks are on sale so we can add aspect didn't you have a little fun with that and still watch the money grow. Hopefully you will as you have been not only finding ways to be more more efficient with your money, your self, but also helping others. You have also found some surprising reasons why budgets fail. Can you share a couple of those.

Yeah, I think the biggest reason that budgets fail is because you don't understand the difference between a spending plan and a budget. A lot of people use those terms interchangeably but here's what I see is the difference your budget is a reflection of the money that is in your bank account today but it's broken up into separate categories like how much you need for rent how much you need for gas how much you need for different utilities things like that and that amount together is because I teach on the zero-based budget system which says that every dollar has a job and so you budget down to zero, so everything that's in your bank account broken into categories.

All those categories are can add up to the exact amount that's in your bank that is the reality today and if you keep that up to date by tracking your spending. You're always going to know at a glance where you're at with your budget. The spending plan. On the other hand, is a strategy for what you plan to do with your next paycheck or whatever income you are expecting and so you again you plan that out. Down to the zero down to the exact amount that you're planning on getting from your paycheck, but if you don't take that spending plan and then executed into your budget when it actually reaches your account.

That's when the fallout happens because the best laid plan doesn't work unless you execute on it absolutely yeah I have found that people that I have spoken with have a good handle on that budget.

They have what I call the line item budget as you describe what your mortgage what your car payment what your electricity all of their obligations. Line item about they know how much those are, and then I say let's take a look back at your bank account for last six months. How much did you spend compared to that line item budget and a lot of times it's 25 to 50% more every month. They have not accounted for lifestyle in that line item budget, which is it's gotta be part of our spending and our budget plan absolutely and for me it just you can't keep track of all those numbers in your head. You can look at your bank account online as much as you want but that only gives you the total amount of money that you have.

You know what you have for different things.

That's why you know the the cash envelope system work wonders for me for a long time, except that it was little hard for me. I Forgetting to take my cash you know to the grocery store and things like that so I will look for a digital budgeting system like a digital envelope system and that's what I love is that digital digital envelope system because then you always know how much you have in each category.

Absolutely any other reasons why you see budgeting fails, people something out. My second top one is that they're too restrictive. You know, and you always hear budgeting is restrictive, but what I say is this is your budget so if you feel it's too restrictive. Then lighten up on yourself, you know, change some of those you got if you got categories look at you and you're going to have got this much gasoline this much in you know eating out or whatever your categories are and you feel like there's not enough or too much in one category.

Another moving around, you know it, then these things are not. The budget never you never get it right the first time. It takes time to figure out what works for you. So have a little grace on you know with yourself and eat whatever your main goal is you want to follow that goal.

But that doesn't mean that you have to cut your throat to do it and if it's not working for you then change it. Don't make it that restrictive. If you're not ready to be that restrictive with it. Same reason my diet has failed me a few times I is the exact same idea. Yeah.

So that's why always kind of.

I encourage people to have a little play money in there if they have the room in their budget because it's important to have that slack in order to keep yourself motivated toward your bigger goals, I believe. How else can we keep ourselves on track and prevent failing our budget will another one this and this was such a huge one for me forgetting about your regular expenses.

I cannot tell you how many times you know it would be the third month and my husband be going okay. We need to get the oil changed. We have money for that identity can. I forgot to put an oil change in my budget because it doesn't happen every month so we forget about it and you know it just that, okay, the budget of the of the oil change is only 60 bucks but for us of the time that was major if we didn't budgeted in and so what I discovered along ghetto just reading personal finance stuff here and there was turned everything that's in irregular expense into a monthly expense. So if I get my oil changed every three months and it cost me $60 I need to save $20 each month and then I'll always have that $60 for my oil changed and it's such a simple thing but just something that had never occurred to me and that really helped my budget be successful and indeed in that there are other big ones that I can think of the come about insurance payments, taxes, the car inspections that we have to do and then licensing those things come up maybe once a year or once every six months and if we were not prepared for those posts.

