How to Budget by Paycheck and Create a System That Actually Works With Coach Michelle | 494

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0:32Michelle:a fresh plan for your money. I worked with a gal this last time that she has been using the budget. I want to say at least six to eight months she's been with us. It might be longer and she'll know who I'm talking about when she hears this, but she has been working really hard. And a few months ago, her husband lost his job, was laid off, and they immediately went into store mode, which is exactly where we want everybody to head if something big happens like that. And up until then, they've been just cranking on paying off debts, right? And so they immediately slowed down and went into store mode, which is where you're not paying extra on debts.

1:11Michelle:You're not doing anything extra. You're trying to go through things and cut stuff off that you don't need. That's not necessary right now. And so she was working on that and she did a beautiful job. And you know what? Her husband, he's a hard worker. He didn't let that stop him for a minute. He had a job. It was weeks. It was, if not just days, it was just in a minute. But she was working on making sure they had the finances dialed in so that they would all be okay. He ran out, got a new job, and guess what? The job paid more money. You know, a blessing. Maybe a blessing in disguise, right? And so they're still working really hard.

1:47Michelle:And that was beautiful. Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future? Do you want to get debt-free but you don't want to live on beans and rice? Or you don't want to give up those pumpkin spice lattes? Hey, it's okay if you don't already know how to budget or if you're using credit cards to get through the month. Hey, it's okay if you want to seem like you have your finances all together or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working.

2:17But guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation.

2:50We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account or the millionaire who's paid off four real estate mortgages. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. Welcome back to the podcast, Michelle. We're so excited to have you. So excited to be here. Thank you. All right. Well, we're excited to dive into the topics and things that your folks come to you in office hours and talk about. Yeah. So if y 'all don't know, this is Michelle.

3:27She's our awesome coach who attends office hours. She helps you guys weekly. We have those at noon central time for the most part, and we also have incorporated some evening sessions in as well. Exactly. Thank you. Appreciate that. Yeah. So we're just going to dive in because Michelle, we know that like we were talking about before, if one person is going through something, there's probably that's representative of a lot of people that are dealing with similar with something similar. So talking through some of the questions that people are bringing is hopefully going to help a lot of people.

3:55Michelle:We have a lot of common themes and we have a repeat types of questions because it's something that people are walking through at the same pace, but just at different times. Yeah. And we've learned that nobody taught them. So, you know, nobody taught them where this is sometimes the first time that they're hearing some of these ideas. So it makes sense. All right. So let's dive into the first one. What's like the biggest first theme that you kind of saw recently in office hours? You know, recently, a lot of folks are trying to make that paycheck plan work. They want to see it in real time, right, and find out whether they are using it right and utilizing it and how it applies to them.

4:32Michelle:So we walk through the page 14 of the paycheck plan, and we talk about how many paychecks they have, and how often they want to do transfers, and whether or not they have variable income, and how much they're going to be pulling out with cash and digital. And we've done that several times over the last few meetings where we're walking through folks and what they have right now and how they set that up so that they are better able to set up the system and make it work for them so they can get it set up on autopilot. So that's a really very common thing that we work through. Yeah, no, I love that.

5:07And I think one of the things that people take away from our podcast is when they hear the concept of being a paycheck ahead, I think that that's very new for some people. And so they're like, yes, I want that, but I don't know how to do it. And office hours is the perfect place to come find out. But what I wanted to know was what are you telling them or what are you teaching them that is like finally clicking? Like, what are you saying? And they're like, aha, like I get it. Right.

5:30Michelle:In reference to using the paycheck plan. Absolutely. I think what really helps is to open up the actual page so they can see it. We've all got eyes on it. Everybody who attends can see what we're working through. And then we walk through how many paychecks does this gal have and her spouse? And then do they have, is it W-2? Is it variable stuff where they've maybe got a 1099 coming in or they got tips or a side hustle or whatever? And then we try to figure out how many times a month do you want to be making those transfers? Because making it six or seven times, those transfers as everything hits is just way too much.

