Real Life Planning Podcast Ep58: Do You Know Where Your Money Is Actually Going?

In Episode 58 of the Real Life Planning Podcast, Vekevia Tillman-Jones, CFP®, MBA, tackles one of the most important—but often overlooked—questions in personal finance: Where is my money really going? Drawing from her work with high-earning professionals and aspiring real estate investors, Vekevia breaks down how lifestyle inflation, subscriptions, and unclear cash flow can hold you back from reaching your goals. She shares practical strategies to help you gain clarity, build confidence, and take the next step toward buying your first rental property.

" Wealth isn’t what you earn. Wealth is what you keep and grow." – Vekevia Tillman-Jones

This week on Real Life Planning Podcast:

Takeaway Quotes:

"You're not behind. You might just need a system that works for you." – Vekevia Tillman-Jones

"If your income goes up and your lifestyle goes up with it, you're just running faster on the same treadmill." – Vekevia Tillman-Jones

Connect with Real Life Planning:

• Facebook 
• LinkedIn 
• X 
• Instagram 
• Pinterest 
• Email: podcast@reallifeplanning.com  

About the Real Life Planning Podcast

Hosts Cynthia Meyer and Vekevia Tillman-Jones explore practical steps for real estate investors to build financial freedom and make working for someone else optional.

Episode 58 Transcript

[00:00:11] Vekevia Tillman-Jones: Okay. Ask yourself a question and be honest with the answer. How do you really feel about your finances? Are you comfortable with your finances? Are you happy with the way things are going? The way that you're saving, the way that you are investing? A lot of people are trying to tackle a particular question, which is, even if I don't say it out loud, I'm wondering where is my money actually going?

[00:00:36] Like, for real? Where? Where's my money going? And a lot of people that I run into are, young professionals, they have great jobs, high incomes and they're doing well for themselves. And so, the fact that they're not actually sure where their money is going is not necessarily bringing them or causing any harm because they make so much money that they're able to just get by anyway.

[00:01:01] So they're able to save, they're able to spend what they need to spend money on, and they're surviving. They're paying maybe even their mortgage and they don't have any issues, but maybe they're thinking about their next goal in life. Maybe to have their first rental property.

[00:01:15] We help real estate investors here at Real Life planning. So they might be interested in getting that first rental property or turning their current home into a rental property. And there's some apprehension there because they're just not sure can they afford it. Like, what should they be thinking about? What matters as far as the cash flow?

[00:01:31] And so, even though the apprehension comes up in a different way, it stems back to for many people, of not really knowing how they're spending and if it works and how they might adjust it if they do in fact take that next step. So, we are going to tackle that together and just give you just, some things to think about. What might be happening so you can have a better understanding of it as you move forward and try to prepare for your first rental property.

[00:01:59] I think the first thing that we have to really think about is this idea of just when you have a larger amount of income, that you automatically are going to have more peace as far as your finances go. Everything's going to be better. I just need to make more money and interestingly enough, I've worked with many individuals and once they get to that salary, they've been making a good salary for a long time, a lot of times, there's a couple things going on really is one is it didn't necessarily bring more peace, as a matter of fact, expenses may have even increased. So now, they feel like they have to make that level of income even more. Like now I'm very tied to this particular role that's highly intensive or very demanding; requires a lot of my time.

[00:02:45] And then they start to wonder how will I be able to do this? Is this sustainable over the long term? They go from feeling like I made it, I finally got to this place and now I'm wondering if I'm at the place I actually wanted to get to. You could feel like even though I'm making a lot of money, I feel like I'm living paycheck to paycheck, or I feel like I don't have the freedom that I thought I might have, or I'm not building wealth as quickly as I thought I might, or I'm not sure about how to build that wealth.

