Introduction
Money can be a source of stress and anxiety for many people. Whether you're struggling with debt, living paycheck to paycheck, or simply feeling overwhelmed by financial decisions, it's easy to feel like you'll never get ahead. But financial expert Tiffany Aliche is here to tell you that financial wholeness is within your reach, no matter your current situation.
In her book "Get Good with Money," Aliche shares her personal journey from financial disaster to success, along with a practical 10-step plan to achieve financial wholeness. As a former preschool teacher who lost everything in the 2008 recession, Aliche knows firsthand how quickly your financial situation can change. But she also discovered that with the right mindset and strategies, anyone can take control of their finances and build a secure future.
Aliche's approach focuses on financial wholeness rather than get-rich-quick schemes or overly complex money management techniques. Her ten principles are accessible and actionable for people at any income level or stage of life. By following her guidance, you'll learn how to budget effectively, save strategically, tackle debt, boost your credit score, increase your income, invest for the future, and more.
Let's dive into Aliche's ten steps to financial wholeness and explore how you can transform your relationship with money.
Step 1: Develop a Healthy Money Mindset
Before you can make lasting changes to your financial habits, you need to examine and shift your mindset around money. Many of us carry emotional baggage or limiting beliefs about finances that hold us back from success. Aliche encourages readers to do some self-reflection to identify their money influences and patterns.
Start by thinking about where your attitudes toward money come from. Were you raised in a household that was always stressed about bills? Did your parents teach you to save diligently or spend freely? Consider how your upbringing and experiences have shaped your current financial behaviors. Write down your money habits and try to pinpoint their origins.
Next, work on establishing a positive "financial voice" - an empowered mindset that sees you as the boss of your money. Instead of feeling like you have to work hard for money, shift to making your money work for you. Visualize a version of yourself who is great with money and embody that confidence.
Practicing gratitude is another key part of a healthy money mindset. While more money can make life easier, it won't necessarily make you happier beyond a certain point. As you work to improve your finances, find reasons to be grateful for what you already have. Create a daily gratitude practice to maintain a positive outlook.
It's also important to surround yourself with people who will support your financial goals. Take stock of the influences in your life - do your friends and family encourage good money habits or lead you astray? Seek out positive role models and accountability partners who will lift you up.
Finally, remember that you have the power within you to create financial abundance. Your current circumstances don't define you or limit your potential. With the right mindset, you can overcome obstacles and achieve your goals.
Step 2: Create a Budget That Works
A solid budget is the foundation of financial wholeness. But for many people, the idea of budgeting feels restrictive or overwhelming. Aliche reframes budgeting as a "say yes plan" that allows you to pursue your dreams and priorities.
To create an effective budget, start by getting clear on your current financial situation. Make a detailed list of all your income sources, no matter how small. Then track your expenses for at least a month, writing down every purchase. Be as specific as possible and try not to judge your spending habits at this stage - you're just gathering data.
Once you have a clear picture of your money coming in and going out, it's time to categorize your expenses. Aliche recommends using three main categories:
- B: Bills (fixed expenses like rent or car payments)
- UB: Utility Bills (variable but necessary expenses like electricity)
- C: Cash Expenses (discretionary spending like entertainment or clothing)
Look at which category is taking up the biggest chunk of your income. If most of your money is going to B and UB expenses, you may need to focus on increasing your income. If C expenses are eating up your budget, you likely have a spending problem to address.
Next, work on reducing expenses where possible. Start with the C category since those are easiest to control. Can you cut back on dining out, cancel unused subscriptions, or find free entertainment options? Look for areas to trim without completely depriving yourself.
To implement your budget, Aliche recommends setting up separate accounts:
- Two checking accounts: one for bills and one for cash expenses
- Two savings accounts: one for emergencies and one for long-term goals
Automate as many of your bill payments and savings transfers as possible. This removes the chance of human error and makes it easier to stick to your plan.
Remember, a good budget is flexible and aligned with your values. It should empower you to spend on what matters most while building financial security. Revisit and adjust your budget regularly as your income and goals change.
Step 3: Save Like a Squirrel
Saving money is a crucial habit for achieving financial wholeness. Aliche uses the analogy of a squirrel to illustrate smart saving behavior. Just as squirrels gather and store acorns during times of plenty to prepare for winter, we should save consistently to build a financial cushion.
