Money Matters

Turn Dreaming into Practical Steps: 3 Financial Necessities to Change your Life

Changing our lives, whether it be a career change or a change of location, can be daunting. Every change comes with a financial cost to it and that can be a hindrance to us following through on our dreams. I’ve been dreaming with a friend lately about some big life changes, so I wanted to share how some essential financial habits can help make those dreams a reality.

couple calculating all their bills
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My Journey to Making Life Changes

I’m going to preface this entire post with the fact that I’m not an accountant, nor a financial advisor, nor anyone qualified/educated to give financial advice. Financial decisions are very personal and should be talked through with an expert that you are comfortable with. In this post, I’m simply sharing my experience and thoughts, which I hope are “food for thought” for you and hope this might inspire you to dream about what is possible for your life and then perhaps take steps towards that.

I’ve had a number of seasons in my life where I’ve switched directions. I’ve quit a secure, full time job to work part time and pursue passion projects. I’ve worked while going to school to make a career change while in my 40s. All of these types of choices have been possible because I’ve had control of my finances.

The Current Conversation

A friend of mine has recently started dreaming of quitting their job and focusing on their side hustles with a hope of making a living off of them. Conversations like these get me really excited because I have done this type of life change before. And because I’ve done it, I know that it’s possible. The steps I’ve started taking with my friend are laid out below. I feel these are the first three essentials to making that life change.

person putting coin in a piggy bank
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3 Financial Essentials for Life Changes

Below are three financial essentials that I could not live without. I am pretty passionate about all of them and hope that you find some financial freedom through these ideas as well. I love to feel in control of my financial situation even when life is throwing me curveballs, like it has these last few months.

1. Make a Budget

I’m always amazed at how many people operate their lives without a budget. For me, a budget is an empowering tool that helps me plan and make informed life choices. A budget does not have to be restrictive, which I think is the main objection to a budget. A budget simply lets you see where your money is going.

And once you know where your money is going, you can make decisions about whether you want to keep things the same or change things up. If you know which areas you can lessen your spending in to increase spending in other areas, that gives you freedom to change your life.

That sounds dramatic, but I was able to go from working a full time job I was not enjoying to working part time and pursuing passion projects all because I knew how to manage my budget. I knew where I could cut spending to be able to keep all my bills paid. It was one of the best periods of my life and I’m so glad I was able to make that change.

Cork Yoga Mat

2. Be Prepared to Make Choices and Compromises

Once you make a budget and get a realistic picture of how much you spend in a month, you can then start to make choices about what expenses are essential and which ones are going to be set aside. You can look at these as compromises or as choices.

For me, these decisions are empowering me to live the life I desire to live. So while I was working part time and pursing some passion projects–like refinishing and selling furniture–I was choosing to not travel for vacations and to not go out to restaurants very often. I never felt like I was missing out on anything because it was a very intentional choice.

You get to be in charge of those choices for yourself. When going over a budget with my friend recently, we talked through categories like vacations, gifts, restaurants, and vehicle expenses. These were all categories that had potential for spending being dialed back.

savings tracker on brown wooden surface
Photo by Bich Tran on Pexels.com

3. Create an Emergency Fund

An emergency fund is essential not only for everyday life, but also for seasons of life changes. If you are going to quit your job and try to start your own business, an emergency fund will be essential as a fall back in case you are not able to make enough to cover your essentials.

To create an emergency fund, look at your budget and add up all of the essential categories. These are categories you cannot go without such as rent, mortgage payments, and insurance. Once you note all of the categories and add them up, you can multiply that number by 6, 8, or 12 months. This will give you the amount of money you need saved up for a life emergency. Save for the number of months that you can and that you feel comfortable with. 6 to 8 months is a reasonable safety net to me.

Realistically quitting your job isn’t a reason to use your emergency fund since it is for emergencies, but if you are planning a life change it would be essential to have some savings built up in case our dreams don’t go as planned.

Financial Resources

I’ve talked a bit about finances on our blog. Here are a few more posts to check out.

1. Money Master Class – A Year of Financial Guidance

This post has literally a year of financial steps and guidance. There are also a number of resources linked within, such as budget spreadsheets, which are valuable tools for your financial journey.

Read the post here: https://asustainablysimplelife.com/money-master-class-a-year-of-financial-guidance/

2. What do finances have to do with living sustainably?

If it seems weird that we talk about money on a sustainable lifestyle blog, check this post out for my thoughts on why it matters.

Read the post here: https://asustainablysimplelife.com/what-do-finances-have-to-do-with-living-life-sustainably/

3. 10 Reasons to Keep Track of Every Purchase you Make

One of my favourite things to do is keep track of every purchase. I love knowing where all of my money goes in a month, so I’m sharing 10 reasons why I think it’s a beneficial habit.

Read the post here: https://asustainablysimplelife.com/10-reasons-to-keep-track-of-every-purchase-you-make/

4. Gail Vaz-Oxlade Books

Gail is one of my favourite financial teachers because she tells it like it is. She has tons of books out there including Debt Free Forever and Money Rules.

I hope you found some helpful ideas on how to prepare for a life change if you’ve been dreaming of one.

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