Make Valentine’s Day Special without Breaking the Bank

If love is in the air for you, and Valentine’s Day beckons, fret not about the price tag. Celebrating this special day need not drain your bank account. With a dash of creativity and thoughtful gestures, you can sweep your loved one off their feet without breaking the budget. Here are some ideas for making Valentine’s Day special and memorable while still being able to work towards your financial goals:

Homemade Delights: Skip the fancy restaurant and opt for a cozy, homemade dinner. Cook your partner’s favorite meal or try a new recipe together. Candlelight, soft music, and a homemade meal create an intimate and memorable experience. Personally, I’m an eggplant parm girl. One year my then boyfriend and I made it from scratch, sauce and everything. It was super sweet and way more special to me than a restaurant dinner.

Personalized Gifts: Instead of expensive store-bought gifts, consider personalized presents. Create a scrapbook filled with cherished memories, craft a handwritten love letter, or compile a playlist of meaningful songs.

DIY Décor: Set the mood with DIY decorations. Make paper hearts, create a homemade photo booth backdrop, or craft your own Valentine’s Day cards. These personal touches add warmth and thoughtfulness to the celebrations. Rose petals are not what I have in mind here! Those are really expensive!

Explore the Outdoors: Weather permitting, plan an outdoor adventure. Take a romantic hike, visit a local park, or have a picnic. Nature offers a picturesque backdrop for quality time together. Ice skating is a personal favorite.

Experience over Material Gifts: Gift experiences rather than material items. Plan a movie night at home, stargazing under a blanket, or a day trip to explore nearby sights. Shared experiences create lasting memories. One idea for Denver locals: Drive down south and check out Bishop Castle in Rye. It’s donation based and a really interesting place. Consider bringing a picnic and some hot cocoa!

Coupon Book: Craft a coupon book filled with thoughtful gestures or favors, such as a breakfast in bed, a chore-free day, or a massage session. These tokens of affection carry sentimental value and can be redeemed over time.

Plan a Surprise Date: Surprise your partner with a well-thought-out date. Organize a scavenger hunt leading to a special location or recreate your first date. It’s the element of surprise that adds an extra touch of magic.

Valentine’s Day at Home Spa: Create a spa-like experience at home. Prepare a bubble bath, light scented candles, and give each other massages. Relaxation and pampering without the hefty spa price tag.

Remember, the essence of Valentine’s Day lies in expressing love and appreciation. Thoughtful gestures and quality time together often hold more value than lavish gifts. Embrace creativity, show your affection, and celebrate love without worrying about the cost. It’s the love shared that truly matters on this special day.

Managing Financial Stress

Money matters can sometimes feel like a rollercoaster ride – exhilarating highs and stomach-churning drops. The twists and turns of financial stress can leave us feeling overwhelmed and anxious. But fear not, for there are strategies and mindset shifts we teach here at Prosperity that can help navigate this tumultuous journey and find calm amidst the chaos.

Acknowledge and Assess: The first step in managing financial stress is acknowledging it. Take a deep breath and assess your situation. Understand your financial landscape by listing your income, expenses, debts, and savings. Knowing where you stand empowers you to chart a path forward.

Create a Budget and Stick to It: A budget is your financial roadmap, guiding you towards stability. Identify essential expenses and prioritize them. Trim discretionary spending where possible and allocate funds to savings and debt repayment. You can get help building your budget with Prosperity by participating in our Budget Builder program, head on over to the Contact page and get in touch! Consistently sticking to your budget helps regain control and eases financial stress, I can say that from experience, it really helps. If you already have a budget and are having trouble sticking to it, Prosperity can help you with that as well.

Seek Support and Guidance: Don't carry the weight alone. Reach out to trusted friends, family, therapists or financial folks like coaches, planners or advisers for support. Discussing your concerns can offer new perspectives and valuable advice, providing a sense of relief. Financial coaching can provide the structure and framework you need to succeed.

Practice Mindfulness and Self-Care: Mindfulness techniques like meditation, deep breathing, or yoga can alleviate stress. Take time for self-care activities that recharge you, whether it's reading, walking, or hobbies. A healthy mind nurtures resilience in challenging times.

Shift Your Mindset: Instead of fixating on what you lack, focus on what you have. Adopt an abundance mindset by acknowledging your resources and strengths. Embrace gratitude for the things that bring joy and stability in your life. For some, this is easier said than done, so consider trying this out by starting small, like a daily gratitude practice. Grateful for having a roof over your head and food to eat? There, you’ve already found something to be grateful for :)

Set Realistic Goals: Break larger financial goals into smaller, achievable milestones. It’s like the old saying “how do you eat an elephant? One bite at a time.” By breaking your goals up into smaller ones, you will be accomplishing things more frequently, allowing you to feel successful. Celebrate each accomplishment, no matter how small. Building momentum through achievable goals boosts confidence and diminishes stress. While your goal may be to build a six month emergency fund, saving your first thousand, then your first five thousand etc… can make you feel more connected to your goals because you’ll be smashing them more frequently than just at the finish line of one goal.

Limit Financial News Consumption: Constant exposure to financial news and market fluctuations can amplify anxiety. Stay informed, but limit your exposure to avoid unnecessary stress triggers. Leave it to Prosperity and other trusted financial folks such as an adviser or planner to worry about interest rates and other day to day headlines.

Embrace Positivity and Flexibility: Understand that setbacks are part of the journey. Embrace a positive outlook and be flexible in adjusting your plans. Focus on solutions rather than dwelling on problems.

Remember, managing financial stress is a journey, not a sprint. By implementing these strategies and fostering a resilient mindset, you can navigate financial challenges with grace, reclaim peace of mind, and stride towards a more secure financial future.

MMA: Not Just for Fighters

When it comes to parking your savings, the options can be overwhelming. Enter Money Market Accounts (MMA) and High-Yield Savings Accounts (HYSA) – two financial tools vying for your attention. Let's dive into what they offer and how they differ, making your savings decision a breeze.

Money Market Accounts (MMA): Think of MMA as the cool cousin of savings accounts and checking accounts. They offer a hybrid approach, combining features of both, providing higher interest rates than standard savings accounts while allowing limited check-writing capabilities.

