Thursday May 31, 2018
Let me prelude this with a statement of, I AM NOT A FINANCIAL EXPERT NOR A FINANCIAL ADVISER. I just have a basic grasp of being financially disciplined and have a few tips to share.
Some things I’ll give my two cents on are building a budget, bank accounts, credit cards and saving money, retirement and the hustle (apparently its not “hussle”).
First things things…
BUILDING A BUDGET
It has to be done. Don’t be scared. It’s easy. Here are the steps:
- Add all of your monthly expenses (rent, utilities, car loan, student loan, insurance, gym, etc.). Anything you pay monthly. Add it up.
- Add all of your weekly expenses (gas, grocery store, eating out, going out to the bar). Anything you do weekly. Add it up.
- Take your weekly expenses and multiply it by 4.2x. (There’s roughly 4.2 weeks in a month)
- Add step 1 and 3 together. This number HAS to be less than the money you earn. IF IT IS NOT, then you are constantly in debt and need to restructure your loans and analyze your expenses to reduce them.
- Ideally, you will have money left aside to save and accrue. But TA-DA. There’s your basic budget
See. Easy. That’s the most rudimentary way to make a budget. There are no less than a million budget posts/blogs online, so I’m not going to dive deep into it. The resources are out there.
Your bank account is crazy important. Unless you only operate with cash, then skip this section… but I don’t think that’s most people.
As far as banks ago, I’m not going to suggest any bank over another, all I would recommend is having 2… count ’em 2! bank accounts. Have your normal checking and savings account at your bank, but open a second savings account at a different bank. Use it solely to save money, and don’t touch it.
If you have direct deposit, ask that your check be split into both accounts. If you get a hard check, deposit it yourself. The key is to deposit enough money in each paycheck to cover your monthly expenses from step 1. Each paycheck I split my direct deposit to cover all of my bills plus an extra $250 a month for general savings purposes. THEN I set up all my bills and loans for auto withdrawal from this bank account. Now, I never have to worry about paying a bill, my bank account has enough money to pay them, and is automatically deposited with the funds. My only priority now is the money in my normal checking account.
It takes a ton of hassle and headache out of trying to balance monthly bills alongside Stop & Shop and the bar tabs.
Scary… Scary, scary, scary. The mean, tricky credit cards… which actually are really helpful. JUST BE DISCIPLINED!
Apply for a credit card. Do your own research, and find the one with a rewards system that suits you. Do you like travel or just points? Now, USE THE CREDIT CARD! But be smart. I pay my card of weekly so that I do not get behind on payments. You read that correctly. I PAY MY CREDIT CARD OFF WEEKLY! Its a great way to build your credit score. If you ever want to buy a new car or house, you will likely need to prove you are responsible with the banks money, and this is how you do it.
Just be smart. Credit cards aren’t scary. But it is super easy to fall behind and dig yourself into a hold.
Save money. Future you will thank present you.
I add extra money to my direct deposit for my bills so I save an extra $250/mo. That’s $3,000 a year! I also save all of my credit card points. I’ll use it for a vacation in a few years.
Saving your money is crucial. What happens if your car breaks down? If you lose your job? The economy is bound to tank again. Will you be safe? Rule of thumb is anywhere from 3-6 months earning should be in a savings account for if shit hits the fan. That’s a ton of money. But start slow and you’ll get there. Just be findful, set a budget and figure out what you can afford to save and do it. Again its all discipline.
Who doesn’t want to retire.
Me? I want to retire before I’m 55. That’s really aggressive. But that is why I am being disciplined now. I want to relax when I get older and right now I’m young and have enough ambition AND DISCIPLINE to be smart financially. I am saving money each month and even building my 401(k). If you don’t have one, then get one! Whether its through your employer or your own through a financial institute. GET ONE! It is the most basic way to save money long term for retirement. And if it is through an employer they often do a percentage match. Make sure, please, if your employer does a 401k match. Take full advantage of it, because it is quite literally free money..
Don’t be afraid to get a second job. Even if its part time and a just a couple bucks. They add up. I work my main job 50+ hours a week and just picked up a second job. Because I can! I wan’t the money and if I’m disciplined enough to save and have a side hustle, then I will be financially free to have fun in this life and when I retire.
So there is a ton more in depth, properly cited, peer reviewed scholarly articles on-line explaining everything I just said… And that’s fine. Go read them. I encourage everyone to do there own research. Just understand that no matter what cards you’ve been dealt. You can impact your future and plan to make yourself financially free. All it takes is some DISCIPLINE! (are you finding a common topic here?)
Set your goal for what you want and when you want to retire. Now just do it. Its that simple. Just. Do it.
If anyone reads this – thank you.
I hope you can take something away from this and help yourself to financially free. Your mind and willpower is so much stronger than you give it credit. Forget what your peers are doing and set out to do what is best for you. What makes you happy. Find it, chase it, and never stop.