Those can be pretty pretty major incidents not to be ready to pay definitely and it goes a long way to have a list of those I would.

I have a list of my irregular expenses, and it has the date that there do and how much it is that I can always go there and plan my budget for how much I need to save for those expenses to find any myths that are involved with budgeting things that people tend to believe but maybe arts is true as we think. Yeah, the one that I always hear is budgeting is hard and I believe that's a myth because you know when it comes right down to it.

Budgeting is easy. Budgeting is just simple math. Sticking to changing changing your mindset is what's hard but if you stick if you're sick of money controlling you in every decision that you make. Then, budgeting is an easy way to take back control and if you can change your mindset and really have that goal in mind and find your why what is the reason you're doing this in mind, your motivation, then budgeting becomes actually very simple, Bobby. I hope people make the transition into retirement very often and that's really the focus of part of our program and and part of what I do. I find that a lot of times people who were getting ready to make that transition have been have been lucky not to have to pinch every penny not to have to stretch every dollar and therefore have not stuck to a budget maybe as much as those who do with their looking at the time were there paycheck. Their income is about to go away and I always stress the importance to them that budgeting has come back to be the most important factor in determining your financial success for the next 30 years.

Yeah so are you are you seeing that there are some steps I'm not know that you have talked about surprising ways to save money and and reasons the budgets failed but but budgeting our way to financial freedom. Are there some simple steps that we can do that so that we can have a more confident financial path. Looking forward well when I'm talking about budgeting your way towards financial freedom. It really starts with debt debt payoff and you know a lot of people that are going into retirement now were finding more and more that that's Dylan issue certain ends.

Yeah it's it's kind of scary. And so whatever age you're at, you know that the first thing on my list of line you budgeting your way to financial freedom is really the idea of that is that budgeting can help with what ever goal you financially you're trying to accomplish. So paying off debt is going to certainly be the most important especially if you're going into retirement because you need to have as few financial obligations as possible and budgeting can certainly help with paying off debt when you get done with that budgeting helps you save for emergencies and the unexpected. Which, you know, certainly in retirement as well as any other time that's gonna be a huge issue and especially if you haven't had like you said deal with that before where you maybe you had plenty of money before and never had to give it any second. But now you need to make sure that you have money set aside for emergencies on the unexpected because no matter who you are.

These are in a calm and they just keep coming and coming and you know like you and I talked about before.

If you have the money for it then you know it's and it's a minor irritation that you have to deal with. But if you don't have the money for it. It can turn into a big emergency and and nobody wants that and then certainly after you get done with. If you have enough money for emergencies and feeling comfortable you can handle those unexpected things then budgeting can help you invest your retirement by letting you see how much you have available to put towards investing without upsetting your day-to-day lifestyle.

I feel like you agree with this. This one Bobby. But to me, one of the biggest misconceptions with budgeting is people feel like it is an event they do it once and feel like, okay, I've done that way, when in reality.

Budgeting is a habit. It's a routine it's it's a lifestyle. Yeah, yeah, that's for sure. You know, I mean because it keeps going. It's it's a day-to-day thing ends up you know paycheck to paycheck thing until you get out of that paycheck to paycheck cycle but you know even if you don't have a budget you still have to keep track of your spending so that you're not overspending in your bank account. And so for me it just makes so much more sense to budget instead of just looking and seeing if you have money in your bank account because, again, for me it just relieves the stress of wondering you know what I exactly have money to spend. You know it's like a toolbox. If you think of of your bank account as your toolbox well okay that's fine but if you put all your money into it. If you put all your tools into a toolbox did break them it be really hard to make sure you have the right tools for the right job. Would it not, yeah, I got a toolbox actually got a dig through sort through to find the right one. Sometime I got my common go to tools pretty well sorted and I know where they're at but yeah the random tools boxes is always interesting when I have to dig into that, let me ask you another question here Bobby. How much time do you dedicate to budgeting now that you are on on that routine and and have made that part of your lifestyle versus how much time did you spend worrying about your money before you were in a regular habit of budgeting that is such a great point.