6:08Michelle:So we walk through a good schedule, right? something that makes sense. And then when we do that, then it helps to bring, I think, a little bit more peace that they're setting it up. Okay. And that they're not going to have to have their hands in it too much. Yeah. We were just on a podcast recently and we were, they were asking about this and we were just talking to them about how we want your budget, the budget that we set up, we want it to actually tell you what to do with your hands, right? Instead of where a lot lot of people get lost as they put words number on a piece of paper and they're like okay but what do i do now and so the difference here between the budget the budget is looking at everything in a month right everything that you need to do with your money in a month which some of that is accounting for things that you would do annually but everything you need to do for for your money in a month and then the paycheck plan is just telling you the cadence of the transfer so right we're gonna we're setting up spending transfers and we're setting up savings bucket transfers and to your point michelle there's a different cadence that or timing or how often you want to do it based on when you get paid, based on the type of paychecks, based on the kind of person you are.

7:13If you're the kind of person that wants it every week and then you just have that week, you have to budget through, that's fine. If you want it every two weeks, everybody's different. And so that's what the paycheck plan is, just telling you, am I doing this in cash or digitally, like a transfer? And what am I doing for my savings buckets and what am I doing for my spending accounts? Well, and I think that that is important when you were saying six, seven times, like people are trying to figure out how often, how many checks they have coming in. And does that mean it's every single time a check comes through?

7:41Because we had a lady one time, she said, well, she gets paid on Wednesdays, her husband gets paid on Fridays. And she was trying to do the paycheck plan based on both paycheck cycles every time. So she was transferring money in there on Wednesdays and Fridays on both of those weeks. And we're like, okay, no, we need to pick a schedule of how we do it and pick a paycheck cycle. And then it doesn't matter even if you get paid weekly, but you want to do your transfers on the 1st and the 15th, or you want to do them weekly. It doesn't matter. You get to decide. Like that's, I think what is confusing to people because they have the power to make that decision, but so, but they're so afraid to do it wrong.

8:14So they ended up doing nothing and we want them to do it. We want them to get on a cycle. Yeah. Real quick. So the visual is all of your money is going to the bills account and it's just pooling there. You don't, you actually, it doesn't particularly matter when your transfers are. That is a personal choice because what you're doing is all your money is staying there and you're just telling it when you want to get paid and you're paying yourself basically it's kind of what it's like so do you you know even let's say you get paid on a wednesday but you want your transfers on a friday that's fine too or you get paid every week but you want the first and 15th because that feels very steady and doable to you it really is up to you but what happens is that money on the days that you set it transfers into your accounts and so you have spending money you have grocery money you have gas money those days specifically that you set and it makes your budget feel very like nice and easy and steady.

9:01Yeah, exactly.

9:02Michelle:And I think that's the piece of it that they need that validation is that it is, it is customized to what they want and what makes them feel comfortable and what makes sense to their family. Yeah. I think it's that A plus personality, right? Like I want to be an A plus student. I want to do it right. Can you help me make sure that I'm not messing this up? Which is what you're doing, which is awesome. Yeah. So the next one that you have told us was really popular is I think it's going to be a really good topic. I'm not sure how much we have gone into it ourselves on the podcast. So tell us what the next big kind of category was.

9:35Michelle:Well, we talk all the time about spending categories versus savings buckets, right? And how to figure out the difference, the physical difference in something specific. The question is on this thing, do I want to set up a spending category? Do I want to have a specific account for this particular item? Or do I want to set it up as a savings bucket? And which one would you do is usually the question that I'm getting. And it depends on the situation. One of the gals I was talking to just this last week, we were talking about, she's a breeder and has puppies, right? That's just a hobby, but it's a little bit of a side business thing.

10:14Michelle:And so she was trying to figure out, does she set up savings buckets for the little expenses that come up with that side business? Or does she set it up as a spending category? Or does she set up a completely different budget and treat it like a business, right? So we walked through different scenarios, because we needed her to be comfortable with what she's doing, and how she's going forward with it, right? And, and that was just one example. But we get other folks that are like, do I have my doctor's visits? Do I put that as a savings? And so we walk through those kinds of things and make sure that where you're putting it in the budget, that it makes sense.

10:53Michelle:And if it's something really big, that definitely put it as a savings bucket because you want to be able to save up a little bit over time. Well, I have two examples of this that I've been dealing with with my clients slash my life that might help illuminate because, you know, not everybody has a puppy business, which is awesome. We had a client one time we were like, she paid off debt one puppy at a time. So I made, we made her a debt payoff tracker with like paw Prince, but anyway, it's fine. So for example, kids, kids is a good one where you might get, or one where you might get confused, right?

