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
How to Budget – Step 2 – Income Vs Expense
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
How to Budget – Step 1 – Where Does All My Money Go?
THIS IS NOT going to be one of those “how-to” examples where you’re told to record ever purchase you’ve ever made. Doing that accomplishes NOTHING but wasting a lot of time. Besides, Mint.com can already do this for you automatically. I’ll have more on that later in this series. Instead, look back through your checkbook from the past few months. What were your MAJOR expenses? Make a list of them. I highly recommend using Microsoft Excel if possible. And yes, there will be a link to the template we create throughout this series at the end. Here are a few examples: … [Read more...] about How to Budget – Step 1 – Where Does All My Money Go?
How to Budget My Money – Introduction
Creating a budget is one of the single best financial actions you can take for your household. Once you have your goals and priorities straight, the next step is to learn how to manage your money. Setting a budget is something that has to be done even before you learn how to invest your money. Why? Because all the income in the world won’t make you any richer as long as you’re spending more than you take in. … [Read more...] about How to Budget My Money – Introduction
Why Do You Want to Retire?
In my previous post about why we care about money, we explored the reasons why saving money might be important beyond simply wanting more material possessions. In this post, I’d like to explore the more specific topic of why it is that we want to retire. … [Read more...] about Why Do You Want to Retire?
My “Money Design” – 2012 Update
As part of my annual financial checkup, I have updated my “Money Design” for financial freedom. This is my plan to one day automate my income rather than rely solely on employment income. My plan can be summarized by the flow chart below: … [Read more...] about My “Money Design” – 2012 Update
Year-End Financial Checklist
The end is near! The end of the year that is … And with that, December is a good time to get you finances in order and get ready to settle with the tax man. Here are some tips to get yourself ready for another year: Set Your Budget for Next Year: Remember, a budget is simple: • Money In – Money Out > 0 = Success. The best way to do this is to create a table with 12 columns; one for each month. Start by listing your income towards the top. Then list all your bills and expenses. This strategy is usually a little more effective than just doing one generic monthly budget because it captures expenses that don’t occur every month or are seasonal (like Christmas expenses). This also lets you see how you’re doing throughout the entire year … [Read more...] about Year-End Financial Checklist
Will Your Retirement Cost $2 Million?
How much money will you need to save in retirement? Think you’ll need $2 million? You may be surprised, but according to a recent article on MSN, experts believe that $2M should be the new goal for most Gen Y’ers. In fact, they also suggest that Gen X’ers strive for a $2M nest egg as well. Although I appreciate articles of this nature and understand that their intended purpose is to reach a broad general interest audience, there were a few things that raised a red flag: 1) $2M may be way more than some people will ever need. 2) The $2M goal is based on working until you reach age 70. Who wants to do that? What if your timeline is compressed so that you can retire earlier? Using conventional wisdom, a $2M portfolio with a 4% withdrawal … [Read more...] about Will Your Retirement Cost $2 Million?