I Blew $400,000 in 1 Year: 8 Money Lessons I Learned To Get Myself Back on Track
Elizabeth, a business operations consultant in North Carolina, has been on both ends of the money spectrum — she grew up poor, and has been broke and essentially homeless in the years before her thriving and lucrative career, having to borrow from friends to keep her lights on.
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In 2023, however, she made more money than she’d ever made before, around $1 million, and blew around $400,000 in that same year.
Though she doesn’t regret all of her expenditures, having recently lost a major client, she’s returned to some key money lessons to get herself back on track.
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Charting Her Expenses
Elizabeth’s biggest expenditures in 2023 ran the gamut. On the one hand, they included paying her 25-year-old daughter’s living expenses, supporting her boyfriend who was out of work and helping out a friend who lost a lucrative work contract. On the other hand was paying for DoorDash to the tune of several hundred dollars each day, grocery shopping by Instacart, excessive Amazon purchases, a luxury vacation to Europe, a $2,000 designer suitcase she admitted she probably won’t use, several cars, including a $100,000 Lucid (which she partially financed), expensive meals out and more.
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Return to Budgeting
When Elizabeth’s second client didn’t renew their contract and her income dropped in half, she began to pay attention to her finances again.
“The first lesson isn’t even a lesson learned, it’s one I knew before that I just stopped applying,” she said. “Budgeting. I actually still have an Excel spreadsheet where I list all of my monthly bills, how much they are, and then I list how much I make and I carry it over.”
She is proud to say that at least she doesn’t have credit card debt and has always managed to pay her bills on time.
No Online Shopping
Another thing she’s taken stock of is the way it became all too easy to order things online without thinking about how much she was paying.
“A friend of mine just made a declaration that she’s not doing any more online shopping,” Elizabeth said. “And I think that that’s one of the things I’m going to start forcing myself to do: If you want something, you have to go get it. And if you’re not willing to go get it, then you really don’t need it.”
Limit Dining Out
Unfortunately, Elizabeth said the pandemic really changed the way she ate.
“Prior to the pandemic, the only food you could get delivered was pizza and Chinese food. I started using DoorDash and PostMates all the time. I’m so bad that I live less than a mile from a grocery store, and I still do Instacart just because I don’t want to take the time to go walk up and down in the grocery store.”
She realized that this isn’t sustainable, and she will have to return to shopping in person and making more food at home.
Don’t Overbuy
Like many people, Elizabeth has Costco and Sam’s Club memberships, except she really only shops for three people.
She said she’d go shopping at one of these retailers, “[a]nd end up with a case of toothpaste. The three of us, we don’t need Costco.”
It just doesn’t make sense for her and she’s ready to abandon this habit.
Save More
If Elizabeth has any major regret, she said, “It’s that I did not stockpile more than I did. The $300,000 I have in the bank was my feeble attempt at savings. That should be double what I have.”
She also wished she’d set up a retirement account sooner, and plans to do so if she picks up another client.
Have an Income Backup Plan
This year also reminded her of a hard lesson she learned in the early days when she was broke and depended upon some crowdfunding to survive (which didn’t pay out as intended): Know where your income is coming from and have a backup plan.
“It’s important that you have some sort of fallback plan in case your primary source of income dries up in whatever that form that is.”
Don’t Stop Looking At Prices
One of the most common ways people overspend when they make more income is through “lifestyle creep,” and Elizabeth admitted this happened to her.
“Another lesson is don’t stop looking at prices, because that’s what I did,” she said. “I’d go out to dinner and I order what I want, and I don’t like cheap restaurants. If you have $90,000 coming in, you don’t think twice about spending $1,000 here and there.”
Balance Help Offered
Despite some obvious forms of overspending, one of the toughest areas for Elizabeth to pull back on has been her tendency to support others. She grew up in a religious home where her parents always took care of others.
“As much as I’m not religious, I do believe in karma. And I feel like not everybody has the ability to make $90,000 a month. So I feel like if I’m being blessed in this way to have all of this, I can’t be selfish and not bless others,” she explained.
However, she acknowledged that there has to be a balance, whether that’s teaching her daughter to be more financially independent or making sure that any support she offers doesn’t come at the cost of her own ability to pay for herself.
While most people won’t make the kind of money that Elizabeth did, lessons like hers can keep anyone, at any income level, from getting too far into the red.
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This article originally appeared on GOBankingRates.com: I Blew $400,000 in 1 Year: 8 Money Lessons I Learned To Get Myself Back on Track