[00:03:18] Some of the things that might be going on in those situations is number one, sometimes it's just lifestyle inflation, right? If we just had to put it in and sum it up into those words, just lifestyle inflation. Like, you have kids and kids are expensive. I have two. Kids are very expensive in the sense or they can be. What tends to happen is soccer practice, swim lessons, all the book fairs at school, dance class. You name it, right? And just regular spending money, experiences, trips, right? So we want to go on vacations. You've been sacrificing and you work hard and you have kids, so likely they're coming on a vacation and a vacation for a family of four could be very expensive. Just lifestyle in general including the grocery bill. A lot of people don't even know what they're spending on groceries. So, it's not just luxury items, but you know what, sometimes you might be getting your grocery delivered and a lot of the delivery services I know in particular with one of our grocery chains here- I don't know if I should say the name. So one of our grocery chains here, if you order online and have your groceries delivered, you actually pay like double the cost of each item, or at least it feels like double. Maybe it's, one and a half of whatever the cost is. But that's still pretty ridiculous when you add that over multiple items and that you might do that consistently every month. So it might be a matter of shopping around and trying to see which delivery service isn't actually overcharging. I know a lot of people never think about or they might think about it but not get a chance to just because they're busy even going to a meat store or like a local farmer's market or something like that and the prices are significantly lower. I know, I was surprised. Our grocery bill used to be like over a thousand dollars a month and- you don't even realize- I have many clients, they're not even sure their grocery bill.

[00:05:14] You'd be surprised if you were to ask around what other people are paying. That conversation just doesn't happen. I remember asking other people what they were spending and it was like significantly lower. I thought to myself even, especially as a financial planner, like there are just some things that people don't even talk about. You just assume that's the grocery bill for a family of four. And for some people that might actually be. So this isn't necessarily saying that you automatically need to slash your grocery bill. This is just pointing out that there are some expenses, they're just lifestyle inflation, like the way that you live, you have a busy life, and what the experience you want to give your family, your kids, et cetera.

[00:05:49] The house you want to live in. Those things cost, right? And then I think number two would be lack of clarity. So, maybe you're earning more, but you're not tracking where it's going, so you're just going on and on doing the same thing, even though it might not necessarily be working, but you can't feel that it's not working because you can still squeeze some savings out of that.

[00:06:10] You can overspend for the month and not really hurt yourself because you make more than enough. But if your income goes up, essentially, if you think about it from this perspective, if your income goes up and your lifestyle goes up with it, then you're just running faster on the same treadmill.

[00:06:26] You aren't necessarily making the progress that you could be making if you had more clarity. Another big thing could just be those hidden, like money sinkholes. If you think about it. It can be- it's a reason why you might feel like your money disappears. You're swiping away your card. One spouse is spending one amount, the next spouse is trying to handle the day-to-day expenses, and nobody exactly knows what each person is doing. And you might even be doing a good job, right? You might be paying off that credit card every month, but you don't really know what needs to go on there, or you're not managing what goes on there. Like some people will tell me, Hey, we, we spend about $10,000 on that card, and maybe that works for you and that's fine as long as you're doing your other goals. But if it's hindering you or not making you feel comfortable that you can move forward with your goals, you want to have some clarity on it.

[00:07:16] Sometimes, when I work with clients, it's not necessarily that they need to change the dollar amount that they're spending per month. But once we are working together and they go through it and they look at their budget and we run plans and we give them the scenarios, et cetera, they feel more comfortable and more confident in what they're spending and that it makes sense and that they aren't hurting themselves financially now or their future selves. They're going to be all able to do all the things they want to do for their children and have some comfort around that. And then they could feel better about, maybe moving out and renting their own house out as a their first rental property or buying another property and house hacking it, whatever have you buying a rental property and starting from there. But they'd feel more comfortable to move forward with that goal.

[00:08:00] Lifestyle creep is a thing. It's not just the way that you live can impact, so it's not just, where's my money going and lifestyle inflation. It could just be lifestyle creep from the perspective of every day I stop by Starbucks or I make more money, I should get a bigger house.

[00:08:20] I make more money, let me go get a more expensive vehicle, a nicer vehicle because I can afford it. And so, you start to spend the same, or even maybe a larger percentage of your income and it's just creeping because you can merely afford it or you might think to yourself, I work hard every day, I deserve nice things and that's not necessarily a negative. I think that should just also be in your- as a part of your plan expenses. So it should also be in your budget or spending plan. There are also things that you might forget about, like subscriptions.

[00:08:50] Think about like if you sign up for a car wash and you just like stop taking your car there because maybe I know some of the car washes, they could start to chip the paint on your car or maybe you want to hand wash or whatever. Maybe you moved and you just forgot to cancel the subscription, so now you're paying for this car wash that you don't even use that service anymore. Or a fitness app, right? You maybe you like, I'm going to get in shape this year, I'm going to do so much and you sign up for an app and you don't even use it. Or gym membership. That's a big one, right? It's the beginning of the year and you're like, I'm going to go to the gym every week and you haven't been in six months and you're still paying for the membership. When you try to go to cancel some of these memberships, especially with gyms, they might want you to come into the gym and you're already busy, so you're like, whatever, I'll go. You keep pushing the can down the road. So you have these subscriptions you're not paying for.

