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Budget Therapy

February 9, 2018

‘Retail Therapy’ is deemed as the act of shopping for the primary purpose of improving one’s mood. If you go on to research the psychology behind the not-so-recent trend, you’ll see a plethora of experts who claim there’s actually some truth to it all.

 

Updated June 03, 2020

 

It’s quite normal for tension to arise from our everyday lives, even more so that you might seek the easement of such tension. All’s well in moderation, right? But consider, for a moment, the motivation behind the seemingly harmless act of retail therapy. As you shop, you’re naturally visualizing how you’ll use the products. In doing so, you are actually visualizing your new life. Kit Yarrow, a professor of psychology and marketing at Golden Gate University in San Francisco suggests, “The purchases themselves are only part of the allure. Shopping – and visualizing – is preparation and it makes people feel more in control and less anxious about [these tensions].”

 

There it is – visualization – the driving force behind retail therapy and nearly all other forms of self-solace. But what if there was a different approach you could take to achieve the same fulfillment without sabotaging your long-term financial stability? What if you chose budget therapy over materialistic mindlessness?

 

You’re smart. You didn’t get to where you are without hard-work, determination, and some good ol’ fashioned, all natural intelligence. Unfortunately, if you’re like most recent grads, you’re struggling under the weight of student loan debt and wondering how in the world you’re supposed to start saving. It’s easy to feel out of control and financially trapped, but learning how to budget your money properly is guaranteed to deliver the same remedy as retail therapy without being quite as costly (or as fleeting).

 

Here are some great tips to turn retail therapy into budgeting bliss.

 

Budget Planning

Rob Berger, a Forbes Contributor and an expert budget planner, claims “the goal of a budget is to help us control our spending so that we can spend less than we make and focus our spending on what matters most to us. However, you choose to budget, it should meet this goal. If it doesn’t, you’re doing it wrong.”

 

This means it is important to understand your goal and create a budget for how to get there most effectively. At the same time, try to enjoy the process instead of obsessing over the outcome. Make your goal be the budget itself and use that as encouragement to keep to your budget every month. And remember, it’s more important to be consistent with your budget planning than it is to be perfect.

 

Budget Planning is Forward Thinking

When attempting to create a budget with maximum effectiveness, it’s important to apply it to the future. As you prepare for next month, give every dollar a name. When you do this, you’re telling your income where to go instead of scratching your head at the end of the month, wondering where it all went. Keep in mind seasonal necessities like paying extra for your electric bill to keep your house cool in the summer. Don’t forget about holiday gifts in December. Planning to get a nice tax return this year? Make sure that extra income is accounted for. If you don’t have a plan for it, it’s likely to slip out the back door when you’re not paying attention.

 

Flexible Budget Planning

Apply the familiar experience of shopping at the mall to budget planning. You walk through the endless aisles of products, perusing your options for the perfect fitting you-name-it. As you visualize your ideal financial self, you may buy a pair of boots you simply must have to survive the winter. But it’s not like you’re never going to buy another pair of shoes again. The same applies for budgeting. As life changes, your wardrobe and your budget will change as well.

 

Track & Save

If destructive habits like retail therapy arise out of a need to feel more in control, what could be more empowering than coupling that same drive with a healthy dose of self-control? Tracking every dime you spend for a month will be extremely eye-opening and reveals your sometimes hidden spending patterns. It also shows how spending even small amounts of money here and there adds up over time. As you observe these patterns, you’re able to choose what’s most important to your budget and eliminate frivolous expenses. Apps like Mint provide easy ways to keep track of spending and analyze what it is you spend your money on.

 

If the goal of budgeting is to spend less than you make, one of the best ways to do that is to save first. Instead of saving whatever is left over at the end of the month, set savings aside first and spend the rest. By getting money out of your pocket and into a savings account, you’re less likely to spend your savings over the course of the month.

 

Try Window Shopping

If you simply cannot resist the urge for retail therapy, try window shopping as an exercise of willpower. It’s possible you’re just looking for a way to pass the time and, in order to feel like you’ve accomplished something, think that you need to walk away with a product in your hand. Try it on for size. See how good you’ll look in it. Then put it back on the rack and return to the store next week if you truly must have it.

 

This sort of practice still gives you the entertainment you seek while shopping, but it also helps you avoid impulsivity – one of the most devastatingly maddening habits for your budget. Impulsivity is rarely your friend, especially if you’re hoping to have a healthy relationship with your money. And let’s be honest… you are. Those impulsive, extraneous purchases are actually compounding your stress rather than alleviating it. Think about all your hard-earned dollars and how many hours it took you to be able to afford that $150 purse. How quickly it vanishes with a single swipe of a credit card.