11:24Because they're, but the, but the answer is they actually can be both, right? So you might be saving for some bigger things with your kids, like their, you know, sports fees, tuition, who knows, whatever, big things that they, summer camps that they like to do, that would be a savings bucket. But if you're actually spending money, like literally every month you're spending money on something, then you're going to make that probably like you said, Michelle, it's really the most important thing is you're comfortable and understand it, but you're also might have a kid's spending account, right? Where you just put a certain budget in there and you know, every month, this is just, I know this is leaving versus the other one is actually pulling up.

11:58And then the other example I would have is clothing. I have some clients that they do go like twice a year. They specifically go clothing shopping and they want to have that bucket of money there for when they go. And then I have people like me who literally somebody always needs something, right? So like there's holes in the socks or whatever, or now your pants are now looking like capris or whatever. And I just know I have a clothing budget every month and it will get used. We're not saving any of that money. Let's be honest about that with five of us in the house, right? So it really like, to your point, Michelle, it depends on how you're using the money and like what makes sense mostly for your family.

12:33I think medical is a big one too. We have a lot of people that like, oh, well, I think I need to do the savings bucket here but then they find themselves, especially maybe the older you get, you're going to the doctors more often, you have more appointments. And so it just kind of makes sense to transition that into or both, you know, depending on what you need, like maybe, so your savings bucket is for, you know, you have surgery coming up or it's for the, your emergency medical dental, like those are big, big ones. But then you know that, yeah, but you know that you're having, you know, three or four or five, six appointments a month based on your situation.

13:07What we want to do is make this process as fun and easy as possible. If it's, if it feels like a nuisance, then we, there's a category that's not in the right section. So whether it's you, you started off with it as a savings bucket and you're like, no, I actually need a debit card. I needed to be a saving or a spending account, or you started off with it being a spending account and you never use the debit card and you realize, oh, I really only use that maybe once every other month that can move over to a savings bucket. It just really depends. And I love how you're walking through the clients based on their situation and what they have going on, because it is different for everyone.

13:39So I think that saving with the puppy business, I think that's so cute. And I love that because literally she could probably do two of those, not the one. The one isn't right, but she probably could have two options there based on what she has going on. And that is what's going to work best for her because there are a lot of expenses there. Yeah. But just generally as a rule of thumb, again, it is personalized. There's no cookie cutter stuff here. But generally, if you're spending the money that you're setting aside each month, it's going to be a spending account. If you're saving it up and it's less than monthly, you're spending it, then that's going to be a savings account.

14:14Yeah. It's time to enter your coaching era because making good money should feel like making good money. Yeah. Imagine six months of private coaching where we'll tell you exactly what to do. No guesswork, no confusion, and absolutely no judgment. It's a done for you system that actually works. You don't know what you don't know, and that's not your fault. And that's why we're here. Financial coaching with us looks like two coaching sessions a month, personalized recaps, and after-hour support, you can text and email. So you're never stuck wondering what to do next. Together, we're going to build your budget, set up your system, and tackle any challenges that come up along the way, which, by the way, they always do.

14:53If what you're doing isn't working and you're tired of trying to figure it out on your own, sign up for financial coaching at budgetbesties.com forward slash coaching before all of our spots fill up and we will help you go further faster. Six months from now, you'll wish you started today. Well, let's talk.

15:10Michelle:What's next? What's next on the next on the list. So we talk about how to pull the money out of the savings bucket and how to make it so that it, so that you're not messing up your monthly budget. And so we talk about the actual physical action of pulling stuff out of the savings bucket, the transfer, the actual physical transfer over to the spending when you know it's going to happen. And using the puppy one before, we talked through an example with taking the puppies to the vet and you know it's going to be X number of dollars. And so the day before or the day of, you're just physically transferring that money over to your spending and you're swiping that debit card when you're at the vet's office.

15:51Or if they send you a bill in the mail and then you pay it from there, then you're going

15:56Michelle:is transferred over to your bills account and pay it from that. So we talk about the actual, like you talk about the hands piece, what you do, you know, pull up your bank app and set up that transfer and away you go. And then you just continue to fill up that savings bucket for the next time. Yeah. I think this is good. And I'm going to let them come into office hours to really get the nitty gritty of this, but I will say this reminds me of my, I have a couple of clients actually, who ended up with a savings bucket for vacations. Right. And so they were transferring on their vacation in the moment stuff that they needed.

