Be intentional about your money to become debt-free and financially secure. Control your money instead of letting it control you.
To move toward your big goals, you must be intentional about your money, every day. Debt payoff, emergency savings, retirement planning, education costs… these all require you to focus.
Although ‘intentionality’ is a technical term in philosophy, it stands for something familiar to us all: a characteristic feature of our mental states and experiences, especially evident in what we commonly call being “conscious” or “aware”.Theory of Intentionality by McIntyre & Woodruff Smith
1. Be intentional about your money by first tracking your spending
I am a firm believer in analyzing your habits and routines to find problems. When it comes to your money, that means you need to track your spending. You need to know where your money has gone before you can tell it where to go.
Tracking your expenses can be as simple as using a paper checkbook register or as complex as designing your own excel spreadsheet. The easiest way, for me, is to use a software program with a cell phone app. I personally use EveryDollar from Dave Ramsey, but Mint and You Need A Budget are also great options.
It doesn’t really matter how you track your spending, it’s more important that you actually track it. I guarantee that your untracked spending is higher than you realize, especially in categories that have many small purchases. I’m always shocked that $5 at a time adds up to $300 so quickly.
2. Review & analyze your spending
Go through your categorized transactions and evaluate:
- Is this necessary?
- Is this the most affordable option?
- Can I “pause” this until I meet my goal?
- Is this a want or a need? Seriously… is this a want?
Obviously, you need to spend money on the basics – housing, food, transportation, utilities. You don’t, however, need a 3,000 square foot house and Mercedes. It’s entirely possible to live happily and comfortably in a smaller home with a beater car. It may not be ideal or your first choice, but sometimes sacrifices are needed to meet your big goals. Debt freedom should absolutely be one of those big goals.
Pay extra attention to subscriptions and recurring charges. Consider canceling cable and subscribing to one streaming service. If you already have multiple streaming services, cancel a couple.
Cancel the gym membership you never use. Lower your grocery spending by 10%, then try to lower it more. Combine errands to save on gas for the car. Resolve to buy clothing on sale or second hand only.
Change your cell phone plan or provider. Call your internet provider to see if you can get a lower rate. Once you have a mini emergency fund saved, raise your auto and homeowners insurance deductibles to save on the monthly premium.
There are SO many ways to save money, but the most effective and long-lasting ones are going to be the ones that you intentionally choose.
You can’t make all these changes at once… you’ll end up discouraged and unmotivated. I recommend focusing on one area at a time. When that savings method becomes a habit, move on to the next. If you need more directed help, check out the free Frugal Year Challenge. It goes through one area of frugality each month so you have time to implement the changes.
3. Make big money goals
Some people set financial goals for a year, for 5 years, for 20 years. The time frame is less important than the goal-setting itself. Make sure your goal is SMART – specific, measurable, achievable, relevant, time-bound.
I haven’t been big on setting goals until recently, but I definitely did for 2021. I want to stay motivated while we pay down our debt, and a big goal is a perfect way to do that.
Set goals for:
- This year
- The next 3-5 years
- The next 10-15 years
What are my goals?
- This year: pay off $24,000 in debt
- The next 3-5 years: pay off all our debt (except the mortgage) and increase retirement savings
- The next 10-15 years: save for Adelaide’s medical expenses and pay off the mortgage
- Retirement: get to 15% retirement savings
For retirement planning, I really like Chris Hogan’s R:IQ (Retire Inspired Quotient). You input some information about your current retirement savings, expected retirement spending, and years to retirement. The website then tells you how much you need to have saved for retirement, as well as how much your current savings should grow. It gives you a great idea of where you stand financially.
4. Create a budget to stay intentional about your money
A budget allows you to control your money. You’re the boss, but you need to have a plan. And really, a budget is just a money plan. That plan allows you to stay intentional about your money.
Budgeting, and reviewing that budget regularly, will keep you focused. You’ll definitely blow your budget, probably more than once. Crises will happen and you’ll lose focus. Honestly, your spending will rarely be perfect in relation to your budget.
Every month, I adjust my budget as we spend. I move funds from the Miscellaneous category or a category that is underspent to categories that are overspent. For example, in December we went over in the Gas/Diesel category and were under in Groceries. Transferring funds between the two balanced our budget.
I’m not actually moving money between bank accounts (although I do that to save for recurring expenses). I’m just recategorizing things in our budget, using my chosen budgeting app.
Why should you be intentional about your money?
Intentionality means thinking through your money moves, rather than constantly reacting to the situation. Living a financial life without a plan leads to frivolous spending, accumulating debt, and limited savings.
Trust me, I know. Before having children, both my husband and I worked full-time. We had normal expenses, like a mortgage, car payment, and living costs, but we still didn’t enough save for the future. We spent what we wanted and didn’t really pay attention because we had enough. When our oldest, Adelaide, was diagnosed with spina bifida prenatally, we realized how precarious our situation was.
Thanks to fundraisers held by both of our families, we were able to spend 3 months 2,100 miles from home, not working, to ensure she was able to get the proper medical care. After her birth, I had to quit my job to care for her, and I anticipate needing to do so for the foreseeable future.
In the first year of Adelaide’s life, she spent 11 days in the NICU, had 3 major surgeries, was hospitalized twice more, attended multiple therapies a week, and was life-flighted 3 different times. She received multiple new diagnoses and accumulated new specialist doctors. All of those stressors consumed our lives. Unfortunately, that also meant we were not focused on our finances either.
Ironically, it was the birth of our second daughter that jumpstarted our money revitalization. When we should have been overwhelmed and stressed, everything felt manageable and I was finally able to really focus. It still took nearly a year until we started to make progress.
Since getting really serious about our finances, budgeting, tracking, and planning, we have paid off over $19,000 in debt… in just 10 months. That’s what intentionality can do for you.
How did I get intentional about my money?
Honestly, I followed the steps I’ve outlined in the Financial Security Steps (we’re still working on Step 7, Pay Off Debt). That’s how I came up with the series.
The Financial Security Steps are:
- Track your expenses
- a) Save a mini emergency fund & b) Begin saving for retirement
- Save for recurring expenses
- Calculate your net worth
- Create a debt payoff plan
- Create a budget
- Pay off debt
- Save a “6-month expense” emergency fund
- Increase retirement contributions
- Choose your next financial goal (more emergency savings, more retirement, pay off the house, save for college)
I’ve gotten our grocery budget under control by meal planning, but it took months. We’ve paid off our first 4 debts, but it also too months (and months). It’s a long, slow process to achieve financial security, but it’ll be worth it.