Personal Finance 101

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Expand Your Income

Generally speaking, when you talk to someone about managing their money, eliminating debt and building up a savings then the 1^st thing to do is cut down on your expenses. I don’t think that anyone ever talks about working on ways to expand your income, making more money to achieve your financial goals.

For most people this is a tough proposition because they already work 50 hours a week, married and have a few kids to take care of at home. I understand what it’s like to be busy and working hard. I would want to suggest that you start small and build up over time.

Starting Point to Side Hustle

Find your passions
Research freelance work related to your passions
Pursue what you like the most
Start small and build in your free time

There are so many ways to make money now with the gig economy that you should definitely take part. You can do well in one skill and charge $25, $50, $100 or more for your skill. Give the marketplace what it wants and you will be rewarded without question. Think about having the ability to make an extra $500 dollars a month with a side hustle that you created yourself and brought to the marketplace.

This one added ability on top of your current job could change your life and your finances. So look around and see what you enjoy then find a way to provide this to people and you will have what you want.

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You Must Have a Strong Reason (Why?)

Why do you make certain decisions in your life? Do you make decisions for someone else, yourself or the betterment of your community? I ask you these questions because a strong and solid reason of why you do something will bring you through tough times.

Yes, this is a blog on personal finance so you must be wondering why I bring this subject up. Let me ask you this: The last time you accomplished something really important to you, did you have a strong reason that kept you on track? I’m sure that everyone will say yes, so that’s why I bring up this subject.

Reasons Why I Choose to Manage My Money

I will tell you my personal reasons why I choose to manage my money. My family did not know much about managing money and so they experienced bankruptcy and bad credit. Luckily my family came out of this and taught me the basics of saving and paying debt. I took this basic information and ran with it, reading as much as I could about understanding the way money works. So my 2 major reason that I choose to manage my money are:

Pay off all my debts
Earn the ability to drive my favorite car

First I want to pay off my student loan and credit card debts so that I can put that money back into my pocket every month. Secondly, I love cars and I want to drive my favorite car. I made a promise to myself that I wouldn’t get that car until I was debt free. That’s a very strong reason to continue on my path to being debt free.

So now it’s your time to think of reasons why you want to get you money in order. After you find a very strong reason then you repeat it to yourself everyday and this will stick in your head to keep you strong when you feel like buying something that you don’t need.

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Delayed Gratification

Can you be disciplined enough to make a plan and see it all the way through until the end? If you know anyone who has been successful at anything then you are looking at someone who delayed gratification. Gratification is a source of satisfaction and pleasure (Merriam-Webster). So delayed gratification means to slow down or wait to gain satisfaction or pleasure.

Example

Example 1	Example 2
Luxury Purse Cost = $500	Luxury Purse Cost = $500
Your Savings (Month 1) = $100	Your Savings (Month 1) = $100
Your Savings (Month 5) = $500	Credit Card Limit= $500

Analysis

In Example 1 you have someone who has made a decision that they want a luxury purse for $500 and they have $100 in savings. They decide to stay patient and save for 4 months in order to buy this purse, that’s delayed gratification.

In Example 2 there is the same decision to buy the luxury purse, but shortly after looking at their savings account, they realized that they couldn’t buy the purse yet. After looking in their wallet and finding the credit card with a $500 dollar limit, the card is swiped that day and they take home the luxury purse. This is instant gratification and something that should be avoided.

Looking at the bigger picture is key, look down the line and in the future to see how one action will affect another. I personally delay gratification because I want a big savings account, debts paid and a lot of free flowing money. Find your reason and focus on sticking to it.

Thanks a lot for reading my blog, like or comment if you want your voice heard. Have a good one.

5 Ways to Increase your Savings Account

Saving is something this commonly talked about by almost everyone but nobody actually does it for various reasons. I’m here to say that it is easier than you think; I personally did give myself excuses of why I couldn’t save and believed them for a while. One day I decided to start saving because I was tired of not having enough money to fall back on financially. I was speaking with my Financial Advisor and I took a chance and told her to start taking out $50 a month and doing this for 8 months consistently changed my life. After the 8 months, I took over the savings and started saving as much as I could a week because I knew my future self would thank me.

Keys to Start Saving

Automate the process
Start small ($5 to $10 a month/week)
Be consistent
Have long term mindset
Do it for the betterment of yourself

You should have the money come from your account automatically so you can’t decide not to do it just because you had a bad day.
Starting with a very small amount will slowly allow you to see that saving money can be a painless process and you can raise the savings amount as you see fit.
Saving every week or every month, even if it’s a small amount will mentally put you in place were you expect to save and it becomes natural.
Saving is a long-term process to grow money for whatever you will need in the future without going into debt to do it.
Save to better you in the long run, there aren’t many people who can get a loan from themselves if things don’t go well financially. Self-reliance is the goal here and you should strive for it.

Thanks a lot for reading my blog, like or comment if you want your voice heard. Have a good one.

Budgeting: Should you do it?

The foundation for money management is the establishment of a budget. Now budget is the last word most people want to hear because it’s synonymous with the word diet. Normally a diet or budget is built in order to limit things that you like in order to gain in the long run. I’m not asking you to do this.

I want you to do a few simple things that will change your financial life forever:

Figure out how much money you make every month
Find out how much money you spend every month
Subtract the two and find that number

Examples

Example 1:

Monthly Income – Monthly Expenses = Positive Cash Flow

$4000- $3000 = $ 1000 (Positive Cash Flow)

Example 2:

Monthly Income – Monthly Expenses = Negative Cash Flow

$4000- $4500 = -$500 (Negative Cash Flow)

Analysis

As you can see in the 1^st example there is a good amount of left over cash after expenses has been paid, this is amazing because most people don’t have this much money left over at the end of the month. Unfortunately in the 2^nd example this person has a negative cash flow because they spend more than what they make. Commonly this is due to them spending all of their paycheck and then putting an extra $500 they don’t have on a credit card.

In conclusion, the key to an understanding of your finances is to know how much you make and how much you spend every month. From this position you can decide if you want to make adjustments or leave things as they are.

Thanks a lot for reading my blog, like or comment if you want your voice heard. Have a good one.