Krisstina Wise, CEO and founder of Krisstina.com and best-selling author of Falling For Money, took a long, difficult path to financial security, but today she feels confident about how she manages money and wants to empower others to take control of their finances.
Her philosophy on money is simple: You must become moneysavvy in order to live a good life. You must control your money so that it doesn't control you.
"I want to live a fulfilling, enjoyable, empowered life - now and in the future. I want to have fun, to enrich my time on this planet with wonderful experiences," Krisstina says. "Money is like gas in the tank of my car - without it, the journey wouldn't be possible."
Here she shares how she got over her emotional hang-ups and learned how to use money as a tool to fund a good life. Read on to learn how to start your journey.
Why do you think we have such a difficult time forming positive relationships with money?
The biggest impediment to getting educated and feeling confident about money is shame. The shame that we, as a society and particularly as women, feel about money keeps us silent. That silence keeps us locked into unhealthy habits, building up debt, worrying about retirement and failing to build the wealth we need to live the life we want.
Another serious impediment is something that isn't politically correct to talk about: We all have "feelings" about money, feelings that produce undesirable financial outcomes. I call it our money neurosis. We feel that money is a bad thing or that wanting it makes us a bad person. Most of this neurosis is inherited from our parents or our peers.
The most important first step to building a healthy relationship with money is to get comfortable talking about it. Then we can ask our questions, get the information we need and get empowered to build financial freedom. That's what I'm trying to do at Krisstina.com: create a safe space where people of all personal and economic backgrounds can feel great talking about money.
Can you tell us about some of the worst financial decisions you've made? Why do you think you made them?
My biggest mistake with money was to live a life I couldn't afford. I was a high-income poor person, earning six figures but spending more than I was making. I was trying to keep up with the Joneses - buying a big house, a better car, an extravagant vacation ... but not saving for my future or for the unexpected. Because I didn't think ahead, I soon found myself as a single mother with two children that I could barely feed.
I made this mistake because I didn't understand money. Although I studied accounting in college, it didn't prepare me to manage my money in the real world. The unhealthy attitudes and habits that I developed in my youth, combined with the financial folly of our society, had made me ill prepared to build true and lasting wealth.
I also wish that I had known about the wonders of compound interest when I was younger. To this day, I will always regret that I did not begin investing sooner. Although it's never too late to begin preparing for retirement, time is the most important ingredient when it comes to compound interest - and the sooner you get started, the more powerful (and fruitful) your investment will become.
What have you learned from these mistakes?
I made myself a promise: never again. I set myself on a course to become educated about personal finance. I studied under the industry's foremost experts, spent almost a decade and my every penny redefining my own relationship with money. I created my own signature budgeting system: Money Mapping. I used the system to build an incredibly wealthy, good life. And I want to help other men and women do the same, without having to suffer the same awful hardships or setbacks.
What spurred you to transform the way you view and fall in love with money?
The sad and stressful consequences I produced for my own life as a result of being ignorant and naive about money inspired me to take these important steps. I essentially had to hit rock bottom (financial despair) in order to realize that something was broken, which motivated me to take the steps to change it.
What were some of the most challenging aspects of this transformation?
The majority of the messages we receive about money are unhealthy messages. Our parents, the media, our friends ... everything tells us that we need to spend, spend, SPEND! We're programmed from a young age to have these unhealthy habits, so it can be painful and difficult to change them.
Also, building financial stability, security and wealth requires discipline - not only the discipline to spend less than you make, but also the discipline to keep up with weekly reconciliation and other smart financial practices necessary to be financially healthy. Discipline isn't easy - if it were, everyone would eat healthy, exercise daily and act responsibly.
What are your strategies for saving, spending, and investing?
The most important strategy I have for saving, spending and investing is to follow my budget. I use that word, "budget," but Money Mapping is actually much simpler and much more fun than the traditional budgeting you probably have in mind. It's the evolution of budgeting - with the emphasis where it really belongs: on living a good life and creating the wealth to get there.
What are the smartest habits we can get into when it comes to managing our money?
As I mentioned above, the best habit for managing money is Money Mapping. There are also a few other practices that have allowed me to achieve financial freedom:
- Reconciling every expense against my Money Map each month
- Having regular "money dates" with my husband to review our money flow and check in on how we are doing financially
- Continually filling my "buckets" to ensure I have enough savings to cover a rainy day, buy big ticket purchases like a car, and have enough cash set aside to cover me in the event that I lose my income
- Continuously learning about money so that I can improve my skills for managing it, growing it, and living a good life with it
What are your favorite money management tools and resources?
I'm working with a great tool, YNAB (You Need a Budget), to offer my Money Mapping system within a personal finance technology. My Money Mapping version of YNAB is a great way to get started on simple budgeting practices right now that can totally change your life.
Online banking is another great tool, offering automation so that 15 percent of gross income is being set aside in an investment account. You can also set up automatic sweeps to other accounts, such as moving money from your checking account into an "emergency fund" savings account.