 

Budget Planning IS Freedom

Finally, the most important budgeting tip is to make sure you properly understand the nature of a budget. A lot of people have misconceptions about budget planning and feel that a budget will limit their ability to do what they want, when, in fact, the opposite is true. Budget planning IS freedom. Mindless spending is far more limiting than proper budget planning, and you’ll likely play an anxious game of catch up rather than calmly putting one foot in front of the other as you proceed through the year. When you learn how to budget your money properly, you’re the master of your money and are able to adjust it accordingly. Remember, there’s no perfect budget out there. It takes practice, and you are ultimately the only one who gets to decide what works best to help you achieve your financial dreams.

 

Cutting Your Monthly Budget: Where to Start

 


 

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2020-09-30
The Best Personal Finance Blogs of 2020

If you’re looking to build strong money management habits, you should consider subscribing to a personal finance blog. All over the internet, personal finance professionals share their wisdom on how to build wealth, pay down debt and establish budgets. You have a world of financial knowledge at your fingertips, so it's time to get started!   With a range of topics and blog focuses, it can be hard to decide where to begin. If you’re all about smart saving, spending wisely and torching your student debt, then here are ELFI’s top picks for 2020 personal finance blogs:

Making Sense of Cents

Making Sense of Cents has a little bit of everything when it comes to building money management habits. Whether you have questions about student debt, insurance or budgeting, this is the blog for you. It’s also been named one of the top personal finance blogs by FinCon, Zillow and the Plutus Awards.   This blog maintains a light, fun tone so it’s easy to read, and it handles a lot of top-level questions about personal finance. Author Michelle also shares about her experiences living in an RV and on a sailboat touring the world. If you’ve caught the travel bug, then you may find some exciting content here.  

Millennial Money Man

Bobby Hoyt, the founder of Millennial Money Man, teaches millennials to pay off debt and live their best, self-employed lives. His blogs focus primarily on trending finance apps and ways to monetize your hobbies. He also shares useful budgeting and spending tips to help set you up for financial success.   If you have a passion for entrepreneurship, Bobby is your man. Enjoy insider tips on growing your business and expanding your income streams, from someone who's done it himself.  

The Budgetnista

Tiffany “The Budgetnista” Aliche is passionate about teaching personal finance. She's also one of Amazon’s #1 bestselling authors for her books on personal finance. Her background as a preschool teacher makes her incredible at explaining high-level financial topics in an engaging, easy-to-understand way. Although she’s developed near-celebrity status as a blogger and speaker, Tiffany's down-to-earth style makes for a relatable, fun read.   From banishing debt to building a strong business, her blog covers best practices for achieving financial success. She debunks money myths with topics like “Debt Freedom Doesn’t Equal Wealth,” to help her readers build money management habits. If you have an entrepreneurial personality and are ready to take the next financial step in your personal life or your business, The Budgetnista blog is for you.  

Afford Anything

If you’re a travel fanatic, you’ll love “Afford Anything." Author Paula Pant has traveled to more than 40 countries. She speaks to financial independence and real estate investing, her two primary categories of expertise. She’s built self-sustaining wealth by investing in real estate and uses her free time to teach others how to do the same.   Her blog is all about cutting back expenses in unnecessary areas while spending on the things you love. She writes for readers who want an actionable strategy for spending and saving wisely. If you’re interested in building wealth or in real estate investing, this is one blog you won’t want to miss.  

Broke Millennial Blog

Broke Millennial Blog author and speaker Erin Lowry wants to teach you how to get your financial life together with a 5-step plan designed to help you take charge of your finances. Her blog focuses on popular millennial topics, like budgeting strategies for different personality types and awkward money situations. If you feel like you could use a little financial direction, this blog is probably a great fit for you.   If you love the Broke Millennial Blog and want to take the next step in your financial journey, Erin makes it easy! You can subscribe to the blog’s email list for access to a free money management worksheet designed just for readers.  

Stefanie O’Connell

Stefanie O’Connell wants to help you travel the world, create a living space you love and have healthy financial conversations with your significant other. Her blog addresses financial conundrums you may have wondered about but have been afraid to ask, like “Why I’m Not Having Bridesmaids at My Wedding” and “4 Ways to Buy a Home When You don’t Have Enough of a Down Payment.”   Stefanie’s upbeat, relatable blog gives readers a sense of familiarity. She doesn’t cut corners and gets straight to the heart of financial questions. Her blog offers direction if you’re interested in investing, budgeting or establishing healthy financial boundaries in your relationship.   Every reader interested in learning more about financial topics should check out ELFI’s recommended blogs. If you’re loving the ELFI blog, don’t forget to check out the rest of our topics for even more great information about managing your student loan debt.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
2020-09-25
3 Financial Goals to Achieve Before Marriage – And Some That Can Wait