The first step is shifting your mindset from "saving to spend" to "saving to make money." Instead of setting aside cash for a specific purchase, focus on building wealth through savings and investments. The more you save, the more opportunities you create for your money to grow.
Aliche recommends having two main types of savings goals:
Emergency savings: Aim to save at least 3 months of living expenses for unexpected events or job loss. This provides peace of mind and financial stability.
Personal savings goals: These could include things like a down payment on a house, a dream vacation, or starting a business.
To boost your savings, start by determining your "noodle budget" - the bare minimum you need to survive each month. This helps you identify areas where you can potentially cut back, even if only temporarily. Look for ways to reduce expenses like cooking at home more, doing your own personal care, and finding free entertainment options.
Practice mindful spending by asking yourself four questions before making a purchase:
- Do I need it?
- Do I love it?
- Do I like it?
- Do I want it?
Try to shift your spending away from "likes" and "wants" toward genuine needs and things you truly love. This helps prioritize your savings goals.
Set up automatic transfers to your savings accounts each month. Treat your savings goals as non-negotiable expenses in your budget. Look for high-yield savings accounts that will help your money grow faster while keeping it accessible for emergencies.
Remember, even small amounts add up over time. Don't get discouraged if you can only save a little at first. The most important thing is to start the habit and be consistent.
Step 4: Tackle Debt and Boost Your Credit Score
Debt can feel like a heavy burden, but it doesn't have to define you. Aliche encourages readers to shift their language around debt. Instead of saying "I'm in debt," say "I have a debt to pay." This subtle change helps you see debt as a temporary situation rather than a fixed state of being.
To start tackling your debt, make a comprehensive list of everything you owe, including amounts, interest rates, and due dates. Then choose a repayment strategy that works for you. Aliche presents two main options:
The Snowball Method: Pay off your smallest debts first for quick wins and motivation.
The Avalanche Method: Focus on paying off the highest interest debts first to save money in the long run.
You can also combine these approaches, knocking out a few small debts for momentum before tackling larger, high-interest debts. The key is to choose a strategy you can stick with consistently.
While becoming debt-free is an important goal, Aliche cautions against making it your sole focus. It's just one piece of your overall financial picture.
Equally important is boosting your credit score, which impacts your ability to access favorable loan terms and interest rates. In the US, aim for a score of 740 or higher for the best benefits.
To improve your credit score:
Focus on payment history: Pay all bills on time, every time. This is the biggest factor in your score.
Keep credit utilization low: Try to use less than 30% of your available credit limit.
Don't close old accounts: Length of credit history matters, so keep older accounts open even if you don't use them often.
Limit new credit applications: Too many hard inquiries can temporarily lower your score.
Check your credit report regularly: Look for errors and dispute any inaccuracies.
Remember that improving your credit score takes time, but the long-term benefits are worth the effort. A good credit score can save you thousands of dollars in interest over your lifetime.
Step 5: Increase Your Income
While reducing expenses is important, there's a limit to how much you can cut. To really accelerate your financial progress, focus on increasing your income. Aliche reminds readers that they are the "goose that lays golden eggs" - capable of generating wealth through their skills and efforts.
There are two main approaches to boosting your income:
- Upgrade your current earnings
- Develop a side hustle
To increase earnings from your primary job:
Ask for a raise: Prepare a "brag book" documenting your accomplishments and value to the company. Practice your pitch and time it strategically.
Expand your skills: Look for opportunities to learn new skills that make you more valuable to your employer or marketable in your industry.
Job hunt: If your current employer won't recognize your worth, look elsewhere. Apply for positions even if you don't meet 100% of the qualifications - men often do this, and women should too!
For developing a side hustle:
Identify your skills: What are you good at? What do others compliment you on?
Brainstorm monetization options: How can you turn your skills into a service or product people will pay for?
Set a specific income goal: Start with something achievable like $500/month extra.
Take action: Start small and build momentum. Tell people about your services and look for opportunities to help solve problems.
Aliche shares her own experience of starting as a preschool teacher who babysat and tutored on the side. This eventually led to helping friends with budgeting, which grew into her current career as "The Budgetnista."
