The tagline to My Money Design has always been designing financial freedom. For as long as I’ve been into reading financial books and blogs about money, I’ve seen a lot of them try to answer the question of what is financial freedom. However, I feel as though the weight of this term often gets lost or trivialized. In this post, we’re going to layout a definition for financial freedom and explain where we need to focus in order to achieve it. … [Read more...] about What is Financial Freedom – The Easy to Follow Explanation
Congratulations if you are an entrepreneur. Congratulations if you have already amassed great wealth. Congratulations if you have an early exit strategy all planned out for one day retiring from your job. As I read through many other personal finance blogs, there seems to be a great deal of people on the path to success. Some of our fellow bloggers are bringing in hundreds, if not thousands of extra dollars every month. That’s pretty impressive for simply finding new ways to share opinions and information, and through selling virtual real-estate to advertisers. Way to go! But whether … [Read more...] about Don’t Quit Your Day Job Yet
Do you feel like you’re rich? When you talk to your friends or neighbors, do you feel like you’re at the same level? Or do you feel like you’re barely keeping up? This might sound crazy, but when you see all those “Occupy Wall-Street” demonstrations and other copy-cat protests on the News demanding equality against the privileged “1%”, there’s a good chance they might be talking about you! Okay, maybe not YOU directly. But it might surprise you to find out how close to the top 1% percentile you really are! Here’s how: … [Read more...] about Guess What – You Might Be Richer Than You Think!
At many times throughout this series and especially in Part 2, I told you not to worry just yet about your individual credit card purchases and to treat them all as one “big category”. The reason I did this is because I didn’t want our lesson to get hung up on analyzing credit card purchases to death. You have a lot of other bills besides a credit card, and most of them are fixed each month. As we’ve already shown, knowing what you’re going to spend each month versus what you’re going to take in is extremely helpful in creating a budget. But in no way does this mean that we should ignore … [Read more...] about How to Budget – Making It Easy with Mint
Time to test the gold in fire. Earlier I told you that a well designed budget would be the key to money management and staying within your means. This is still true. If you’ve created something that is tailored for you, meets your goals, and is comfortable enough for you to live with, then you should do well. All of this would be great if “you” were the only person this budget was for. The problem is that it’s not just “you”. A budget is usually for you, your spouse, and your family. Although that doesn’t sound like a lot, there’s a lot going on inside that group. Just like how a company … [Read more...] about How to Budget – Step 7 – Sticking to the Plan!
So after Step 5, does your budget meet our goals? Did you make adjustments and sacrifices? Do you have a positive balance for each month throughout the year? Is less money going out than is coming in? If so, then you are ready to move on to adding in your investment goals. Notice we didn’t do this in any of the previous steps. This is because you have get your business in order before you can start getting advanced with your budget - You have to walk before you can run. After we’re meeting our basic set of goals, let’s start digging a little deeper and adding in our investment goals. … [Read more...] about How to Budget – Step 6 – Adding In Your Investment Goals
Every great budget follows one simple formula: • [ Money In > Money Out ] = Good Or in other words … • [ Money In – Money Out > $0 ] = Good Basically you’ve got to have more money “coming in” than “going out”. Any other way is just a recipe for disaster! Don’t under-estimate how incredibly powerful this equation is. Everyday, people make the mistake of buying things on credit that they can’t afford or taking on payments when their income simply can’t sustain it. It’s simple physics that you can never have more going out than coming in. … [Read more...] about How to Budget – Step 5 – Apply the Formula for Success
As I’ve already expressed, your entire year is not just one month multiplied times 12. Your year is full of different events and one-time events that can greatly influence your money. The next step is to capture all those things in your 12-month snapshot. Here are a few to start with: … [Read more...] about How to Budget – Step 4 – Add In Those Special Times
Now here is where your budget will become far more advanced than everyone else’s: • Copy your one-month column 12 times so that you cover all 12 months! Yes, our budget is going to go for the whole year. What’s Wrong With One-Month Budgets? Lots: … [Read more...] about How to Budget – Step 3 – Take It All The Way to 12 Months
Take that list of your major expenses you created in Step 1 and list them for one month. Create one column and put your rows of expenses near the bottom half of the page. Income Now let’s go up to the top of the column. This is where we will list your income for the month. For most of us, that will simply be your paychecks and your spouse’s paychecks. Congratulations if you have other significant forms of income. Some examples might be: … [Read more...] about How to Budget – Step 2 – Income Vs Expense