Money, travel, and life
Happy New Year. With a new year comes new resolutions and new opportunities to achieve the things we didn’t last year. Aside from getting in shape, having more money is a common new year resolution for many people. But achieving this goal isn’t always easy, and it requires careful planning and consistent effort. Here are 6 things you can do this year to increase your chances of having more money next year!
The Richest Man in Babylon by George S. Clason is a classic book that explores the principles of personal finance and wealth building. The book is set in the ancient city of Babylon and tells the story of the city’s wealthiest man, Arkad, who shares his wisdom on money and success with a group of young men. Here are the main lessons from the book.
The Psychology of Money: Timeless lessons on wealth, greed, and happiness by Morgan Housel is a book that explores the psychological and emotional factors that drive our relationship with money. The author, Morgan Housel, offers timeless lessons on wealth, greed, and happiness, drawing on a wide range of historical and contemporary examples to illustrate his points. Some key points from the book include:
An envelope system is a personal finance management tool that helps you keep track of your income and expenses. It’s basically a budgeting technique where you give each expense category a fixed monthly amount of money, called an “envelope,” from which to spend. Interestingly, I found out that my parents used this system early on in their marriage to manage their money. So, I figured I’d share what the envelope budget is and how you can use it to save money.
What’s your financial silver lining in the time of the coronavirus? The COVID-19 global pandemic caused the world to quarantine and businesses to shutdown affecting billions of people around the world. People’s lives have been upended, put on pause, and completely thrown into disarray. Now, is the time to take a moment to review your finances, where you’re spending money, and how to protect yourself for the future. When it comes to money and finances, there are three possible scenarios.
The 3 envelope budgeting system is a simple way to spend less money on those troublesome categories where you tend to overspend. By using this simple money trick, you can save more cash and have enough money to pay for the things you really want. If budgeting isn’t your thing, use this simple 3 envelope budgeting system to control your spending and save more.
Other than having a job and earning money, the most critical thing you can do to improve your finances is to have (and stick to) a written budget. A budget is so fundamentally important to life that it should be taught in school. Unfortunately, how to manage money isn’t taught in school enough. So, I want to help people get started on their first budget by showing how to use the 3 envelope budgeting system. Your first budget doesn’t have to be complicated. All it takes is 3 envelopes, a pen, cash, and a little thought.
Have you ever had an unexpected bill set you back and make you go deeper into debt? Those new tires set you back $400. That trip to the doc cost $800! Or that time your electric bill doubled in one month! It happens to all of us. So, what’s the best way to deal with an unexpected expense? A buffer month of money has prevented me from going into debt, and it could help you too.
A buffer is something that protects you from bad things. It’s something that stands between you and trouble. Money is a cause for trouble in almost everybody’s life (sooner or later). A money buffer stands between you and money stress.
Having a money buffer means that you have a month’s worth of paychecks already in your bank account ready to pay for this month’s expenses. This means you’re paying for July’s bills using June’s paychecks. If that sounds backwards, it’s not. It’s forward-thinking, and if you build this buffer, your life will be so much less stressful.
It doesn’t matter when any of your bills are taken from your account. A buffer month means the money will be there ready to pay all of them. And if your paycheck comes a day or two late because of some holiday, or some mistake by the HR department, it won’t affect you. Because this month’s paycheck is going to hang out in your account to pay for next month’s bills!
Dave Ramsey is a genius when it comes to inspiring people with common sense to get out of debt and to live within their means. He gets a fair bit of criticism on his investing advice though. Dave recommends people spread their investments across four types of mutual funds:
Enthusiastic readers and listeners probably run off to Google to find these 4 mutual fund investments to invest like Dave and build wealth. But the answers are hidden – and followers end up having to contact an investing ELP (endorsed local providers) SmartVestor Pro that follows Dave’s rules (and pays for his endorsement).
Dave purposely shies away from giving specific investment advice to his listeners. Part of it probably has to do with the rules and regulations around giving investment advice, and part of it is probably because he’s honed his message for simplicity and maximum effect. The problem is: many debt-free followers are left wondering where to invest their retirement or extra money. I’m no ELP SmartVestor Pro, but let me help fill-in where Dave has left off when it comes to investing in mutual funds for maximum efficiency.
Do-it-yourself or DIY investing has never been easier. If you have access to the internet and aren’t afraid of technology, then you’ve got a chance to earn money on your savings like the 1% (buzz word for the super wealthy). In this multi-part series I’m going to show you how to invest in stocks, bonds, and index funds the easy way so that you can get your money earning more money. Here’s what you need to know before you start DIY investing.
First of all, you need to be out of debt except for a possible mortgage on your house. If you have any debt (credit card, personal loans, student loans), you need to take the money you’ve saved and pay that off first. It’s a guaranteed return on your money. What does that mean? If your credit card interest rate is 14.99%, whatever you pay off on that card, you’re essentially earning 14.99% back by not having to pay that interest. Debt is negative interest on your money. Paying it off is a guaranteed return. Even a 4% guaranteed return is better than trying to cover that debt by earning more in the market. Pay off your debts first.
The easy way to beat 90% of professional investors is to invest that money in low cost index funds through ETF’s. That’s it. That’s all you need to know. It took me 10 years to learn this, but when I figured it out and back tested it, I laughed at how obvious and simple it is. Then I wondered why no one was teaching this. This should be taught in middle school and retaught in high school. So I vigorously scoured the internet and sure enough, tons of intelligent, respectable advisors and financial magazines tout the benefits of index investing and how professional fund managers don’t “beat the market”. And when professional investors say don’t “beat the market”, the market = index funds. It all seems so obvious, yet for some reason it’s not. So I’m here to bring the obvious to light. It’s index funds all day long, baby. Follow this advice and you’ll be earning money like those wealthy 1% who pay less tax than you. If you can’t beat ’em, invest in them!
Proof is in the pudding – Had Mr. Trump invested in index funds (instead of real estate), he’d be twice as rich. Sucker!