Remember that increasing your income isn't just about making more money - it's about creating more opportunities and security for yourself. Even a small boost in earnings can make a big difference when combined with smart budgeting and saving habits.
Step 6: Invest for Retirement and Wealth
Once you've established a solid financial foundation, it's time to focus on growing your wealth through investing. Aliche emphasizes that investing isn't just for the wealthy - anyone can start small and build over time.
The power of investing comes from compound interest, where your money earns returns, and then those returns generate more returns. This creates exponential growth over the long term.
Aliche recommends focusing on two main types of investing:
- Retirement investing
- Wealth-building investing
For retirement, start by calculating how much you'll need. A general rule of thumb is to multiply your annual expenses by 25. This gives you a target amount that should last indefinitely if you follow the 4% withdrawal rule in retirement.
Aim to invest 20% of your income for retirement through vehicles like:
- 401(k) plans offered by your employer (especially if they offer matching contributions)
- Individual Retirement Accounts (IRAs)
- Roth IRAs (which offer tax-free growth)
For most people, a mix of stocks (for growth) and bonds (for stability) is appropriate. As you get closer to retirement age, you can shift to a more conservative allocation.
Once you're on track with retirement savings, you can focus on additional wealth-building investments. This might include:
- Individual stocks
- Mutual funds
- Exchange-Traded Funds (ETFs)
- Real estate
Determine how much you can afford to invest each month after covering your expenses, savings, and retirement contributions. Then decide if you want to be an active or passive investor:
Active investing involves researching and selecting individual stocks or assets. It requires more time and carries more risk, but can potentially yield higher returns.
Passive investing uses vehicles like index funds that track the overall market. It's lower maintenance and generally less risky.
If you're new to investing, start small to build the habit. Even $5 a month is a good beginning. As your income grows and you become more comfortable, you can increase your investments.
Remember that investing always carries some level of risk. Do your research, diversify your portfolio, and consider working with a financial advisor if you need guidance.
Step 7: Get Good with Insurance
Insurance is a crucial but often overlooked aspect of financial wholeness. While it may feel like an unnecessary expense when times are good, having the right insurance coverage can protect you from financial ruin in times of crisis.
Aliche recommends prioritizing these types of insurance:
Health insurance: This should be your top priority. If your employer doesn't offer coverage, explore options through healthcare.gov or a private marketplace.
Life insurance: If you have dependents or significant debt, consider a policy that covers at least 10 times your annual income. Term life insurance is usually the most affordable option.
Disability insurance: This protects your income if you become unable to work due to illness or injury. Many employers offer short-term disability, but you may want to consider additional long-term coverage.
Property and casualty insurance: This includes things like homeowners/renters insurance and auto insurance. Make sure you have adequate coverage to protect your assets.
Umbrella insurance: For additional liability protection beyond what your other policies cover.
When shopping for insurance:
- Compare quotes from multiple providers
- Look for bundling discounts if you need multiple types of coverage
- Review your policies annually to ensure they still meet your needs
- Consider raising deductibles to lower premiums, but make sure you can afford the higher out-of-pocket cost if needed
Remember that insurance is about managing risk. While you hope to never need it, having proper coverage provides peace of mind and financial protection.
Step 8: Increase Your Net Worth
Your net worth is a key indicator of your overall financial health. It's calculated by subtracting your liabilities (what you owe) from your assets (what you own). Aliche refers to improving your net worth as getting "richish" - building wealth steadily over time.
To calculate your current net worth:
Assets:
- Cash and savings
- Investments
- Real estate equity
- Valuable possessions
Liabilities:
- Mortgage balance
- Car loans
- Student loans
- Credit card debt
- Other outstanding debts
Don't judge yourself based on the number you come up with. Instead, use it as a starting point to set goals for improvement. Aim to increase your net worth by a specific amount over the next 1-2 years.
Strategies for boosting your net worth:
Increase your assets:
- Build your savings
- Invest for growth
- Pay down your mortgage
- Acquire assets that appreciate in value
Decrease your liabilities:
- Pay off high-interest debt
- Avoid taking on new debt
- Refinance existing loans to lower interest rates
Increase your income and invest the difference
Reduce expenses and redirect savings to wealth-building
Track your net worth every 6-12 months to monitor your progress. Celebrate improvements, no matter how small, and adjust your strategy as needed.
