Image by: By Steven DePolo
By Richard K. Noots
So, you’ve been watching TV a lot lately, and you noticed something. People who invest money don’t seem to have a care in the world! No one ever talks about how they might get their power shut off while simultaneously putting money on the DOW. Instead, their woes are more esoteric. They’re financial worries are more broad, and with larger denominations to worry about.
How can you there? It’s easy! All you need is a little financial security. I know, it doesn’t scream like this is an easy project, but it is. Getting your finances in order is much easier than people let themselves think. Usually people would rather get an accountant or just pray that they have enough money to last to the end of the week. If you are one of those people, your life is about to change.
#1) The Trick to Finances
Saving money isn’t hard. I promise! Even if your paychecks make you envious of slave labor, you can turn it around. You don’t even need Gordon Ramsey. The first step is to figure out how much you have coming in on a monthly basis. For most people it’s just paychecks, but other people may have stipends, grants, military money or what else that they can also take into account.
Next, find out how much money goes out. No, not every little thing you buy. That would take too long and you probably waste too much money on things you don’t need anyway. So, you want to figure out your necessities. These are the things that keep you alive. Electricity (and gas if you have it), rent, water and trash are the main ones. In today’s fast-paced world, you can usually include internet and gas prices/vehicle insurance (or estimate how much you spend on public transportation). Most importantly, include food. Always give your food budget an extra 15 or 20% increase from what you think you’ll spend, trust me.
#2) Figuring out where it all goes.
So now that you have A: what you’re earning, and B: what you’re spending, you have a difference that you can play with (hopefully!). If not, perhaps consider a second job. With the left over money, you’ll probably want to pay your other bills, like credit cards and student loans, whichever apply. You also want to start putting some money in savings, so you can build yourself what’s called a safety net.
Ideally, you want to have over three times your monthly earnings in the bank in case something bad happens. You’ll also want to pay off your secondary bills, especially if they’re accruing interest. No, you don’t need a debt consolidator, you just need to pay off which ever bill has the most interest, and work your way down. This is what you’re extra money will go to. Not new TVs, not Cable, not anything but savings and bills. Of course, if you have kids or you’re just going insane from having nothing for yourself, budget that stuff in as well. Just remember the order of how your money should go.
1: Necessities (Food, shelter, getting to work)
2: Savings and Bills (roughly 1/3rd or 1/4th should go into savings, and the rest goes to those godforsaken bills).
#3) It can’t be that easy!
Actually, it is. All those financial aide people you see, debt consultants, accountants and whoever else do the exact same thing. Moreover, they’ll give you this exact same advice. The real trick to not have debt is to not accrue it in the first place with things like Credit Cards or loans. Those are reason numero uno America has a spending problem.
Of course, on paper it is always easier said then done. However, all this is supposed to do is give you a template from where to start. Once you have this accomplished, you will be more financially successful than over eighty percent of the world. That’s no exaggeration either. With this done, and as long as you can keep it steady, you will have the power to invest and take risks like the big shots. The reason you’ll be successful is because you now know how to keep your ducks in a row, just like those in the big leagues.
What financial advice have you received over the years? Was it helpful, or detrimental? Give us all the juicy details, and if we missed something we may just add your solution here!