Marriage is both a personal and financial turning point that opens up a new world of financial opportunities and struggles. However, with proper planning, you can minimize the challenges and make the most of financial opportunities. Check out these financial goals to achieve before marriage, as well as a couple of others that you’ve still got time to work toward:  

Financial Goals to Achieve Before Marriage

The Emergency Fund

For many couples, the COVID-19 pandemic has made the importance of emergency funds exceptionally clear. Especially as you enter into your first few years of marriage, it’s important to build a strong financial foundation so you’re prepared for unexpected expenses, from home repairs to medical bills.
Financial hardship is a leading cause of divorce, and in these uncertain times, an emergency fund can help to weather the storm.   In addition, an emergency fund provides a way to ease financial anxiety and distress even when times aren’t tough. When you know you’re prepared with emergency savings, there’s no need to panic if the unexpected happens.  

Setting a Monthly Budget

Even if you aren’t getting married, creating a budget is a great financial step, and is something you should do right away. Work with your partner to outline your regular expenses, as well as any expenses that may arise in your first year of marriage. Make sure you provide yourself with some flexibility in your savings and begin building an emergency fund if you haven’t already.   There are several useful tools that can help you keep track of your budget, including apps like Mint. You can also employ a budgeting strategy to keep your saving and spending on track. Several popular budgeting methods include the 50/20/30 rule, the Zero based budget and the cash envelope system. Not only will a budget be good for your finances, but it will be good for your marriage, as well.  

Setting Goals for the Future

Yes, setting goals is a goal. You and your future spouse should lay out financial goals before getting married. It’s important to be on the same page when it comes to debt repayment, housing plans, savings goals and other major financial milestones. Plus, it’s good to know what your spouse is looking for, and a good plan helps to avoid financial stress that can really harm a marriage.  

More Flexible Financial Goals

Making a Down Payment

While it’s great to start saving for a down payment before marriage, it’s not necessary to be entirely ready to buy a home before tying the knot. Especially if you’ve already established good money management habits, you can always continue working toward this financial goal as a married couple.   Even if you don’t have the money for a down payment right away, you can easily establish a strategy to save toward a down payment. Experts recommend planning on putting a minimum of 10% down for your down payment and the more you can save, the better. Stay focused and keep saving. You’ll have that down payment in no time.  

Becoming Debt-Free

Some couples choose to pay their student debt off before getting married, however, student debt is another financial goal you can afford to wait on, especially if you consider refinancing. After your wedding, you may choose to prioritize other expenses that come with building a life together, like a new car or home, before tackling the remainder of your student debt.   That said, you certainly don’t want to forget about your student loans. By refinancing your student loans, you could earn greater financial flexibility by lowering your interest rate or changing your student loan repayment term. Refinancing can provide you with the options you need to achieve financial goals with your new spouse.  

Tips for Tackling Student Debt

As a general rule, it’s best to first tackle whichever debt is incurring the most interest. Debts with high interest rates can easily spiral out of control, and while it may not be essential to totally eliminate your student debt before your marriage, it is advisable to develop a plan to do so.   The good news is, you can employ several strategies to make paying off debt a less intimidating ordeal. Two of the most popular repayment strategies are the debt snowball and the debt avalanche. These two plans take opposite approaches. While the debt avalanche calls for dealing with the highest interest debt first, the debt snowball calls for dealing with the lowest amount of debt first and using the momentum to pay off debts one by one. The right method for you depends on your situation, but both can be incredibly effective if used correctly. Again, it’s worth noting that it isn’t necessary to have your debt entirely paid off before getting married, but you should develop a plan for paying it off before you say “I do.”   A marriage is a big change, but it doesn’t have to be stressful. By taking the time to have fun and create a few financial goals, you’ll set yourself up for success even before tying the knot.  If you’re getting married soon, you also might be interested in budgeting for your wedding. Check out our guide here.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
Woman getting her finances in order
2020-09-10
Using the COVID-19 Pandemic to Get Your Finances in Order

This has been a challenging year in many ways. Despite the challenges, however, many people are doing their best to make the most of a difficult situation by accomplishing goals during their time at home.   If you have some extra downtime, this could be the perfect opportunity to work toward your financial goals! If you're ready to get your finances in order, here are a few suggestions to get you started:  

Save for an emergency fund

There’s no way to avoid all of life’s accidents, but you can be prepared for them.
Saving for an emergency fund means intentionally setting aside a percentage of your income for necessary expenses in case of unexpected expenses.   Emergency funds are meant to cover absolute must-haves, like food and housing, rather than entertainment-based expenses like vacations and dining out. While it’s fantastic to save toward those things, too, you should first set aside money for your emergency fund, then focus on secondary expenses.   It’s common to save a $1,000 emergency fund at first, then to work toward an emergency fund totaling six months’ necessity expenses. Reaching a full emergency fund is an incredible accomplishment, and also means you can breathe a sigh of relief knowing you’ll be taken care of if the unexpected happens.  

