Financial coach offers tips for living the life you want

With rising prices at the grocery store, gas station and nearly everywhere, I've been taking another look at our family's spending. I like to check in with our spending a few times a year. This past year, we went from two to one daycare payments (hooray), added a car payment, and my husband switched to a new job. All of these had different impacts on our spending and savings.

If the thought of creating a budget or just looking at your monthly expenses in detail makes you cringe, this is for you! I reached out to financial coach Monica Scudieri, author of Grab Your Slice of Financial Independence, to find out how to make budgeting less intimidating. She shares her advice in this three-part series.

Monica, what inspired you to become a financial coach?

Monica: After my divorce years ago, I started over with one house, two kids, and $257,000 in debt. For the first five years, I earned what I like to call unemployment frequent flier miles having filed three times totaling 22 months of unemployment. For the next five years, I downsized and purchased five rental properties in three years. At the end of these 10 years, I reached my definition of financial independence.

One of the ways you were able to do that was by being really honest with yourself and the state of your finances. It can be really intimidating for people to think about budgeting, let alone try to create a budget. Where can people start?

Monica: If you have ever been on a road trip then you know there is some planning involved. For example, where are you leaving from? Where are you headed to? How many days will it take? Etc..

Getting your household finances in order is in many ways done in the same manner. Start by defining where you are going, your destination.

Answer the following questions:
1. What is your definition of financial independence?
2. Why is achieving financial independence important to you?
3. What does financial independence look like in your life? Be specific in setting some goals.

If your definition of financial independence is "I want to do what I want, when I want and for how long I want" that is a good start, but we need to go deeper. Ask yourself "What do you want to do? When do you want to do it? How long do you want to do it for?" instead.

If you are struggling with these questions, here is a tip, use S.M.A.R.T. goals (Specific. Measurable. Achievable. Relevant. Time.) to help define what financial independence looks like in your life and the goals you what to achieve.

Keep these answers someplace where you can read them every day. As you learn and grow, your answers will evolve (and goals will be checked off).

Once you have defined your goals, what should you do next?

Monica: Now it's time to figure out what you have and how to get from there to those dreams you just wrote down. That's your starting point.

To define that, pull together the following information:
1. Calculate your net worth.
2. Look up your credit score.
3. Look up your credit history.
4. Record your cashflow for 1-3 months.

Net Worth
Net worth equals assets minus liabilities. Assets are things we own that increase in value. Liabilities are things we owe on, like a mortgage, car loan, credit cards, or school loans. Your net worth changes as you grow and invest (we'll get to that point later). The best practice is to calculate it once a year to track progress.

Credit Score
Like net worth, your credit score also changes over time. The credit score is what lenders use to determine the interest rate you are eligible for. The better the score the better the rate. The worse the score the worse the rate.

Credit History
The best practice is to pull your credit history once a year to monitor for fraud activity you may be liable for. A great site to get your credit history is from Annual Credit Report (and its free). Nothing is scarier than your identity being hacked, and credit cards opened in your name.

According to the Javelin Strategy & Research Identity Fraud Study, 40 million US citizens were impacted by some type of fraud totaling $43 Billion (with a B) in losses in 2022. If you do see something on your credit history that is not yours, start making calls right away and document everything, date/time of the call, who you talked to, what was said, etc.

Cashflow
This is the number one reason why budgeting can be so painful. Most people think they know what they spend every month. But the truth is, most people do not. Before we even think about creating a budget, we need to do some homework. You wouldn’t buy a random house without first figuring out where you want to live and why, right? Do not skip this step. Record your cashflow (spending and income) AND do not make any changes in your lifestyle. That’s right, live your life. All that is required now is to record spending and income.

Cashflow tells a story about your life. It tells us what you value and what you don’t. There is no right or wrong, for now it's just information. Once you have a few months of spending and income, then the fun begins.

Next up...we will look at how to get from knowing what you want, to getting what you want.

Tara Lynn is a former WRAL reporter and anchor. She lends her 15-plus years in journalism to tell visual stories through love-filled photography for families of all kinds. The mother of three little humans and one senior rescue dog believes in celebrating magic in the little things, the big loves, and the imperfect moments that make the most remarkable memories. Her vision is to help families celebrate and share their love through photography and curated album artwork that become timeless keepsakes connecting multiple generations...because moments often pass in the blink of an eye, and the photographs we take connect us to our memories and our great loves, forever.

You can find Tara Lynn on Instagram at @TaraLynn_andCo and TaraLynnAndCo.com. Learn more about her photography at TaraLynnAndCoPhoto.com.