High-Yield Savings Accounts (HYSA): Picture a piggy bank but with high-interest rewards! HYSA is an online savings account that offers higher interest rates compared to traditional savings accounts. They're known for competitive interest rates, often higher than brick-and-mortar banks, helping your savings grow faster.

Comparing the Two:

Interest Rates: Both HYSA and MMA offer higher interest rates compared to regular savings accounts, though HYSA tends to have a slight edge in offering better rates.

Access to Funds: HYSA typically limits the number of withdrawals per month, while MMAs may offer limited check-writing abilities. However, both allow easy access to your money when needed.

Minimum Balance Requirements: MMAs often require a higher minimum balance to avoid fees compared to HYSA. HYSA typically have lower or no minimum balance requirements.

FDIC Insurance: Both accounts are often FDIC-insured up to the legal limit, providing a level of security for your deposits.

Choosing Your Champion:

Consider HYSA if you're looking for competitive interest rates with lower minimum balance requirements and are comfortable with limited withdrawals depending on the bank you go with. Opt for MMA if you seek a blend of higher interest rates and check-writing capabilities, and are okay with maintaining a higher minimum balance.

Whether you're saving for a rainy day or a dream vacation, both HYSA and MMA offer attractive features to help grow your nest egg. The choice ultimately boils down to your preferences and financial goals. Whichever you choose, rest assured, your money is working harder for you!

Can I Travel on a Budget?

Short answer: absolutely! Who said traveling had to be an expensive affair? Embarking on an adventure doesn't have to drain your savings; in fact, it can be an enriching experience without the hefty price tag.

Here are some tips to help you wander wisely and make the most of your travel budget.

Make a budget first: Here at Prosperity we can help you determine a number that’s realistic for what you want to do and help you come up with a plan to save it up. Regardless of your income level, we prioritize spending that’s in line with our values, so we encourage folks to spend on things like travel if it’s important to them. That said, we don’t want anyone going overboard or getting into debt over a vacation or adventure.

Plan and Research: The second step to budget-friendly travel is research! Scout for affordable destinations, off-peak travel times, and budget-friendly accommodations. Websites and travel apps often offer great deals and discounts, so keep an eye out for those hidden gems. Pro tip: Thanksgiving is a time when many Americans travel domestically, if you’ve always wanted to see the world and don’t have a commitment at the end of November, consider planning something then! On the flip side of that, if you’ve always wanted to see the cherry blossoms in Japan, be prepared to pay for peak travel season.

Budget-Friendly Accommodations: Hostels, guesthouses, or vacation rentals can be economical alternatives to pricey hotels. Embrace the charm of shared spaces or cozy lodgings that won't break the bank. Naturally, the rise of Airbnb and VRBO has made this easier than ever. If you’re open to hostels, they can be a great way to meet fellow travelers and add to your trip.

Be Flexible with Travel Dates: Stay open to flexible travel dates and times. Off-peak seasons or mid-week flights often come with substantial savings. Plus, a bit of flexibility can add spontaneity and excitement to your journey. Apparently flights on Fridays and Mondays are more expensive than Tuesdays and Wednesdays.

Local Eats and Cuisine: Indulge in the local food scene! Seek out street food, local markets, or eateries frequented by locals for authentic and affordable culinary experiences. Sometimes it can be valuable to research neighborhoods or parts of the city you’re visiting that are known for street food. Sometimes the best recommendations come from locals, so don’t be afraid to make a friend and ask for a recommendation while you travel!

Public Transport and Walking: Opt for public transportation, ride-shares, or even walking to explore a new destination. Not only does this save money, but it also lets you soak in the local vibe and culture. Many developed nations outside the US have really well established public transit that gets you from point a to point b on schedule, safety and comfortably.

Free Attractions and Activities: Explore free or low-cost attractions, parks, museums, and walking tours. Many cities offer free guided tours or have days when museums offer complimentary entry.

Pack Light and Smart: Travel light to avoid additional baggage fees and travel more comfortably. Pack essentials and versatile clothing to mix and match outfits. Personally, I’m queen of the carry on. I can do a week with just a backpack depending on the trip. This tip may be controversial to some, but I’m a big believer in packing smart over packing heavy. Be sure to think about how you will pack when you buy your flight as some airlines charge the least for checked bags at the time you purchase your ticket.

Travel Rewards and Discounts: Consider travel rewards programs or use credit cards that offer travel perks and rewards. Accumulated points or discounts can significantly slash travel expenses. Remember, it is NEVER worth going into debt for the sake of rewards.

Connect with Locals: Engage with locals for insider tips on affordable activities, hidden gems, and authentic experiences that might not be in guidebooks. If you have a specific hobby or passion, see if you can meet up with locals who do the same. It can be really special to play soccer or attend a religious service in a foreign city.

Remember, budget travel isn't about skimping on experiences; it's about maximizing every moment of your adventure without overspending. With a bit of planning, flexibility, and a dash of spontaneity, you can jet-set on a budget and create unforgettable memories without breaking the bank. Happy travels!

New Job, Same You

Congratulations on landing a new job with a significant pay increase! It's an awesome moment that often comes with a whole bunch of emotions and definitely lots of excitement. While the immediate urge might be to celebrate, it's also an great time to make savvy financial decisions that can set you on a path towards long-term financial stability and success.

Firstly, take a moment to breathe and celebrate your accomplishment – landing a new job is no small feat! Once the initial euphoria settles, consider these steps to make the most of your increased income:

Assess Your Financial Situation: Before making any drastic changes, take a comprehensive look at your financial landscape. Review your budget, outstanding debts, and savings goals. Understand where your money is going and how this pay increase can strategically fit into your financial plans.

Prioritize Debt Repayment: If you have lingering debts, consider using a portion of your increased income to expedite repayment. Tackling high-interest debts like credit cards or loans can save you money in the long run.

Boost Your Savings and Investments: Consider beefing up your emergency fund or increasing contributions to your retirement accounts. A larger income means more opportunities to bolster your financial safety net and secure your future.

Revisit Your Budget: With an increased income, reassess your budget to accommodate your new financial reality. Allocate funds for both necessities and discretionary spending while being mindful of your financial goals.