Cut back on spending

Focus on eating at home

With almost half of the United States now working from home, it’s easier than ever to avoid the drive-thru at mealtime. If you’re working from home, this is the perfect time to practice cooking your meals. To take it a step further, you could even try meal prepping!   Preparing a meal at home costs, on average, about $4. Compared to the average cost of eating out at $13 per meal, food savings top $180 weekly if you’re eating three meals per day. Cutting back on the cost of dining out is a great way to lower your regular expenses and to get your finances in order.  

Save on travel expenses

Whether or not you’re working from home, travel options are limited as a result of the COVID-19 pandemic. Consolidating your errands into one trip and limiting unnecessary miles on your car are both great ways to save a little more during this time.   If you are working from home, what a fantastic opportunity for savings! Instead of spending the money that you’re saving on work travel elsewhere, consider making progress toward a specific financial goal or even adding to your emergency fund.  

Learn a few simple home repairs

If you find yourself with a lot of time on your hands, especially time at home, why not learn a few do-it-yourself repairs? Even if you don’t need to update your home right now, you could save a significant amount in the future by knowing how to make minor adjustments yourself.   From instructions on installing a faucet to fixing a broken drawer, the Home Depot has a number of DIY home project guides on their website to get you started. Best of all, the guides are free and offer step-by-step instructions for first-time fixes.  

Use your extra time wisely

Improve your credit score

Improving your credit score is a fantastic way to get your finances in order. Even though you can’t boost your credit score overnight, you can make a few smart money moves right now that will put you on the right track.   Paying your bills on time is the most effective way to keep your credit score high. While you have a little extra time at home, look to see if your bank offers an automatic bill pay option. Automatic bill pay is a phenomenal way to set up your payment schedule, then let it take care of itself. This is especially useful for regular monthly expenses like rent, mortgage, car and utility payments.   Even if you prefer to handle your payments manually, create a payment schedule by setting reminders for important dates. With This will help you to stay on top of important expenses, and you can enjoy the benefits of having a strong credit score.  

Make some extra cash

Boredom can be a catalyst for creativity. If you like to play the piano, consider making a little extra money by teaching beginner piano lessons. If you enjoy shopping, try bringing in some side income by delivering for Instacart, DoorDash or a similar service. Now could be the perfect time to turn your hobby or favorite activity into a side business.  

What to do if you’re struggling financially during the COVID-19 pandemic

Reach out to your lenders

The COVID-19 pandemic has, unfortunately, created financial hardship for many people worldwide. The U.S. unemployment rate hit an unparalleled high of 14.7% in April, leaving many families without the financial resources for necessities like rent and groceries.   If you find yourself in a difficult financial situation resulting from COVID-19, speak with your lenders and landlords to discuss a mutually beneficial solution. Many businesses have deferred monthly payments, and the federal government has suspended interest on student loans for the remainder of the year.   We understand how difficult it can be to navigate this time. If you’re an ELFI customer in need of assistance, our expert Personal Loan Advisors are available to discuss your financial situation.  

Prioritize the necessities

If the COVID-19 pandemic has negatively impacted your financial situation, make the most of your income by temporarily limiting unnecessary spending. From eating at home when possible to enjoying free or cheap recreational activities, these short-term sacrifices may better your long-term financial health.   If you need a few ideas for a few at-home activities that are also budget-friendly, check out our list of ideas here.  

Check for forgotten expenses

If you’ve tried everything but your expenses still feel overwhelming, one way to get your finances in order is by making sure you've canceled all the monthly or automatic payments for services you no longer use.   Check your credit card bill to see if you’re making automatic payments on anything you may have forgotten. This can be everything from streaming services you no longer use to app renewals you're still being charged for. Even a few dollars each month can add up if you’re unwittingly paying for several unused services.   Additionally, take stock of your utility bills to see if your expenses have been slowly climbing. If your utility costs have grown significantly, discuss the expenses with your provider. If you can't come to a resolution, consider exploring other options to see what might be available!   Finally, student loan refinancing can be an effective way to lower the interest and extend the term on your current student loan payment. If you’d like to decrease the amount you’re paying each month, determine whether student loan refinancing might be the right fit for you.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.