When making financial decisions, always consider the impact on your net worth. For example, paying cash for large purchases instead of financing them can help you avoid interest and build equity faster.
Remember that building wealth is a gradual process. Stay consistent with your efforts and trust that small actions will compound over time to create significant results.
Step 9: Build Your Money Team
Achieving financial wholeness isn't a solo journey. Aliche emphasizes the importance of building a "money team" - a group of professionals and supporters who can guide and encourage you along the way.
Your money team might include:
Financial educator or coach: Someone who can teach you money basics and help you develop good habits.
Accountability partner: A friend, family member, or peer group focused on financial growth.
Accountant: For help with taxes and overall financial planning, especially if you're self-employed or have complex finances.
Attorney: To assist with estate planning, contracts, or other legal matters.
Financial planner: For comprehensive guidance on investments, retirement planning, and long-term financial strategy.
Insurance broker: To help you navigate different insurance options and find the best coverage.
The specific professionals you need will depend on your individual situation and goals. If you're just starting out, you might only need an accountability partner and some educational resources. As your finances become more complex, you can add team members as needed.
When choosing professionals for your money team:
- Look for credentials and experience in their field
- Check reviews and ask for referrals from trusted sources
- Ensure they communicate clearly and make you feel comfortable
- Understand their fee structure and what services are included
Your money team should empower and educate you, not make you feel inferior or pressured into decisions you don't understand. Don't be afraid to switch professionals if you're not getting the support you need.
Remember that you are the CEO of your financial life. Your money team is there to advise and support you, but ultimately the decisions are yours to make.
Step 10: Leave a Legacy
The final step in Aliche's financial wholeness plan is creating an estate plan. While it can be uncomfortable to think about, planning for what happens after you're gone is an important part of financial responsibility.
Estate planning isn't just for the wealthy - everyone should have basic documents in place to protect their assets and loved ones. Aliche recommends tackling this step-by-step over several months:
Identify beneficiaries: Decide who will receive your assets when you pass away. This includes money, property, and personal belongings.
Choose guardians: If you have minor children, designate who will care for them if something happens to you.
Create a will: This legal document outlines how you want your assets distributed. You can work with an attorney or use online tools for basic wills.
Set up advance directives: These include:
- Living will: Specifies your wishes for end-of-life medical care
- Healthcare power of attorney: Designates someone to make medical decisions if you're incapacitated
- Financial power of attorney: Allows someone to manage your finances if you're unable to
Consider a trust: This can help your assets avoid probate and potentially reduce estate taxes.
Review beneficiary designations: Ensure your life insurance and retirement accounts have up-to-date beneficiaries listed.
Document important information: Create a file with account information, passwords, and other crucial details your loved ones might need.
Plan for long-term care: Consider how you'll handle potential needs for assisted living or nursing care in the future.
Review and update your estate plan regularly, especially after major life events like marriage, divorce, or the birth of a child.
By creating a comprehensive estate plan, you ensure that your hard-earned financial progress will benefit your loved ones and causes you care about, even after you're gone.
Conclusion
Tiffany Aliche's ten steps to financial wholeness provide a comprehensive roadmap for taking control of your money and building a secure future. By following her guidance, you can:
- Develop a positive money mindset
- Create a workable budget
- Build robust savings
- Tackle debt and improve your credit
- Increase your income
- Invest for retirement and wealth
- Protect yourself with proper insurance
- Grow your net worth
- Build a supportive money team
- Leave a lasting legacy
Remember that financial wholeness is a journey, not a destination. Your specific goals and challenges may change over time, but these core principles will help you navigate any financial situation.
Start where you are, celebrate small wins, and be patient with yourself as you build new habits. With consistency and dedication, you can transform your relationship with money and create the financial future you desire.
Aliche's approachable style and practical advice make financial wellness feel achievable for anyone, regardless of their starting point. By getting good with money, you open up possibilities not just for yourself, but for generations to come.
So take that first step today. Whether it's tracking your expenses, opening a savings account, or simply writing down your financial goals, every positive action moves you closer to financial wholeness. You have the power to change your financial story - it's time to start writing the next chapter.