Avoid Lifestyle Inflation: This! Is! The! Most! Important! Part! While it's tempting to upgrade your lifestyle with a higher income, be cautious about excessive spending. Strive for a balanced approach that aligns with your values and long-term financial objectives. It’s okay if you increase your budget a little but please be wary of lifestyle inflation. It’s a wealth killer!

Seek Professional Advice: Consider consulting with a financial coach, planner or advisor to optimize your financial strategy. They can offer tailored guidance to help you make the most of your increased income. Here at Prosperity we can help you with savings plans, debt payoff strategies and budgeting but we don’t cover investments or retirement.

Remember, a significant pay increase presents a wonderful opportunity to make impactful financial decisions. By approaching this change thoughtfully and strategically, you can pave the way for a more secure and prosperous financial future. We’re proud of you!

Paying Off Loans Effectively

Navigating debt can feel overwhelming, no doubt about it! Between student loans, car payments and consumer debt, it’s easy to feel like you’re in over your head. I know because I was there. With a strategic approach, it's possible to regain financial control and work towards a debt-free future, really! The key lies in implementing effective debt management strategies that align with your financial situation and goals.

The first step is to begin by taking stock of your debts. List all your outstanding loans, including credit cards, student loans, car notes and any other liabilities. Understanding the full scope of your debt is crucial to creating a plan for repayment.

Consider prioritizing your debts. Two common strategies are the debt snowball and debt avalanche methods. The debt snowball involves paying off the smallest debt first, then moving on to the next, providing psychological motivation as smaller debts are eliminated. The debt avalanche tackles high-interest debts first, potentially saving more on interest payments in the long run. At Prosperity, we prefer the debt avalanche method because it costs you less money, but we recognize that personal finance is personal so we don’t have a hard and fast rule about it.

Consolidating high-interest debts into a single lower-interest loan can streamline payments and reduce overall interest costs. However, you must ensure the terms of consolidation align with your financial goals and won't lead to increased debt burdens. It might sound great to get out of debt in six months but if you can’t cover the cost of your expenses you’re just going to stay in debt.

This is semi-generic advice that I don’t really like, but I feel like it’s important to share anyway: consider seeking opportunities to increase your income. Consider part-time work, selling unused items, or negotiating better rates for services. It may sound like a hassle to call your internet provider, but you may be able to lower your rate, freeing up some cash to go towards your loans. Now, taking on additional work is not realistic for everyone. Some folks sign agreements with their employers to not take on additional work, other folks work 80 hours a week already just to make ends meet. That’s why I don’t love this advice.

Something else you can and actually should do is examine your budget to see if you can reduce expenses to free up more money for debt repayment. Create a realistic budget that allocates a portion of your income towards debt repayment. That includes paying the minimum on all your debts, with any cushion found in your budget going to your highest priority loan. Prosperity’s Budget Builder program can help you with this.

Above all, communicate with lenders if you're facing difficulties making payments. They may offer hardship programs, payment plans, or negotiated settlements that can provide temporary relief and prevent further financial strain. This should be a last resort, but a helpful one if you’re borrowing money to pay your debts.

Remember, managing debt is a marathon, not a sprint. By adopting a proactive approach, staying committed to your repayment plan, and seeking support when needed, you'll gradually chip away at debt, paving the way towards financial freedom and peace of mind.

A Beginners Guide to an Emergency Fund

Life can throw unexpected curveballs at any moment, underscoring the importance of having your own financial safety net. Cue the emergency fund – a shield against the uncertainties that come our way. Yet, for many, the concept of establishing this buffer can seem daunting or even elusive.

Building an emergency fund starts with small, purposeful steps. Begin by defining what constitutes an emergency expense – unforeseen medical bills, or unexpected job loss. At Prosperity, we consider car expenses to be inevitable, so we save for them in what we call a sinking fund. More on that in a future blog post! For folks with steady or consistent income, we recommend that you build an emergency fund with three to six months worth of expenses. For folks with variable income (freelancers, self employed, gig economy etc..) we recommend having between six and 12 months in the bank.

Why so much? Mostly for protection against job loss. You want to create an environment where you can breathe if you wake up one day and find yourself unemployed, knowing you can pay your bills and afford groceries. Don’t worry, Rome wasn’t built in a day and your emergency fund isn’t going to suddenly fund itself overnight.

Building an emergency fund is about setting aside a portion of your income regularly, committing to consistency rather than instant accumulation. The most popular and successful way to get to your savings goal is to automate your savings. If you are paid by direct deposit, you may be able to designate multiple destinations for your pay check. Send some money directly to your savings account instead of sending the whole thing to checking. If your budget is tight, start small, saving even $25 a paycheck will grow to $650 over the course of a year on a biweekly pay schedule, saving $100 will become $2,600.

The key to success lies in prioritizing this fund in your budget. Treat it as a non-negotiable expense, almost like paying a bill. Automate transfers to a separate savings account, making it a routine contribution rather than an afterthought. If you can’t automate your savings via your paycheck, do it manually on pay day before the money disappears. While it may seem challenging, every dollar saved brings you closer to financial security and peace of mind.

Remember, the purpose of an emergency fund isn't just to weather storms; it's a testament to your financial resilience. It's a shield against stress and a symbol of empowerment, granting you the freedom to navigate life's uncertainties without financial strain. Start small, stay consistent, and watch your emergency fund grow, providing a reassuring safety net when life takes unexpected turns.

Remember, you got this! If you need help determining how much to save, Prosperity is here to help.

Talking About Money is Scary

Discussing money can indeed be either daunting or uncomfortable, if not both for many people. For some reason there are loads of emotional and societal taboos surrounding it. For some it can stir up feelings of vulnerability, judgment, or fear of inadequacy, even if they’re financially in a good place. However, these discomforts are something we tackle here at Prosperity, as open conversations about money are essential for achieving our financial goals and changing the narrative around money.

The reluctance to talk about finances can stem from deeply ingrained beliefs or societal norms that view money as a private or sensitive matter. Yet, confronting these discomforts allows us to gain clarity, develop financial literacy, and work towards our goals. Whether it's saving for a dream vacation, planning for retirement, or managing debt, discussing money enables us to set realistic targets, seek guidance, and make informed decisions.