16:30And I was like, no, if you saved$5 ,000 for your vacation, you transfer the whole thing over and then have a good time, have fun. And I think that, that idea, again, trying to be an A plus student, trying to do it right. I think it's different for everyone and how you want to do it. But if there's something like that, that you know, that you have going on, transfer the whole thing. We're trying to make this process as simple for you as possible. And we don't want to, again, tracking, like we don't want you to have to feel like you have to track everything. Yeah. And the key here, well, a key here, which it sounds like everybody already knew, but just to reiterate is we're not spending out of the bills account because that's when it really does get messy.

17:05If you think about your spending, your spending account, I don't know what people's budgets are, two, three, four,$500. There's only so many like transactions that are happening, right? So it's much easier to understand, to see, to track or keep track of when you're spending out of that account. And even if you're reimbursing yourself out of that account, right? Versus the bills, you've got 20 or 30 bills going. And then every once in a while, there's something that you have to refund or refill or figure out. That's a lot harder on you. So that's why the money from the savings bucket goes into your personal spending account.

17:40That's when you're going to go, that's how you're going to use that. And I will say, I do it. Like it was really sweet how you're like the day before the morning of like, I'm at the register doing it personally. And so they're going to wait for me to do it and it's going to be fine. But I think that that's fine. As long as you're doing it after, like I have a lot of people that say, Oh, I have to go back and transfer money from my bills into my spending. Cause I borrowed I'm like, well, first of all, why do we even have the bills, a card bills account card on you? Like, No, that's as hard. Yeah.

18:09Harder number one, right?

18:10Michelle:But you're not going to go back and remember and have, and again, that puts you back into that tracking mode where you're feeling like you have to add up everything and then make a lump sum. No, just do it in the moment or beforehand, but not after. Don't do it after. Like you said, we'll all forget. And again, here's another caveat here that goes with this is if you feel like you're doing it a lot, then that is a spending category. So if you feel like you're transferring constantly from a savings bucket to a spending account and it's like, well, this is not automatic like you girls told me. Yep, you're right.

18:43That means it should be a spending account and its own separate budget for spending.

18:47Michelle:I love that. Exactly. Because it should be something, those savings buckets should definitely be for things that don't hit you every time, every month. I just need every bank to be like my bank who allows you to have as many checking and savings as you want. And I get different designs. I think they have up to 10 different debit card designs that I get to choose from. Pretty sure I've used them all. And they actually called me. They're like, you know, at some point there, we're not going to let you open up any more checking accounts. I was like, okay, but, but right now you are, and I have all your designs and they're so pretty.

19:17And here's another little tip, Michelle, I was just thinking about, cause we, what I was thinking is not everybody's as lucky to have Vanessa's bank as she is. I'm not. And so we do have people who will like use ally for all their savings buckets. Right. And we tell them to get a spending card for that, for ally specifically. That way, you know, when they're going to reimburse themselves for an oil change, it's not taking 13 days to get over. They're just using the spending account debit card in the, in the ally. So if you have a separate bank for all your high yield savings, where all your savings because that would be a way to help with that too.

19:54Michelle:Yeah. I love that advice because I do think that we get a lot of folks that are trying to get those bank accounts set up and they want to capitalize on the high yield savings accounts. And somebody like Ally has that and they just don't fit a hundred percent. So that's, I love that you said that because listen up people, this is exactly what you need to do if you're working with Ally. I love that. Yeah. Yeah. It's been a great resource. Yeah. Good. All right. So let's talk about another one. I worked with a gal this last time that she has been using the budget. I want to say at least six to eight months she's been with us.

20:26Michelle:It might be longer and she'll know who I'm talking about when she hears this, but she has been working really hard. And a few months ago, her husband lost his job, was laid off, and they immediately went into store mode, which is exactly where we want everybody to head if something big happens like that. And up until then, they've been just cranking on paying off debts. Right. And so they immediately slowed down and went into store mode, which is where you're, you're not paying extra on debts. You're not doing anything extra. You're trying to go through things and cut stuff off that you don't need.