[00:09:36] Maybe you started a business like a side hustle or something like that. You signed up for different, maybe like a phone service like Grasshopper or just any of those services. And you never turned it off, so you're still paying for that. Or Netflix or Disney plus. I don't know, any apps maybe that the kids aren't even using.

[00:09:55] I know some of the games that children want to play, you have to sign up for those as well. So it could just be subscriptions you've forgotten about or they're piling up. You have too many subscriptions. You can't even use them all and you're just not aware of your cash flow overall, everything's on autopilot.

[00:10:11] You're putting everything on a credit card and so while that's very convenient and it can certainly help add to your credit card benefits, right? So you can get like maybe a free flights and stuff like that depending on the credit card, but it's still important to be aware. So a challenge or one tip there might be just to even at least once a month, I would say every couple of weeks is a good idea, but a bare minimum of once a month, open up your bank app. Go on your credit card account. Look on there online, or open up a statement. See what you spent. Is anything surprising? Like did you spend a lot more than you thought you would? Was it spot on? Are you pretty surprised by how much you spent ordering something on Amazon or just are there any surprises? And they could be good.

[00:10:54] You could think that you spend a lot and you don't necessarily, so that's important too. You're just trying to uncover any blind spots, and if you look at it at a bare minimum monthly, it's going to be a lot easier to catch something and adjust than if you haven't looked at it in over six months or even for the year. You don't want to be surprised.

[00:11:13] Many people could benefit from just having a plan. There's a lot of power in having a plan. So let's talk solutions. This isn't about cutting out every drink you might get from Starbucks or dessert or whatever have you. Maybe you like to eat out on Fridays or maybe you get a massage every week. It's more about having some clarity and control around your spending. You want to make sure you have the basics, like an emergency fund. And I find that a lot of high earners, they have a savings. It's not, they aren't saving, but is it significant enough? Is it a good enough percentage of your monthly expenses? Just as a rule of thumb, each person's situation could be different, especially if you have one person- you have a couple and maybe only one person works, one person may stay at home or there's a significant difference rather in terms of what one person makes over the other person or just whatever your situation might be, that emergency fund could look different for your situation. But just as a rule of thumb, for your personal expenses, you at least want to try to save three months worth of your expenses for your emergency fund. Now if you earn quite a big or a high earner, you have a more high level position. It could take much longer. God forbid if you were to lose your job or something like that. It could take much longer to get another role like that making significant money. I had a client that was out of work for a year. And so, six months might be a even better goal. Or if you're have one parent that's a stay at home or just one spouse or partner that's a stay at home spouse or make significantly less, that six month mark might even be better if the lower earner income could not cover the expenses, should have something happen to the higher earners income. So those are some things to think about.

[00:12:57] When we work with clients and they actually have rental real estate or any type of business, we all also advise them on emergency fund for their business. Obviously if you have any high interest debt, you want to pay that off. So think, these days, your interest rate could be, on a regular loan you might pay 6, 7, 8, 9%, but on credit cards, that could easily be in the double digits. So you want to be aware of that, or maybe you got a credit card and it had an interest rate of 0% for a promotional period, and that's going to come to end. So you want to be aware of that. And again, if you're looking at these things, your financial situation, at least once a month, you should be keeping track of any high interest debt.

[00:13:35] A lot of people who are high earners, they are paying it off every month or each month. So they're not necessarily carrying a balance, but it's important to just be aware of how much you're being charged .

[00:13:45] You want to make sure that you're investing, right? Rental real estate, your 401k, all those kinds of things. So that savings and putting money towards your retirement, your future self, so the savings is taken care of today, right? The short term, the retirement type savings is taken care of your future self. And then obviously, like rental real estate investing. Are there other types of investments you could do to add to your wealth building and to create the lifestyle that you're looking for?

[00:14:09] If you're trying to have a plan and you're not sure exactly what makes the most sense a plan, having a plan is what matters. So some people will say, but Vekevia, how much should I save? What should I spend on what? There are different rules out there and I work with clients to customize things around their particular scenario, but just some rules of thumb. It's like you might have heard of the 50, 30, 20 rule. So 50% of your spending will be towards your needs, 30% will be towards your wants. 20% will be towards saving or debt payoff. And if you really do have some debt to focus on, maybe 10% goes to savings and 10% goes to towards debt.

