Building a Budget That Works

Posted on October 18, 2024December 4, 2024 by Mark Anthony

Building a Budget That Works

Building a budget that works: Your Path to financial success

Building a budget that works for you is one of the most important steps you can take to achieve financial stability and reach your goals. A truly effective budget balances financial responsibility with your lifestyle needs.

💰Step 1: Determine Your Net Income

Calculate your monthly income after taxes. Be sure to include income from side hustles, tip income, and any other income.

If you are self employed, don’t forget to account for taxes you’ll owe on this type of income. TaxAct has a self employment tax calculator which will help estimate your tax obligations.

📊 Step 2: Know Your Spending Habits

Before you begin building a budget that works, you need to know where your money is going. This means tracking your expenses, no matter how small.

Make sure to include large expenses that may not occur every month. Things like property taxes, insurance payments, vacations, Christmas, etc. Estimate the annual cost of and set aside a monthly amount for these type of expenses so you’re ready when the payments are due.

Use one of these methods:

📱 Budgeting apps like Monarch Money, EveryDollar, Quicken are relatively easy to use and can connect with your accounts to simplify the process

📑 Spreadsheets can be effective if you’re organized and diligent with your receipts

📓 Notebook for those old school folks who prefer pen and paper

How you track depends on your personal preference. Just start tracking so you have a basis to start from. You might be surprised at what you discover!

🤝 Step 3: Get on the Same Page with Your Partner

If you’re in a relationship, it’s crucial that you and your partner are aligned on financial goals and spending habits. Money can be a major source of conflict in relationships, but it doesn’t have to be.

Action item: Schedule a “money date” with your partner to discuss your financial goals, concerns, and habits. Make it a regular occurrence, perhaps monthly. Be sure to discuss both necessary expenses and discretionary spending.

🎯 Step 4: Tailor Your Budget to Your Lifestyle and Goals

There’s no one-size-fits-all approach to budgeting. Your budget should reflect your unique lifestyle and financial goals. Are you saving for a house? Planning for an early retirement? Paying off debt? Your budget should support these objectives while also allowing for some flexibility.

Action item: Write down your short-term and long-term financial goals. Then, allocate your income accordingly in your budget, making sure to include categories for both necessities and discretionary spending.

💡 Pro Budget Tip

Focus on paying off credit card, car loans, personal loans, and any other consumer debt as quickly as possible. You’ll be amazed how quickly your net worth will increase when you eliminate your debt service payements

🎉 Step 5: Set Yourself Up for Success.

A good budget isn’t just about restriction—it’s about empowerment. Include some discretionary funds in your budget to avoid feeling overly constrained. Also, automate your savings and bill payments where possible to make sticking to your budget easier.

Action item: Set up automatic transfers to your savings account on payday. Start small if needed—even $20 a week adds up over time.

💡 Smart Budget Strategies

Automate Your Finances

* Set up automatic bill pay

* Create automatic transfers to savings

* Use direct deposit to separate accounts

🔍 Step 6: Regularly Review and Adjust

As your life circumstances change, so should your budget. Regular review ensures that your budget continues to align with your goals and needs.

Action item: Schedule quarterly budget reviews. Assess whether your current allocations are working. Are you meeting your saving goals? Is your budget sustainable? Adjust as necessary.

🏋️‍♂️ Step 7: Bounce Back When You Fall Off Track

Nobody’s perfect, and there will likely be times when you overspend or forget to track an expense. The key is not to let these slip-ups derail your entire budget. Instead, view them as learning opportunities.

Action item: When you go over budget, don’t beat yourself up. Instead, analyze what happened. Was it a one-time expense or a sign that your budget needs adjusting?

If you’re having trouble staying on track, try switching to cash for items like groceries, clothing, dining out, and miscellaneous shopping.

Use the Envelope System

How It Works

1. Create labeled envelopes for each spending category

2. Fill with cash when you get paid

3. Once empty, stop spending

4. Limit borrowing between envelopes

Final Thoughts

Remember, budgeting is a skill that improves with practice. Be patient with yourself, celebrate your progress, and keep your eyes on your financial goals. With time and consistency, you’ll master the art of budgeting and pave the way for a secure financial future.