Embracing these conversations fosters transparency, understanding, and support among family members, partners, or friends (or financial coaches!). It empowers us to share experiences, learn from others' insights, and seek advice when navigating financial challenges. While uncomfortable at times, openly addressing money matters is an essential step towards achieving financial stability and realizing our aspirations.

Here at Prosperity, we’re here to help in many ways. We definitely want to shatter the taboo that money is supposed to be kept secret or private. We understand that sometimes disclosing financial information can cause friction (or worse) between friends or family, so we recommend leading gently and with compassion. No bragging please! It’s not about how big your paycheck is, it’s about what you do with it. Starting a conversation with friends about how your last car repair caused you stress can open the door to other conversations about times when money caused negative feelings- this is something that can ultimately strengthen relationships. Being comfortable asking someone you trust for advice, financial or otherwise, (is it a bad idea to buy new skis this year if I just invested in new climbing ropes 4 months ago?) can deepen relationships.

We understand that when folks come in for a Money Date, they may be sharing information with us that they’ve never shared with anyone before. That can cause a nervous reaction for sure! We hope that everyone we work with understands that we take your trust seriously, and want only to foster the warmest of environments when it comes to getting comfortable talking about money. It’s our hope that by the end of your first Money Date you leave feeling lighter knowing that you opened up and were candid about your very personal situation.

Ready to take the plunge? Schedule a Money Date today!

5 Signs You’re in Good Shape Financially

I meet with a lot of people who don’t feel like they’re in a good place, only to discover in our Money Date that they’re actually on solid footing. Being in good financial shape doesn’t mean everything is perfect, you can have debt or a negative net worth! It’s all about creating a situation where income exceeds expenses and you have a plan to address the debts you have.

Here are 5 signs you’re financially stable:

1. You have an emergency fund in place

   • Having an emergency fund equivalent to at least three to six months' worth of living expenses is one way to signify financial stability if you have consistent income. For those with variable income we recommend you have more like six to 12 months in the bank. This fund acts as a safety net, providing a buffer against unexpected expenses or job loss without disrupting your financial health.

2. You’re consistently able to save (or invest)

   • Regularly contributing to savings accounts, retirement plans (like a 401(k) or IRA), and other investments demonstrates financial stability. It shows a commitment to building wealth for the future, whether it's for retirement, a down payment on a home, or other long-term goals.

3. Your debts are manageable

   • Manageable is a pretty subjective term when it comes to personal finance, so here’s what I mean: If you are able to pay your monthly loan payments without having to sacrifice various aspects of your lifestyle, you’re probably financially stable. Not all debt is a good thing, but being able to pay it down is. You shouldn’t buy a car or a house that burdens you financially. I’m talking more than just cutting lattes and avocado toast (not that I want you to cut these), but rather having to make truly difficult decisions in order to pay all your bills.

4. You live within your means

   • Living within your means is the greatest key to financial stability. It means your income exceeds or equals your expenses. Ideally you have money left over at the end of every month to put towards your goals too. Living within your means doesn’t mean you have to live in depravity! It means you’re savvy about your expenses and make an effort to spend on things that align with your values rather than those of the people around you.

5. You have a budget and you stick to it

   • Having a budget is a great indicator of financial stability because folks who make and keep them don’t let them tip into the negative. Sure, there are months where we dip into savings for a car repair or a vacation, but very few folks intentionally consistently spend more than they earn when they are monitoring their expenses. Having a budget allows us to see our expenses all laid out. This enables us to be smart about how we spend our money and ensure that when we part with our precious life energy (see the prior blog post on that) we are doing so with care and intention.

Are you financially stable? Take a look at your personal situation and see if things are actually better than you thought they were. If you need help, schedule a Money Date with Prosperity and we’ll help you untangle your finances in no time!

Introducing the 30 Day Budget Challenge!

Looking for a way to kick off the new year with some financial wins? Check out our new 30 day budget challenge!

This easy to follow challenge is packed full of 4 weeks worth of fundamentals, frugality, strategies and forward focusing exercises and things to do that will leave you feeling in control of your finances. Sign up today by filling out the contact form at the top right of the page.

Happy budgeting!

Love,

The Prosperity Team

What is the FIRE movement?

The FIRE movement stands for "Financial Independence, Retire Early." It's a financial and lifestyle movement that has gained popularity in recent years, particularly among those seeking to break free from traditional working patterns and achieve financial independence at a young age.

The core principles of the FIRE movement include:

Financial Independence (duh): The primary objective of the FIRE movement is to attain financial independence, which means having enough savings and investments to cover your living expenses without relying on traditional employment income. You are financially independent if your income from sources other than traditional work cover your expenses and cost of living. Folks in the FIRE movement typically achieve financial independence through a combination of investments such as real estate, traditional stock market investments and other sources. This financial security provides the freedom to make choices based on personal values rather than financial necessity.

Retiring Early (obviously): FIRE enthusiasts aim to retire at an age much younger than the traditional retirement age of 65. Early retirement can mean retiring in your 40s, 30s, or even earlier, depending on individual goals and financial strategies. Retiring early can take many forms, it’s not just golfing or sipping pina coladas on the beach all day. Some folks who retire early do so to raise their children, others to travel, and some to volunteer or work by choice. Early retirement doesn’t have any rules, so folks build lives that align with their goals and values.

The components of achieving FIRE include:

High Savings Rate: Achieving financial independence quickly typically involves saving a significant portion of your income. FIRE advocates often aim to save 50% or more of their income by minimizing expenses and making efficient financial decisions. Yes, many FIRE movement members are tech bros, but really folks in any line of work can achieve FIRE with enough planning, dedication and motivation.

Investing for Growth: To build wealth and generate passive income for early retirement, the FIRE movement emphasizes the importance of investing in assets like stocks, bonds, real estate, and retirement accounts. Investments play a vital role in growing one's savings. While we don’t go into detail about investments here at Prosperity, we can say your money works hardest for your when it’s in the market.

