The following blog post is part of The Road to Financial Wellness blog tour. The Road to Financial Wellness is a three-month, grassroots campaign promoting financial empowerment on a national level and encourages people to pursue their dream lifestyle. Find out more about local events near you.
Like many personal finance bloggers out there, we here at Fi Big Sky have had our share of “a-ha moments” on our journey to financial independence. I shared one of my biggest a-ha moments in last year’s Road to Financial Wellness Post.
What I’ve learned since is the path to financial wellness isn’t straightforward or a black and white list of rules that everyone can follow–there’s no one way to make it. Everyone’s situation is different and planning for everything is near impossible. Layoffs, babies, home/car repairs and medical emergencies are just some of the life events that can throw a wrench in future plans and derail years of planning. As mere mortals having no way to prevent life from happening, we can only plan unexpected expenses that ensue.
Before you start to think we have it all together, let the record show I’m unsure Mr. Fi and I readied ourselves for every scenario of bad luck or expensive setbacks that may come our way. I am sure, however, that we are thinking about it and working on a back-up plan.
When It Clicked
One of the many a-ha moments I’ve had since starting our journey towards financial wellness occurred when my company hosted a Financial Boot Camp Seminar. At this seminar, my coworkers and I explored the mysterious world of credit scores, budgets, and how to create spending plans based on priorities. I knew my involvement with the FIRE (Financial Independence and Retiring Early) community would separate my thoughts and my peers on what a spending plan should look like. I expected to hear lots of questions and personal stories about struggling to make ends meet or get out of debt. But even though I went in with these presumptions, I was still shocked by many of the comments made that day. But I’m getting ahead of myself. Let’s start from the beginning.
After completing the “priorities” spreadsheets provided by the seminar leader, most people had the same top five priorities: family, health, career, money and home. I wasn’t surprised at all when things like “retirement” and “exercise” were left out of the top 10, but with solid top fives across the board, I looked forward to the spending plan discussions. I was everyone’s cheerleader when they connected the dots between their budgets and their priorities. Unfortunately, that is not how the second part of the seminar panned out.
Credit scores were a sore topic for most–many attending were in debt and others had yet to look at their scores. By the time we moved on to the spending plan part of the meeting, the high from the happy “priorities” spreadsheets had worn off. Everyone grouped into teams and created monthly spending plans for a theoretical $5,000 per month paycheck.
The crank-o-meter continued to rise.
People needed to allocate money to the “must-have’s,” then “recreational activities” and lastly to “savings/emergency funds” leaving a $0 balance at the end. Almost every plan designated most of the money towards the “must have’s” of homes, cars, and food with a healthy amount going towards “rec activities,” leaving a tiny amount for savings.
Before sharing what everyone had written, the seminar leader expressed that “everyone should be saving, at the very least, 10% of your earnings per month. Ideally, you would want to save 20%.” This led to retorts like, “I’m sorry, HOW much?” and “There’s no way I can do that with what you’ve given me!” I was hoping for some a-ha moments to spark discussions of compromise but the opposite happened.
Instead of trying to determine how to cut their spending for the month, most of my coworkers just sat there, stared at their budget sheets and made excuses.
Coworker: “I have kids, there’s no way I can’t spend what we’ve already written per month. Maybe if I was single it would be different.”
Coworker: “I can’t cut back on food. We need to eat and this is how much it costs to feed our whole family every month.”
Leader: “What if you cut back on the number of times you ate out per month? Would that help?”
Coworker: “Oh I can’t cut that. If we don’t go out on Fridays my kids will be pissed.”
Leader: “Focus on the categories that aren’t ‘must have’s.’ Can you cut back on recreational areas such as shopping? Going to the movies?”
Coworker: “So you’re telling me to just save money and not have any fun…”
Then, as if the seminar could not bring these people down any lower, the real bomb landed. She explained that the biggest reason to have a budget is to have savings. Being financially ready for most emergencies by having three months worth of paychecks saved up in an account. Panic set in. Declarations of “Are you SERIOUS? I don’t even have one paycheck saved, let alone three!” and “Well, we’re screwed” flitted about the conference room. I didn’t see a single calm expression; there was only fear and hopelessness left in my coworkers’ eyes.
How Fortunate We Are
That’s when I realized how fortunate I am. Not to brag, but I am innately good at saving money. Beyond that, though, I am fortunate to have found a community of people who understand the importance of saving and urge me and others to do so on a daily basis through their writing, podcasts and vlogs.
Although that seminar taught me nothing new financially, it did teach me that many people have yet to begin their journeys toward fixing their finances. Sending my coworkers out into the world after a single seminar armed with a free sandwich and some worksheets wasn’t going to change their lives or help them find financial wellness. They needed someone to tell them, “Look, you’re living in a nightmare of debt and confusion now, but there are other options and people who have been there and found their way out.”
Being financially stable allows for growth in ways you can’t even imagine, making a-ha moments (both good and bad) something to learn from and welcome instead of something to dread or ignore. How money works is still a mystery to many and those who don’t understand how money can work for them often just assume they’ll never understand. That’s why I am proud we are in a community of writers who try making each of their journeys, no matter how different, attainable and less mysterious. People should not live in fear of their lives changing, but that’s all my coworkers, and most people, can do because they didn’t know if they can financially survive change and they didn’t have ongoing support to help ease that fear.
Like I said before, Mr. Fi and I don’t know everything about money, and that’s okay. The journey to financial wellness isn’t about knowing everything, it’s about knowing what’s important to yourself, setting goals, learning from mistakes and asking for support along the way. We know that being fortunate and not sharing that fortune with others puts everyone at a disadvantage. So if you’re ready to make steps towards financial wellness, joining the personal finance community, @Phroogal and The Road to Financial Wellness is a great place to start.