I spent so much more time stressing about it and that's what I always tell people is yeah if they getting to spend a lot of time budgeting know it's nowhere near the time you spend stressing about it and you know when you're stressing about something it just the stress never goes away because you never deal with it and so I was stressing about money.

I stressed and stressed. But when I finally budgeted the money and got on a regular routine. Yeah, I don't feel that stress anymore because I dealt with it and the time involved. Well, let's see.

In the beginning it was a little bit more. I actually was really excited about it. So I spent a lot more time than most normal people with blood.

I think it probably took me you know three or four hours to get everything together.

You know, so that you have a your financial picture in front of you and know what you're working with. But on a regular basis.

I have a budgeting system that allows me to put in my expenses as I make them so if I leave a restaurant. I put my I enter my receipt right then it takes me 30 seconds tops and I'm done and once every two weeks. I'll really go over it so that I can pay my bills and budget. My new money that maybe takes me half an hour so there's really not a lot of time spent on a regular basis.

Once you got the the pre-work out of the way. I think it says a lot that you chuckled when you said most normal people would know what we need to make this a normal thing. It needs to be home normalized that paying attention your money is something that we all should be doing. Yeah, and it's a lot of fun. I mean I did it. I still do it because it's fun.

You know, for me, budgeting is like dreaming when you look at your budget and you decide what you're gonna do with your money. It's exciting because even if you're paying off debt when I was the stay dry was paying off debt. It was exciting for me to pay the bills because I can look at the amount I owe going down and I knew that when I was done with that, here is where my money is going to go next. And you know rather than I mean, I love to daydream. But when you daydream you're just kind of sitting around wishing that something would happen and most the time then you kind of you know, shake it off and go okay.

Well, back to the real world because that's not good happen. But now with the budget, you're dreaming. But you're actually putting a plan in place that can get you to accomplishing that dream. And that's what I love about budgeting absolutely will again. She is Bobby Olson, host of the sensible chat podcast focuses on breaking the paycheck to paycheck cycle by teaching positive money mindsets how destroyed it and reduce financial stress. Folks who work with Bobby one on one walk away with a clear view of their financial picture and a budget that meets their specific needs. Putting them in more control over their financial lives and of Bobby and Bobby's anybody wants more information or would like to be in touch. What's the best way to reach you were or find out more. Sure, they can just go to sensible chat.com and that's dense, as in dollars and cents able sense able chat.com sensible chat.com but we really appreciate the time. Thanks for being here on the planning matters radio podcast.

Thank you for having me. It was an honor once again very happy to be joined by Bobby Olson. She is host of the sense of bowl chat podcast that CE and TS sense able chat podcast and if you take some time. Dedicate your focus and attention and take some of Bobby's advice you are able to make sense out of your dollars and cents, and that's what we also try to help people do each and every day to the point where they are achieving big financial goals like the ability to stop trading our time for money. Enjoy our time. Enjoy our money and relaxing move confidently through retirement. If you have questions, concerns.

If you would like a planning financial a retirement or an investment review evaluation if you got a few questions you just want to talk over with somebody we are here to help. Feel free to pick up the phone. Be in touch. 919-300-5886. You can visit us online rich on planning.com there is a link right at the top of the website. If you would like to request a convenient time for you to do a complete comprehensive financial planning evaluation virtually online.

Do those for your safety and just visit Rich on planning.com or give us a call 91930058 hearing from you would help you. This is been planning matters radio the content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of an investment strategy purchasing investment tax or legal advice from a professional writer any investment investment strategies mentioned involve risk, including the possible loss by three services of capital management for registered investment advisor recently and strengthen claims paying ability from annuities be taxable as ordinary visuals for specific product is partly a result