Frugal Living: Living frugally is a key component for many members of the FIRE movement. FIRE followers prioritize spending consciously on what truly matters to them and cutting expenses on non-essential items. This allows them to save and invest more of their income. Minimalism is definitely popular in the FIRE movement, but that doesn’t mean everyone is.

Debt Reduction: Eliminating high-interest debt, such as credit card balances and student loans, is a common objective within the FIRE community. Reducing debt expedites the path to financial independence. For many folks pursuing FIRE debt payoff is the first step in their journey to financial freedom.

Continued Learning: FIRE advocates often stress the importance of financial education and lifelong learning. Understanding investment strategies, financial planning, and tax management can help individuals navigate their path to early retirement successfully.

Side Hustles and Alternative Income: Many in the FIRE movement pursue side businesses or passive income streams to supplement their savings. These additional income sources can help accelerate the journey to financial independence.

The FIRE movement is not a one-size-fits-all movement. And it certainly doesn’t promote a life of scarcity. It offers a framework for financial empowerment, but individuals tailor their strategies to match their unique goals, circumstances, and timelines. Some may choose to reach financial independence and continue working, while others embrace early retirement and focus on personal passions, travel, or volunteering.

While the FIRE movement has drawn attention for its ambitious goals and unconventional approach to retirement, it requires disciplined financial management and a commitment to living within one's means. It has inspired many to rethink their relationship with money, work, and life choices.

Money is a Form of Life Energy

“Our life energy is our allotment of time here on earth, the hours of precious life available to us. When we go to our jobs we are trading our life energy for money. You could even say that money equals our life energy.” - Vicki Robin

Vicki Robin's concept of "life energy" in her book "Your Money or Your Life" offers a profound perspective on the relationship between money and the hours of our lives spent earning it. This concept connects the value of money to the time and effort we invest to earn it, making money a representation of our life energy. It’s relatively simple and straightforward: we trade our life energy or time for money, therefore what we trade our money for we are effectively trading our time.

If you earn $20 an hour and buy a $50 dress, you’re saying that this dress is worth two and half hours of your life. This is definitely different from girl math. Vicki goes even further to say your hourly wage is not your real hourly wage, you must account for the time getting ready for work, traveling to and from your job, the cost of special clothes you wear on the job, any meals you have to buy during working hours… the list goes on. So you may earn $20 an hour before taxes, but after those and deducting your costs of doing business you may actually be earning closer to $10, suddenly making that dress worth 5 hours of your time. Is it still worth it?

Only you can decide whether or not money spent is spent well. Hopefully you’ll consider seeing money as a form of life energy and only part with it for reasons that have meaning to you!

Setting a Mortgage Budget- Can I Just Use My Lender’s Limit?

A friend once asked me if they could use the amount their lender approved them for when buying a new home as their budget. That’s a bit of a loaded question and the short answer is I guess so, but you have to think about a couple of things.

First, a mortgage lender is compensated for selling you a mortgage. They’re selling you a product and receiving a commission. They have an incentive to get you into the most expensive home as possible because they gain the most from it. Mortgage lenders aren’t evil, this is just how the industry works.

Second, just because you can, doesn’t mean you should. Assess your comfort level with debt. Consider how comfortable you would be with your mortgage payment if interest rates rise or if unforeseen financial challenges arise. Setting a budget for a mortgage that aligns with your financial goals and well-being is a critical step in the home-buying process. Relying solely on your lender's limit can sometimes lead to taking on more debt than is comfortable or sustainable.

Here are some other things to consider when it’s time to establish a budget for a mortgage:

Assess Your Financial Situation:

• Begin by reviewing your current financial situation. Calculate your monthly income, including all sources of earnings.

• Examine your existing financial obligations, such as student loans, credit card debt, and car loans.

• Consider your monthly living expenses, including utilities, groceries, insurance, and transportation costs.

• Create a number that you want to pay, and then use online mortgage calculators to find out using the current interest rates how much home you can afford.

• Utilize online affordability calculators to estimate a reasonable budget for your mortgage based on your financial information.

Consider Your Future Financial Goals:

• Reflect on your long-term financial objectives, such as retirement savings, educational expenses, or other investments. Ensure that your mortgage budget doesn't hinder these goals.

• Remember, even if you have a fixed rate mortgage other pieces of the puzzle can go up over time such as taxes and insurance, both of which may impact your mortgage payment.

Factor in Additional Homeownership Costs:

• Remember that a mortgage payment is not the only homeownership cost. Account for property taxes, homeowner's insurance, utilities, maintenance, and HOA fees when determining your budget. No one told me my heat would go out within a year of living in my condo!

Shop Around for Lenders:

• Compare mortgage offers from multiple lenders to find the most favorable terms and rates. Different lenders may offer varying loan options that better align with your budget.

Stay Within Your Budget:

• Finally, establish a mortgage budget that falls within your comfort zone. This budget should reflect a monthly payment that allows you to comfortably manage your financial obligations and future goals.

• It may be hard, but stick to this budget even if you get approved for more. You’ll thank yourself in the long run.

In summary, setting a budget for a mortgage requires a comprehensive evaluation of your financial situation, goals, and comfort level with debt. While your lender's limit is an essential reference point, it's equally crucial to customize your budget based on your unique financial circumstances. This approach helps ensure that homeownership is financially sustainable and enhances your overall financial well-being.

“How Do I Balance Enjoying the Moment While Saving For the Future?”

This is a great question that I get a lot. It can be pretty easy to get wrapped up in a financial goal like paying down a credit card and forget to smell the roses, but it’s imperative that we do! In this blog post I’ll give a few recommendations, but ultimately what it comes down to is the “5 P’s”. Ever heard of them? Proper Planning Prevents Poor Performance.

So in this case, I mean plan to enjoy the present. For one that may mean budgeting $50 a month for coffee shops, because lattes make them happy. For another it could be splurging for the fancy gym membership because they make great use of it. Here are some strategies to strike that balance:

Set Clear Financial Goals: Start by defining your financial goals, both short-term and long-term. These could include saving for a vacation, buying a home, or building a retirement nest egg. Having specific goals gives you a sense of purpose for saving, it also can give you a finish line to work toward even if you set another goal right after accomplishing this one.

