Good Money Habits for Single Parents with the creator of “Distilled Dollar”: Part I

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Matt is a licensed CPA and founder of Distilled Dollar where he shares how he and his fiancée went from living paycheck-to-paycheck to building wealth. With his fiancée’s help, he’s distilling down $$$ topics in pursuit of financial independence by the age of 35.

Thanks so much for your time, Matt! Can you start by telling us about your background in finance and your experiences with Distilled Dollar?

Thanks for having me!

My journey in finance began when I picked up a biography on Warren Buffett. I was in the middle of business school and trying to answer the question, “How can this material help me today?” I did what most younger brothers do and leaned on advice from my older brother; he was the one who recommended the book.

Fast forward a few years—and a hundred books later—I felt completely immersed in the principles of personal finance, but I still had no idea how to implement what I had learned. After all, as a millennial, I was graduating college with over 40k in student loan debt. I felt like that one-legged man in an ass-kicking contest.

I graduated college, became a licensed CPA, and found a good job. Happy ending, right? Well, despite all that, I was still living paycheck to paycheck. Bit by bit, I slowly built up positive habits surrounding my finances and made incremental, one percent changes nearly every month. I didn’t beat myself up when I slipped up, and I always realigned my actions to what I believed.

My main belief here is that money should be a source of good in this world. It shouldn’t be something we dread to think about. Distilled Dollar was the result of my fiancée and I struggling with managing and combining our assets. When it came to money, it felt like someone had pressed the reset button when we started dating. Money became a huge stress again, for both of us. It took a good nine months to basically figure it all out. Now we’re emboldened by the confidence we gain from having a grip on our finances.

What experiences do you have working with single parents and their finances?

As a CPA, and even as a college student, I’ve helped with two different programs: VITA and LadderUp. Each organization is designed to help low-income households receive the financial tools and advice they need.

The biggest role I played within each group was preparing federal income tax returns. This meant sitting down with single parents, foreign exchange students, widows, and those with disabilities. From a numbers perspective, I was always able to find a refund or, at the very least, guarantee they had optimized their final tax bill. The much more difficult aspect was answering questions such as, “What should I do with this refund?”

As a CPA, it is easy to find people who automatically assume I have a grasp on personal finance. While I can talk all day about accounting, that doesn’t mean I fully understand everyone’s budgets and goals. This is a common trap people fall into when they trust someone who is presumably great with money. My story is just one example of going from paycheck to paycheck to eliminating financial stress and worry.

What are some of the main challenges facing single parents, in terms of finances and budgeting?

With so many responsibilities to juggle for single parents, it’s difficult to gain a foothold on personal finance. Luckily, the subject isn’t very complex, and much of that complexity is often used as a marketing ploy from banks or individuals. The basics of it are simple. If you don’t budget, then you should sign up for a free service that will track your spending for you. Mint.com offers a completely free budgeting tool and doesn’t even require a credit card to start their service.

The overall goal is to gain honest clarity as to where your money is going. Once we gain perspective, then we can start to plug the holes in our leaky bucket. This process of pulling back the curtain has led to the biggest gains financially, and it mostly came from money I had already earned but never kept.

What are your top 3 tips for single parents who are new to budgeting?

My first tip is that you should budget. Many people dismiss it because of the extra bit of work, but the truth is that people who budget have money. As I mentioned above, budgeting shows us the holes in our bucket that need to be patched up immediately.

My second tip is to start small. I’m all about one percent improvement, because for me that sticks. I’m not able to make drastic changes in my lifestyle overnight. If I do, then I know I’ll always snap back like a rubber band. Instead, try saving one percent of your paycheck for one month. Put the money in the bank, or if you’re dealing with credit card debt, put an extra one percent towards your debt this month. Next month, add another one percent. Over time, you will not notice the change in your lifestyle, but you will start to see the money growing.

My third tip is, know your “why.” Money you’re saving needs to have an emotional connection, or else we’ll just grab it and spend it. If that money can be used towards a child’s education for example, then all of a sudden it becomes more meaningful. Making that decision to save an extra one percent becomes even easier with an end result in mind.

I’m adding a fourth tip here, which is to automate as much as possible. We often become stressed from paying bills, so we decided to automate all of them. We know we’re paying them, but we don’t feel that ping of stress each time we click “pay,” since that is now done for us.

Check out Part II of our conversation with The Distilled Dollar!

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