Being a budgeting expert was fate for Tiffany “The Budgetnista” Aliche. Growing up under the same roof of her father, who was an accountant and CFO and mother whom she dubs a “master negotiator,” money management was a way of life.
“I thought everybody grew up like that until I went to college and so many of my friends were messing up their credit cards and finances,” The Budgetnista tells Centric.
After studying business and spending 10 years as an educator, Tiffany decided to turn her free advice into a revenue-making empire. A notebook she once wrote tips in for a friend, ended up turning into a book called “The One Week Budget,” becoming a number one best-seller on Amazon.
Now The Budgetnista is gearing up for the “Live Richer Challenge,” an attempt to virtually reach 10,000 women, and inspire them to live quality lives on a budget. In an exclusive interview, the 34-year-old entrepreneur breaks down the steps to saving and how you can be financially sound, no matter your income.
CENTRIC: Why is budgeting and financial literacy so necessary?
THE BUDGETNISTA: Because money is not endless, and if you don’t know how to manage it you will lose it. Look at MC Hammer, Toni Braxton--twice--and look at Allen Iverson. I met a doctor who made a quarter of a million dollars a year, no kids and didn’t have $200 in their bank account. Honestly it’s the people who make the most who do the worse. I know teachers who make $40K and do way better; they’ll be the ones with a $100K in their retirement account. People who make a lot tend to think they have time to catch up. It’s really important to learn how to manage your money because it gives you freedom. Money gives you freedom to choose how you want to spend your time and that’s why learning to budget is so important. The budgeting part is not about budgeting but using your money as a tool to live the life you want.
What is the most common misconception people make as it relates to budgeting and building personal wealth?
Not getting started. That’s the number one mistake. People are like ‘I don’t know how to do it, so I just won’t start.’ So they continue to live their financial life randomly. People kind of hope that it’ll click. Money is like learning a language. You’re not going to randomly learn Mandarin...it’s not happening. If you want to learn it you have to constantly make an effort. No one who is truly wealthy randomly was like ‘I’m just randomly good at money.’ That’s not true. If you don’t inherit great wealth from your parents and you don’t make a conscious effort to manage it then it’s not going to work out. I’m not saying you’ll be broke but you’re never going to have as much as you could’ve had and you’re probably going to struggle unless you get started.
What are first steps to budgeting and saving?
Step one is list everything you spend money on; that’s everything from your bills, utilities, entertainment, groceries, transportation, whatever. The next step is to ask yourself how much do I spend a month. Bills like the rent are easy because it’s the same every month, but for things like your energy bill use the average amount you spend. You need a financial picture of your money going in and money going out. Compare the two. If I make $2,000 a month and I spend $2,500 then I’m at -$500. That’s your basic budget. That’s a 15-minute process.
How much money should one typically be saving?
When it comes to retirement you should be saving a minimum 10 percent; women should be paying a little bit more because they tend to live longer. That’s the standard. Most people are like I can’t afford to save 10 percent, and that’s fine. For retirement most people have a 401K from their job. Go to HR ask them what percentage of your income is going into my 401K. You might be at 2 percent, that’s fine, you don’t have to push yourself up 8 percent. Instead you tell them to move it from 2 percent to 3 percent. You’re going to barely feel it. Every six months you go to them and push it up a percent, and in a few years you’ll be at 10 percent without even feeling it, because 1 percent is probably $5 out of your paycheck. You can reach it gradually overtime, and if you can’t do 1 percent every six months, do a half percent.
What advice would you give freelancers who do not have retirement plans with their job(s)?
I’m seeing that so many people do not have regular paychecks. You start out like everyone else by figuring out how much your life costs you a month. Everyone needs to know their magic number. If you’re a freelancer you should have two magic numbers: how much does your regular good life cost? But then you need to know your baseline. Then you have to what I call “be like the squirrel.” Squirrels are super smart when it comes to saving because when acorns are plenty they work really hard, but freelancers forget that. You may make $10,000 one month and go out and plan a vacation, but the next month you only make $1,000. When things are really good that’s when you have to hustle the hardest. Save the most when things are really good.
One of the most important things you want to do as a freelancer is to pay yourself. Most freelancers get paid directly from their client. Instead have an account and when you get a check from [a client] have it pay the account and that account gives you a check every month. The pot pays you, not the person. It’s important to save because [if you don’t] you won’t have money to be paid from. That way you won’t feel the fluctuating income. Also as a freelancer you want to live by percentages and have separate bank accounts for expenses, taxes, travel, etc. Even though you’re a freelancer you want to make your financial life look like a regular 9-5.
The hardest part to saving and budgeting is will power; are there any methods you have for how one can be financially discipline?
The method is you don’t have to be financially discipline. Automation is the new discipline. If you have a regular income it makes this really easy because if you get paid $2,500 every two weeks and you tell yourself you want to save $500 a month, that’s $250 a check. If you get paid on the 1st and 15th of the month, on the 2nd and 16th have your bank accounts automatically transfer $250 a check. It doesn’t take discipline. You want to place your money in a money bucket, which is an online-only account. I like to use Ally; they’re highly rated. What I like about it is there’s no physical bank for me to go to and spend my savings, and because it’s a savings account I don’t have a debit card to it. The way you feed your online account is through your regular bank. And if I want to get my money back, because it’s an online-only account it takes two to five business days for that transfer to come through. If I see cute shoes and I want to take the money from my [online] account I have to wait, so that means no more impulse buying.
When people think of budgeting they often equate it to living life on the cheap side; coupons, shopping for clothes at Target--it’s always deemed less appealing. How should one with that perception approach budgeting?
I can see why people think that because budgeting is kind of an ugly word. You have to change the way you think. There are four questions you can ask yourself when buying: do I need it, love it, like it or want? If it’s not a need--food, shelter and water--and it’s not one of your loves (mine is travel), then it’s just a like or want. What likes or wants can [you] cut out? For example, if you don’t watch cable cut it off, if you’re not a foodie why go to brunch every Sunday because your friends want to go? They can come to the house after. Keep your loves and cut out the likes and wants and transfer that money to your money bucket. I try to use a budget to live a better life. Use a budget to reduce your likes and wants so that you can have more of your needs and loves.
What is your “Live Richer Challenge” about?
I started the “Live Richer Challenge” because so many women on social media aren’t able to come to my classes. I decided to start an online 36-day challenge where I’m going to help 10,000 women take control of their finances. It’s going to fun and it’s free, and I have sponsors. It’s virtual so you can live anywhere, even out of the country. We launched last month and about 2,200 women signed up. I’m going to show women how to change their money mindset, how to budget, how to save, how to begin investing and how to update their insurance.
Everyday you’re going to get a small easy task and that task is going to lead to having a budget. I want to reach them in whatever their online experience is like. It’s going to be a daily email, a free app where you get a reminder, blog post, social media and I’m also creating an ebook and physical book to go along with it. My goal of helping 10,000 women leads to 10,000 families, 10,000 communities...can you just imagine how you can shift the nation? I want to do it every other year, so my goal is to have touched 100,000 women in ten years.
Any last tips?
Get started and live richer!
(Photo: Akintola Hanif)