Create a Realistic Budget: I think it’s pretty safe to say very few people can pull off a $100 monthly food budget. Develop a budget that allocates a portion of your income for both current expenses and savings. Ensure that your budget reflects your priorities and values yet also allows for both enjoyment in the present and financial security in the future.

Automate Savings: Set up automatic transfers to your savings or investment accounts. This "pay yourself first" approach ensures that you save a portion of your income before spending it on non-essential items. It helps you reach your goals faster and is proven to successfully help you save more.

Build an Emergency Fund: Having an emergency fund in place provides financial security and peace of mind, allowing you to address unexpected expenses without derailing your long-term savings goals.

Prioritize Debt Management: First of all, stay out of debt and live within your means. If life happens and you have to take some on, high-interest debt can hinder your ability to save and invest. Focus on paying down high-interest debt while ensuring you make at least the minimum payments on other debts.

Live Within Your Means: Bet you didn’t see this one coming. Avoid the trap of lifestyle inflation, where your spending increases as your income grows. Continually assess your wants versus needs and resist the urge to keep up with extravagant spending habits.

Embrace Minimalism: This one is a love/hate thing. Consider adopting a minimalist mindset, which encourages you to declutter your life and focus on the things that truly matter. This can reduce the desire for unnecessary spending and help you live in the moment with less financial stress. This can be naturally in line with the way someone is already living their life, or it can come across as the same kind of preachy that the avocado toast haters bring to their financial blogs. I honestly am not even close to the world’s best minimalist, but I do try my best to minimize buying things just because they’re on sale.

Practice Mindful Spending: Before making a purchase, ask yourself if it aligns with your values and priorities. Mindful spending can help you differentiate between impulse purchases and meaningful experiences. I also try what we call the six month rule in my family, if I still want something after six months of wanting it then it’s probably a justifiable purchase and I allow myself to consider buying it. No tamagachis here, but definitely a new blow dryer.

Set "Fun Money" Aside: I pretty much said this at the top of the article. Allocate a portion of your budget for discretionary spending on activities, hobbies, or experiences that bring you joy in the present. This allows you to enjoy life without guilt, which is essential. Just be sure to set a reasonable amount given your income and goals.

Regularly Review and Adjust: Your financial situation and goals will change over time. Regularly revisit your budget and financial goals to ensure they remain relevant and adaptable to your evolving circumstances.

Seek Professional Advice: Consider scheduling a money date with Rachel here at Prosperity. She can help you create a financial plan that balances your current and future needs effectively.

Remember that achieving a balance between living in the moment and saving for the future is a dynamic process. It requires conscious decision-making, regular assessment, and flexibility to adapt to life's changes.

50/30/20 Rule Explained

Ramit Sethi definitely made this one famous and popular. Basically you have three categories for how you spend your money: needs, wants and savings/debt repayment. The general rule is that you use 50% of your take home pay on the things you need, 30% on the things you want and 20% on savings and/or debt repayment. It’s pretty simple!

But what can get tricky is what is a need versus what is a want, so I’ve written some categories for each below:

50% - Needs:

Housing (rent or mortgage)

Utilities (electricity, water, gas, etc.)

Groceries

Transportation (car payments, public transit)

Insurance (health, auto, renters, etc.)

Minimum debt payments (credit card minimums, student loans)

30% - Wants:

Dining out

Entertainment

Travel

Hobbies and leisure activities

Non-essential clothing and personal care

Subscriptions (streaming services, magazines)

20% - Savings and Debt Repayment:

Saving for emergencies and long-term goals

Paying down high-interest debt beyond the minimum payments

Investing for retirement or other financial goals

Building an emergency fund

5 Money Tips I’d Give to My Younger Self

I got asked by my younger brother what financial advice I’d give my younger self. What a great question! There’s so much financial advice out there, some good, some bad, some ugly. Today I’ll add my two cents. In no particular order:

Invest in your financial education

As someone who has gone on to become a financial educator and personal finance coach, literacy has always been important to me. It seemed like Wall Street knew a secret language that only they could communicate with and therefore we had to entrust them with our hard earned money in order for it to grow. Turns out that was just a bunch of BS jargon used to mislead and confuse us. I’m not saying every financial concept is super easy, I’ve definitely had to take deep dives, phone friends and watch YouTube videos to really understand certain things. But taking the time and choosing to prioritize my financial education led me to know how to pay off my student loans early and buy my first condo at 27. I’m by no means a self made woman, but I had to lead the charge to take control of my finances and future.

Not all debt is evil

This is something I’m honestly still learning. When I first graduated college I was allergic to debt. In many ways I still am. I absolutely see consumer debt as something that can ruin lives and steal futures. But now that I have a mortgage, I understand the difference between good debt and bad debt. Now, I even call debt by the name rich people use for it: leverage.

Take good care of your assets

For me, this is mostly focused on my car. I love my Forester to death. I know I’ll have to replace it in the future, but owning a paid off car frees up my money for other things. Amazing things, fun things, the things we dream about when we’re in debt. It feels so good to be out of debt when it comes to my car, I’d love to stay this way forever.

Set financial goals

Unless you have goals, you’re never going to go anywhere. It’s totally cool if your goals change over time, but you should always be saving for something. Otherwise, you’ll easily find yourself in a situation where you spend away all your cash and make little to no progress. Goals can be big, goals can be small. What matters is that you have them.

Live beneath your means

Living beneath my means has enabled some incredible things for me. Not just vacations and travel, but I was able to cut a $10,000 check to rid myself of my student loans after surviving a few months of unemployment in relative comfort. Neither would have been possible if I had lived in excess of my income.

Bonus:

Start planning for retirement as soon as possible

This one’s a bonus because younger me started saving for retirement with her first paycheck. If you haven’t started saving for retirement yet, consider starting today.

Remember that financial literacy and responsible money management are ongoing processes. Continuously educate yourself, adapt to changing circumstances, and seek advice when needed. Your financial future will thank you for taking these steps today. Don’t put too much pressure on yourself, but also be firm in setting your goals.

