TODAY

TODAY   |  September 10, 2013

How to have financial freedom at any salary

Author Kate Northup shares ways for people to not only make intelligent budgeting decisions, but also ensure that their money counts toward the things that matter most to them.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> this morning on today's money, whether you're financially secure or deep in debt, money is always a big source of stress.

>> it doesn't have to be. especially if you pay attention to how you feel every time you spend. she is the author of a new book, money, a love story . good to see you.

>> good to see you, hey.

>> you're book is about gaining financial freedom .

>> it is. emotionally and practically. it's having your income greater than your living expenses and feeling good about your money. we have to deal with money every day so why not have a good relationship with it.

>> you at one point were $20,000 in debt.

>> was.

>> how did you dig your way out?

>> through getting real about my living expenses and income and proceeding to add more value to the world in order to increase my income which is the best way because money is just a stand in for what we value. if we add value to more people's lives our income will increase.

>> sometimes people feel badly about spending. and you have three tips and i love this first one. it says spend money on what you truly value. not on what you think you should have.

>> absolutely. you'll get more emotional bang for your buck if you spend money on what you value which requires identifying what you value. maybe your values are community, health and adventure. if you look at your spending and orient it in alignment with those things you'll feel good about your spending as opposed to spending on things your mom want to have or keeping up with the joness.

>> you spend less in the process.

>> if you're spending with your values you can spend less and still feel good about it.

>> people watching this say emotional value is great but i have to pay my rent this month. how does the emotional value connect to making more money.

>> great question. your emotional value is really important because being grateful for the fact that you can pay your rent. that's a value, being able to pay for your living expenses and have a roof over your head. so getting tied into i'm grateful that i can actually write that check to my land lord and thank you for the electricity that i can flip on every day.

>> you also talk about having a savings account but a money for me account.

>> yes. so when it comes to spending less money, it often feels like deprivation but if you create a money for me account, what you can do is every time you save money and you decide not to spend the money, you can put it in your money for me account or when you negotiate for a lower rate on your credit card or when you get unexpected income. you get to pay yourself. so you're sort of rewiring yourself to say this money is for me. i'm paying myself instead of nordstrom or whoever else might have gotten the money in the past.

>> is that okay in the marriage to have the side account for yourself?

>> you can name it a money for us account if you're in a marriage.

>> just money for me.

>> don't keep a phantom account. i'm asking for a friend.

>> obviously.

>> a friend.

>> christina's not watching. she is with the kids hopefully. listen to your body when it comes to your spending habits.

>> this is one you won't find in other personal finances books. what it is is our body -- you know how you get the gut feeling like it will get tense and tight. when you look back and go through your credit card bill, feel into each expenditure and whether your body felt expanses when you spent that money or contracted. when you look at your money in the coming times check in for that as well and you'll be able to make smarter spending decisions.

>> different ways to think about