This is such a wonderful and funny guest post written by amazingly talent friend, Stefanie O’Connell.
What is it about 90s sitcoms and New York City?
Watching them, my vision of adulthood became shaped by Rachel Greene’s huge SOHO apartment and Carrie Bradshaw’s pension for pricey impulse buys while walking down 5th avenue.
Imagine my surprise when I finally made it to New York City and a comparatively minor latte habit threatened to bust my entire budget – forget the two-bedroom apartment.
You see, I had come to New York City to follow my dream of becoming a professional actress. And with that came some startling financial realities, namely….
- The cost of living in New York City (which is not nearly as expensive as most-people would have you believe, but a serious challenge nonetheless).
- The reality-check of an actor’s salary (I typically made between $300-500/week, but only when I was lucky enough to actually have an acting gig).
– And –
- The total unpredictability of irregular income. (I spent time in between acting gigs making ends meet as some combination of babysitter, personal assistant, tradeshow hostess and restaurant cashier).
Affording my dream life, both as an actor and an aspiring 90s sitcom heroine, seemed less and less likely.
Until I discovered personal finance.
Once I saw money as a tool for affording my dream life, rather than a limitation keeping me from it, I learned how to use personal finance to build that life, even with irregular income….
I Got REAL About What I NEEDED
I wasn’t going to be able to afford my dream life (stress and debt free) until I get real about what I actually needed.
So I dug down into the numbers and calculated what I now call my make or break number, comprised of three parts:
- My monthly bare bones budget total. The cumulative cost of my monthly expenses. Anything I needed to live and work normally – housing, food, insurance, transportation, etc.
- A bare bones budget buffer. A buffer of at least ten percent of my monthly bare bones budget total. (Because life is always more expensive than we plan for it to be).
- Monthly financial goal targets. Emergency savings, retirement, short and medium-term savings goals. I broke each financial goal into a manageable monthly mini-target and added it to my monthly bare bones total and my budget buffer to calculate my monthly make or break number.
Suddenly, I had a benchmark for the financial viability of my life. One that told me exactly how much money I needed to make each month (at a minimum) – to afford my life necessities and my financial priorities.
To figure out how much I could spend on the fun stuff, like “Central Perk” style lattes, I simply subtracted my make or break number from my previous months’ income – keeping me grounded in my actual means, rather than crossing my fingers and hoping I’d make enough money to afford my indulgences.
The only trouble was, I didn’t always make “enough.”
Sure, I had developed a great system for managing inconsistent income, but my income was rarely high enough to break even, let along afford the dream life. So…
I Got Bullish With My Earnings
When you find out your life is not financially viable, that is, your make or break number is greater than your monthly take home pay, you have two options, spend less (to reduce your make or break number), or earn more.
As you can probably tell by my Friends inspired fantasies, I wasn’t exactly itching to cut back any more than I already had, so, I turned my attention to the income side of the equation. After all, you can only cut back and save so much, but your potential for earning more is unlimited.
Unfortunately, as an actress in New York City, I had gotten stuck in the “starving artist” mindset, thinking my earnings were inherently limited because of my degree and experience (or lack thereof).
It took me a while to realize that the only limitations to my money making endeavors were my own, and that the permission to explore new income opportunities ultimately had to come from me.
It took me a while to realize that the only limitations to my money making endeavors were my own @stefanieoconnelClick To Tweet
Rather than limiting myself to traditional means of storytelling, like theater and television as I had been, I began applying my passion to new mediums – writing and speaking about the financial lessons I’d learned while trying to “make it” in New York City – eventually, giving me access to opportunities I never knew existed.
It turns out, I didn’t need to be confined to a stage and a script to connect with people and tell meaningful stories, just like someone who loves kids doesn’t have to limit their career prospects to babysitting.
By bringing my passion for storytelling to a market with actual demand, I was able to build a six-figure business that extended far beyond doing what I love, but also, afforded me a lifestyle I love.
Today, I admit, my income is still wildly inconsistent. As such, the lessons learned from my years as a struggling artist remain a foundation for my financial life – including the make or break number.
The only difference is now, I can afford to fund my financial priorities and monthly necessities, and still have plenty leftover for Saturday brunching with my girlfriends, and yes, even the occasional pair of pretty shoes. Just like Carrie Bradshaw.
Stefanie O’Connell is a millennial money expert, author and creator of the free Cash Confidence Challenge, helping women take ownership of their finances to afford a life they love! Follow along @stefanieoconnell
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