What is a Sinking Fund and Why You Should Have One

In the world of personal finance, you might have heard of an emergency fund, but have you heard of a sinking fund? In this blog post I’m going to explain both and hopefully by the end you’ll be heading to your bank’s website or nearest branch to open up an extra account to start your own sinking fund if you don’t have one already.

Sinking Fund:

A sinking fund is like a savings account with a specific destination in mind. It's your way of planning for known, infrequent expenses, such as annual insurance premiums, vacations, or car repairs. We know those all happen, but they can be hard to budget for on a monthly basis because they don’t happen every month. By setting aside money regularly for these expenses, you're better prepared when they come knocking. In Denver, where you might face varying seasonal costs (hello, heating bills and ski trips), having a sinking fund can keep your budget afloat. Your sinking fund should be in a bank account that doesn’t have restrictions on how many transactions you can post in a month, because you’ll be using it. In summary, a sinking fund is a savings account that you’re allowed to touch regularly.

Emergency Fund:

Maybe you’ve already heard of an emergency fund from our earlier post. It’s your safety net for unforeseen financial curveballs, like a sudden medical expense or unemployment. It's your financial life raft when the unpredictable happens. Having an emergency fund provides peace of mind for sure, but more importantly it has you prepared for the worst case scenario. So in short, an emergency fund is a savings account that you only touch in a true emergency. You can drag me for this, but Taylor Swift tickets are not an emergency and neither is your BFF’s bach in Cabo.

“So how much should I put in my sinking and emergency funds?” is a question I get a lot. There’s conventional wisdom about emergency funds, most folks say you should have 3-6 months expenses saved (that’s going to be anywhere from around $12,000 to $31,500 if your expenses fall between the ranges seen in my last blog post about the cost of living in Denver). When it comes to sinking funds, there’s a variety of opinions. Personally, I like to keep between $3,000 and $4,000 in my sinking fund. I got to these numbers because I figure if it didn’t rain but it poured, I’d have some nasty luck and need to make a big car repair right after booking a vacation. I want my sinking fund to have more than enough to cover those planned expenses, but I also want to replenish it relatively quickly. So personally I contribute $250 a paycheck to my sinking fund, or $500 a month. This number may be very different for you. Whenever my sinking fund hits $4,000 I transfer $1,000 out to my long term savings account and while that doesn’t happen as often as I’d like it to, it always feels great when I’m able to do that.

Are you sold on a sinking fund? Want help organizing your finances? Contact Prosperity to schedule a money date!

The Real Cost of Living in Denver

Here at Prosperity, we love everything colorful Colorado has to offer. Well, almost everything. According to US News, Denver is the 16th most expensive city to live in in the US. But how much does it really cost to live in Denver?

One number I found was that the estimated total monthly cost of living for a single adult in the mile high city comes from Expatistan- as of time of writing it estimates that number to be $3,798. Let’s unpack that.

An average person has the following monthly expenses:

• Housing

  • Rent or mortgage

  • Utility bills

• Transportation

  • Car payment

  • Car insurance

  • Gas

  • Public transportation

• Food

  • Eating in

  • Eating out

• Healthcare

  • Health insurance

  • Wellness (gym memberships)

• Entertainment

• Debt repayment

  • Student loans

  • Consumer debt

I’m a data driven person, so I’m going to try and recreate that $3,798 with the above categories. Every persons budget varies, so this will be different from your numbers but hopefully you can compare these numbers to yours and see how you’re doing.

Housing

Shelter

I found that the average apartment in Denver is rented at $2,000 for 840 square feet according to rentcafe. This definitely varies by neighborhood from Congress Park ($2,564) to Westwood ($1,294).

Utilities

It was difficult to find a Denver specific data set for this, but I was able to find a state level breakdown of utilities at Sofi. They list the average utility cost statewide at $331. That’s made up of electricity ($92), gas ($88), cable and internet ($110) and water ($41). These numbers definitely look like the rates for single family homes to me. I couldn’t find rates for sewer, but Denver does have a “pay as your throw” trash policy as of January 2023 and the rate goes from $9-$21 a month depending on the size of the cart you choose.

Total housing: $2,000+$331+($9 to 21) = $2,340 to $2,352 plus sewer fee.

Transportation

The amount of money a person spends on transportation can vary heavily due to a few factors: does this person own a car? Is the car financed or paid off? How far do they drive in an average month? Is their car fuel efficient? According to Simply Insurance, the average monthly payment for a new car is $539 and $336 for a used car. Then we need car insurance, which Bank Rate says is $2,121 annually in Colorado. That comes out to $176.75 a month. Axios reports that Denver area households drive about 1,536 miles per month on average. Assuming you drive a car with average efficiency, let’s say 26 miles per gallon for this experiment, then you’re buying 59 gallons of gas every month. Current gas prices at time of writing are about $3.25 in Denver, so that puts you at $192 on a monthly basis. Alternately, you could get an RTD pass and ride the bus and lightrail for $114 a month if you’re in the local region or $200 if you’re further out like near the airport.

Total transportation: car payment + car insurance + gas = ($336 to $539)+176.75+192= $704.75 to $907.75 for car owners, or $114-$200 for RTD riders.

Food

It was difficult to pin down a local to Denver rate on how much a person’s grocery bill sets them back, but Sofi’s page had a statewide number, $342, so we’ll use that. The Bureau of Labor Statistics says that the average Denverite spends 11.7% of their budget on food excluding alcohol. That sounds about right for me and my budget, what about you? I couldn’t find any good data online about eating out, but my experience with my clients shows folks spend between $250 and $400 on eating out on average here in Denver.

Total food: $342+($250 to $400)= $592 to $742

Healthcare

Health insurance is a little funky for many folks because if you work a W2 job that offers it as a benefit, it’s likely deducted from your paycheck without you even noticing… but that doesn’t mean it’s not a real expense! According to ValChoice, health insurance statewide costs an average single person $538 a month. For those of us lucky enough to be in an employer sponsored healthcare plan, it’s likely we only pay a portion of this number, which is very fortunate. To account for folks who work in lines work that do not provide health insurance, I’ll be including this number as part of my calculation. Looking to a common wellness expense, Yahoo says the average gym membership in Denver costs $77. I personally pay $81, so I think this one is dead on the money.

