This is post from guest contributor, and my good friend, Amanda Abella. She’s a freelance writer and life coach based out of Miami. She’s also the author of Make Money Your Honey: A Spirited Entrepreneur’s Guide to Having a Love Affair With Work & Money.
I recently agreed to spend close to $6,000 dollars by enrolling in a life coaching certification course through International Coach Academy.
Six thousand bucks that took me a long time to save up due to graduating in the middle of The Recession. Six thousand dollars that I slaved over by freelancing, working crazy hours at a part-time job and then transitioning into a full time gig.
So, why on earth would I spend 6 grand? Well, it’s an investment. Running my own business is one of my ultimate professional goals and I saw an opportunity to combine my experience in Human Resources and my passion for personal development in order to help others.To be honest I knew it was the right move for me, but that still didn’t take away the sticker shock. And boy did I have sticker shock.
Unfortunately, investing in our own professional advancement isn’t the only way we get hit financially. Sometimes emergencies occur, accidents happen or we just plain did something stupid – all of which can seriously deplete your savings.
So how do you bounce back from it? By being smart about it.
Not getting discouraged
Just because I was about to see six grand leave my bank account didn’t mean I couldn’t save that up again. In fact I was rather confident in my ability to save (hence I had 6k sitting in the bank), I just really needed to kick it up a notch.
After the sticker shock wore off I looked at my current savings plan and made necessary tweaks – starting with noticing my spending habits.
Defining my relationship with money
Believe it or not your relationship with money has more to do with psychology than how much you make. That being said I tracked my expenses for a month to see where I stood in my relationship with money. I also recorded how I was feeling while spending.
What did I learn? I’m an emotional spender. If I feel stressed I tend to shop. If I shop for things I don’t need then I just lose a ton of money I could have invested. Once I realize that I feel like crap and spend again. It’s a vicious cycle.
The good news is that now I’m conscious of this habit and have actually succeeded tremendously in curbing it. That money then goes into investments like a lifecycle fund or index funds so that compound interest can do it’s thing. I’ve also begun turning my impulse shopping into impulse saving.
Splitting up my paycheck
With every check I get I immediately try to put away half. That 50% is split in between taxes (15%), an emergency fund (15%) and two dedicated high-yield savings accounts (20%).
Of course, some months are tighter than others, but my main objective is to save half when I can. If a month is particularly tight I just adjust my percentages accordingly.
Why do I do this? Because it’ll save me a lot more money than doing the standard automatic transfer every month. It’ll also forces me to save more often, in my case biweekly with the regular paycheck and whenever I get paid by a freelancing or coaching client.
For a complete explanation of this saving method make sure to pick up The Money Book for Freelancers, Part-Timers and the Self-Employed.
Axing the big bank
In 2011 Americans paid an estimated $29.5 billion in bank fees — and those weren’t just overdraft fees. If you pay close attention to your bank statements you may notice some maintenance charge here and a card protection charge there. It may not seem like a big deal at the moment but over time it can really add up. The worst part is they will probably increase.
My solution was to ditch the big boys and find myself an online bank with no fees and higher yields. There are some great options out there for your online banking needs so make sure to shop around.
Doing some side hustling
I hustle. Big time. Whether it’s ad revenue from my blog, a writing client or a coaching client, I have come up with a few ways to make some extra money. Take a look around and see what marketable skills you have. You’d be surprised how much people are willing to pay for skills you already possess.
I may have taken a big hit in the bank account recently, but thanks to my savings tactics I’ve already saved about $3,000 in cash in just a couple of months – that’s already half of what I initially spent! Additionally, I’ve made some nice gains in the investment department.
Not too shabby, eh?
Have you ever spent your savings for education or a career investment? What are some of your tips for building savings back up?