[00:14:43] A lot of times people are like how should I save or pay off debt? Maybe you do both, right? And we work with our clients to help them decide what makes the most sense there. Another rule of thumb that people might go by is instead of the 50, 30 20, they might do 60, 20, 20. So 60% to needs, 20% to nuance, 20% to debt.

[00:15:02] So it's not really about perfection as much as it is about having a plan and giving every dollar a job, right? With some clients, I should say, not high income earners necessarily, but with clients, I'll find that some people are just not interested in tracking their spending closely.

[00:15:18] So they like the idea of the percentages. Like, let me just stick, 20% into my 401k or max up my 401k, let me stick, 20% of my savings are 10, 15% to regular savings for a while I'm paying off some debt, et cetera. And they feel good about those percentages, and then they get to spend the rest as they want, and they love that.

[00:15:35] We give them rules of thumb in terms of how much rent should make up as a percentage of their take home pay or mortgage taxes and insurance for that matter. If they live in expensive areas in terms of rent or mortgage, home prices might just be high, we help them balance and customize savings plan, a spending plan that meets the reality that they're faced with. So, a pro tip, I would say pay yourself first, obviously. On payday, you might want to set up automatic transfers if you don't have that alway already set up.

[00:16:07] So you know, you set one for savings, one to investing and spend what's left, and that way you get to do it guilt free. That's the key difference between, hoping to save the amount that you might want to, or that you know you should, and then actually building wealth and being ready to maybe get that rental property or turn your home into a rental property and actually having enough money set aside if something should go wrong, you're not going to be distraught or have to go bankrupt. Very important to get the run the numbers. Especially if you're new to rental real estate. I find a lot of clients they do really great research in terms of like, how much is this mortgage? Can we afford it? Could we rented out? But there's more to run in numbers than just that when you think about rental real estate. So the cashflow piece and knowing where your money is going is just very crucial.

[00:16:52] A lot of this will come down to especially when you have couples, but even as an individual client, a lot of this comes down to your money mindset. What you think about money and how you perceive it and how it works for you. It's not just math, it's emotion, it's identity, it's habits. So if you do feel like you don't have a handle on your spending, maybe you feel like you're spending a little bit more than you want to, you have to ask yourself questions like, am I feeling spending to feel better? Or, am I trying to impress, am I trying to impress myself? I don't know, or my group of people that I'm around or am I trying to prove that I finally made it to myself, or did I grow up poor and now I'm spending a lot to show the child version of myself, that I can actually spend, or maybe you make really good money but you won't allow yourself to really spend anything because for whatever reason, your own traumas or your own issues or your own thought process, your money mindset is like I always have to be pinching and doing things like that, and I can't really spend and splurge so I can live and feel comfortable and actually build wealth in a way that I want to.

[00:17:59] So just all important things to think about. Wealth isn't what you earn. Wealth is what you keep and grow and it lives beyond just the money aspect. It's like, have you built the lifestyle that you want to be living? That's your financial freedom. If you feel like maybe you're behind and you're thinking on that, you're not really behind.

[00:18:18] Oftentimes, what I find is, clients just need a system that's going to work for them. So all in all, you might be asking yourself, where's my money going? And it could just be habits that you haven't looked at yet, or maybe you just need to make a few minor tweaks and that's fine.

[00:18:35] So go back, look at the last 30 days, like I said, on your bank statements, credit card app, or maybe you want to print things out and you can think about like, and look and see where's your money going? And if, once you see that, is that aligned with the life that you want to live now? And if it's not, what adjustments do you need to make?

[00:18:55] There's no shame. This is just a starting point, just so you can have clarity around it. Once you get a handle on your finances or you feel more comfortable, you know where your money is going for real, then you could feel comfortable about what the next steps are in terms of getting started in real estate.

If you like this video podcast, consider joining Real Life Planning’s Question of the Week where our CERTIFIED FINANCIAL PLANNERs™ and rental property business owners answer the most common questions about real estate financial planning direct to your inbox.

This blog is for general financial education purposes. Information contained in this blog should not be construed as financial, tax, real estate, legal, or investment advice. For educational purposes, blog posts may contain links to other websites which are not under the control or and are not maintained by Real Life Planning. Real Life Planning has provided those links for your convenience but does not necessarily endorse all the material on those sites. Please consult your financial, real estate, legal, or tax advisor for advice specific to your situation.