Total healthcare: $538+$77= $615

Entertainment

What a tricky category to quantify. The Bureau of Labor Statistics says the average Denverite spends 4.9% of their budget on entertainment. My client experience has been varied, but if you count all those ski trips as entertainment, you’re in for a big number here. With tickets to a game at Coors Field starting at under $10, there’s plenty of cheap entertainment to be found. I’m going to use my own personal number here- $340. I like to attend local community events, concerts and experience the outdoors by having a ski pass. Sound like a lot? I’d love to hear what your entertainment budget is!

Total entertainment: $340

Debt Repayment

This category is the worst. No one likes debt, but it’s imperative that we account for it in the cost of living, especially if the debt is consumer (that means it’s from credit cards). The average minimum for federal student debt is $280 for a bachelors degree according to Best Colleges. Credit Karma published a breakdown of debt by age and state where gen z holds on average $19,352 and millennials hold $63,053, including student, car, consumer and mortgage debts. It’s hard to say what the interest rate, repayment period or monthly payment may be for these numbers, so we’re going to make our only assumption in this whole post and assume that the average Denverite holds student debt, but not consumer.

Total debt: $280

So, what’s the grand total? Since we have a few items with ranges, I’ll give you a low and a high: $4,281 at the low end and $5,236.75 on the high side.

What do you think? It looks like I came in above the original number from Expatistan, do you think I got it right? Message me with your thoughts on these numbers, and share yours too!

A Beginners Guide to Building an Emergency Fund

Life can throw unexpected curveballs at any moment, underscoring the importance of having your own financial safety net. Cue the emergency fund – a shield against the uncertainties that come our way. Yet, for many, the concept of establishing this buffer can seem daunting or even elusive.

Building an emergency fund starts with small, purposeful steps. Begin by defining what constitutes an emergency expense – unforeseen medical bills, or unexpected job loss. At Prosperity, we consider car expenses to be inevitable, so we save for them in what we call a sinking fund. More on that in a future blog post! For folks with steady or consistent income, we recommend that you build an emergency fund with three to six months worth of expenses. For folks with variable income (freelancers, self employed, gig economy etc..) we recommend having between six and 12 months in the bank.

Why so much? Mostly for protection against job loss. You want to create an environment where you can breathe if you wake up one day and find yourself unemployed, knowing you can pay your bills and afford groceries. Don’t worry, Rome wasn’t built in a day and your emergency fund isn’t going to suddenly fund itself overnight.

Building an emergency fund is about setting aside a portion of your income regularly, committing to consistency rather than instant accumulation. The most popular and successful way to get to your savings goal is to automate your savings. If you are paid by direct deposit, you may be able to designate multiple destinations for your pay check. Send some money directly to your savings account instead of sending the whole thing to checking. If your budget is tight, start small, saving even $25 a paycheck will grow to $650 over the course of a year on a biweekly pay schedule, saving $100 will become $2,600.

The key to success lies in prioritizing this fund in your budget. Treat it as a non-negotiable expense, almost like paying a bill. Automate transfers to a separate savings account, making it a routine contribution rather than an afterthought. If you can’t automate your savings via your paycheck, do it manually on pay day before the money disappears. While it may seem challenging, every dollar saved brings you closer to financial security and peace of mind.

Remember, the purpose of an emergency fund isn't just to weather storms; it's a testament to your financial resilience. It's a shield against stress and a symbol of empowerment, granting you the freedom to navigate life's uncertainties without financial strain. Start small, stay consistent, and watch your emergency fund grow, providing a reassuring safety net when life takes unexpected turns.

Remember, you got this! If you need help determining how much to save, Prosperity is here to help.

Credit Cards: A Love (or Hate) Story

Ah, credit cards, those small pieces of plastic that have the power to make you feel like you've got the world at your fingertips – or like you're wrestling an octopus underwater. Let's dive into the love-hate relationship we have with credit cards.

The Love Side:

Convenience King: Credit cards are the VIP pass to convenience town. Swipe, tap, or insert – and voilà, your purchase is done. No need to carry wads of cash or jingle with coins.

Rewards Galore: Who can resist the allure of those sweet, sweet rewards? Cashback, travel points, discounts – it's like getting a bonus for simply spending your own money.

Emergency Savior: At Prosperity we hate seeing it, but it’s true. When life throws a curveball, credit cards can be your financial knight in shining armor. Need to fix your car ASAP? They've got your back.

Build That Credit: Want a bright financial future? Credit cards are your key to building a strong credit history. That's like leveling up in the adulting game.

Inflated Prices: Did you know that business that accept credit cards pay a small fee (normally about 3%) to the credit card companies for the pleasure of taking plastic? As a result, prices are inflated a little bit to account for this. If the inflated price applies to the products you’re buying whether or not you’re using a credit card, shouldn’t you just use the plastic anyway?

The Hate Side:

Debt Trap: The biggest gripe with credit cards? They can be a slippery slope to debt. That 'buy now, pay later' attitude can land you in a financial labyrinth faster than you can say "interest rate."

Interest Beast: Credit card interest rates can be scarier than really anything else we can imagine here at Prosperity. If you don't pay off your balance in full, you're essentially paying extra for your purchases.

Impulse Control Gone Wild: Credit cards whisper sweet temptations in your ear. It's easy to splurge on that shiny new gadget or yet another plane ticket, only to wonder where your money went.

Hidden Fees: Credit cards might seem simple, but they can sneak in some sneaky fees. Annual fees, late payment fees, foreign transaction fees – it's like they're playing hide and seek with your money.

So, why do we have this rollercoaster relationship with credit cards? It's because they come with pros and cons. The key is to harness the power of credit cards without letting them control your financial destiny.

How can you do that? It's simple: set boundaries, stick to a budget, pay your balance in full every month, and be mindful of those flashy rewards. Credit cards can be your loyal companion or a cunning trickster – it's all in how you use them.

So, embrace the love-hate relationship, but remember, financial happiness comes when you're the one holding the reins, not your plastic friend. Stay savvy, keep it real, and may your credit card adventures be epic! 🌟💳💸

Want some help with your credit cards? Contact Prosperity today and schedule a money date!