A Personal finance blog to get rich
So you are making a decent income currently but you need some extra money to go on a vacation or you need to start saving $20,000 to add to your son’s college fund. How do you proceed with this plan in the most effective manner possible?
Good question. I have been put into this position within the last 3 years. Then I found out that my family’s expenses were far above the income from stocks and oil properties.
A financial times article says that a wealth range of at least £2m in the U.K can make one worthy of the title ‘rich.’ The annual Charles Schwab Modern Wealth survey says that a rich person in the USA averagely has $2.3 million to their name. This, according to the company is over 20 times the median net worth of an average household. The report, however, states that for one to be considered financially comfortable, they have to have at least $1.1 million in the bank.
Most of the respondents in the survey noted that they plan to enter the wealthy elite class in a decade, and the easiest way to get there was to learn to ignore FO.MO.
Budgeting might not sound like your idea of a fun time, but it’s a sound strategy for getting more out of your money. If you want to stop wasting your cash and start saving more for the things that matter, then budgeting is a great way to get started. The only trouble is that most people don’t know how to create a budget, to begin with.
There are reasons why personal budgets often fail. I wrote about it in the past. Considers not doing the common mistakes people often do. cause once or twice your budget fails and are demotivated to follow it all together. As the budget is the most effective tool for having your finances in order. We write about it very often.
I admit I don’t budget. I tried a number of times without a success. It’s not that we go over budget but this is the rigor that seems burdensome. We are good at keeping money aside from my income before we start spending. We just make sure that we do not reverse borrow from savings.
For many of us, budgeting is one of those tasks we always say we’ll get around to doing — after all, we know it’s important to keep tabs on our money and plan for the future. But amid the busy pace of daily life, it can be tough to track and manage the flow of our money without an easy system to help.
Spending is something that everyone should be conscious about and by that, it means that we should keep track of our money at all times. Most people make use of a budget to list down all of their spendings; however, this technique doesn’t work for everyone.
Others usually rely on conscious spending alone which is actually fine as long as you break the habit of spending whenever you feel like it. This will require a lot of discipline from anyone but it can really be fulfilling if done properly in the end.
While I am not even close to being in the top one percent that we all hear of, I’ve made good financial decisions and am happy with the nest egg my wife and I have been able to build. We are both responsible with our budget and are well on our way to meeting our financial goals.
But for me, it wasn’t always that way. I started my professional life a financial basket case. I worked hard and saved money but just could not seem to keep a budget or hold on to my money for more than a year. Being a financial reporting analyst for a large insurance firm, my lack of financial stability was a big embarrassment and I did everything I could to hide the shame.
Do you budget? If yes then I’d like to ask – do you really love to budget? I don’t think many people would answer in a ‘yes’. Let’s admit we don’t really want to budget. Some of us do but that’s because of extreme financial difficulties. But there are solid benefits that make budgeting essential for all.
Even for the billionaires. We just need a trigger to start with it. for some it’s being in debt, for others, it may be due to a financial goal. For me, the trigger was buying our first home.
When you combine mortgage, property taxes, homeowners insurance and compare them with rent you used to pay, you sense fire – you start budgeting.
Learning how to budget your finances is the first step to gaining control of your money and creating wealth. Although the manner in which you budget your money is unique to your need and income, there is a general blueprint that can guide our budget process. The 50/30/20 rule simplifies by the process by breaking it into three categories rather than breaking it into multiple categories that are difficult to follow.
The 50/30/20 rule applies to fixed costs, financial goals and flexible spending respectively. Fifty percent of your income should go into paying bills such as rent, gas and food. Cutting on costs is the most effective way of making savings. Thirty percent of your income should go into making payments or contributions that will secure your financial foundation. Automating your savings contributions and debt payments will not only help you to save consistently, but will also ensure you don’t fall back on payments.
Budgets – the foundation of every financial plan and the word that has a tendency to make us run for the hills. When people think of a budget, it’s easy to be scared off by the confinement of it – now you’ve drawn up a budget, there’s no room for fun or social plans is there!? Wrong!
Not too long ago I wrote why personal budgets often fail. Budget failure is a common outcome. Many of my friends faced the similar situation, going over a budget by as early as mid month. Often it’s not your spending habit but, your budget that was wrong in such situation.
If you are in to budgeting, you must have realized by now that creating budget is the easiest thing to do. The most difficult and tough task is to stick to it. Earlier I spoke about How to Stick to Your Budget Consistently. This is another article which will try to convey the same message, a little tweaking in your habit and thoughts can make wonders.
Have you ever set a personal budget for yourself? Are you still sticking to it? My guess is that you answered these questions in a sequence of “yes” to the first, and “no” to the second. We all have great intentions of spending our money wisely in accordance with our plan, but it hardly ever happens that way.