By creating a budget that addresses both your financial goals and your lifestyle needs, you’re setting yourself up for long-term success. A balanced approach ensures that you can maintain your quality of life while still preparing for the future. After all, the ultimate goal of financial planning isn’t just to save money—it’s to create a stable financial foundation that supports your life goals, both now and in the years to come.

The Joneses Are Poor

Posted on October 15, 2024November 24, 2024 by Mark Anthony

The Joneses are Poor

The Joneses are Poor...Why Trying to Keep up With "The Joneses" is a huge mistake

We often feel pressured to comply with societal norms. This pressure can lead to poor financial decisions that can harm our financial future. It’s common to fall into the trap of comparing ourselves to others. Social media feeds are filled with images of glamorous vacations and expensive cars. These carefully posts create an illusion of a perfect life. So it’s no surprise we start to feel inadequate and less accomplished. A common phrase used to describe this situation is “Keeping up with the Joneses.” But what if I told you the Joneses are poor? In this post, we’ll pull the curtain back on the concept of the Joneses concept, debunk the myth of their prosperity, and explore why attempting to keep up with them is a mistake.

The Fallacy of Appearances

On the surface, the Joneses may seem like the model of success. However, looks can be deceiving. It’s important to remember that the Joneses’ lifestyle is often fueled by debt and a desire to appear rich at all costs. What they’re often missing is a real plan for financial success.

The Joneses are Poor: Drowning in Consumer Debt

Many people appear rich and successful. However, this lifestyle is often funded entirely through consumer debt. They rely heavily on credit cards and loans to maintain their extravagant spending habits. Behind the glamorous facade, they struggle to make even minimum payments on their high-interest debt. These individuals often live on the edge, where one financial emergency could trigger bankruptcy.

Sacrificing the Future

The Joneses live for today without regard for the future. They’re more interested in immediate gratification than real long-term financial freedom. They may be spending far beyond their means by failing to save for retirement or set aside money for emergencies. Without regard for the future, they risk falling into the vicious cycle of debt, stunting their opportunities and freedom down the line.

The True Cost of Keeping up with the Joneses

It’s hard to avoid comparing ourselves to the Joneses, but we need to understand and consider the downside effects of this mindset.

Emotional Wellbeing

Attempting to “keep up” with others will eventually exhaust you emotionally. The standard of life they’re living isn’t sustainable long-term. If you’re constantly comparing yourself to others and measuring your success based on personal belongings and spending extravagantly, you’ll eventually become jealous, unsatisfied, and inadequate. If you let yourself get sucked into this trap, your sense of self-worth will suffer as you attempt to keep up with unrealistic expectations. The appearance of wealth without any real wealth to back it up is nothing but smoke and mirrors. Stop trying to keep up, and find contentment with what you have. Focus on developing a plan for your future to be financially successful, and you’ll be far more fulfilled.

Financial Freedom

By chasing the Joneses’ lifestyle, we’re willingly entering a never-ending loop of consumerism. Your life may feel less fulfilling because you’re working hard and earning money only to immediately hand it over to the lenders who so graciously funded your abundant lifestyle. True financial freedom is achieved by living within our means, making smart financial decisions, and pursuing our goals.

Embrace Authenticity and Personal Growth

Rather than being fixated on the Joneses and their appearance of success, we should focus on what we define as a successful life and develop a plan towards the financial freedom and independence that allows us to achieve the successful life we define.

Determine What is Important to You

Take the time to determine what brings you joy and inspires you to achieve your dreams. Aligning your financial decisions with your dreams will help you create a more meaningful and fulfilling life, free from the constraints of comparison.

Click Here to learn more about building a budget that works for you.

Celebrate Your Successes

Instead of comparing yourself to others, celebrate your own accomplishments and progress. Embrace your journey to financial freedom and dream of the possibilities your new focused attention can achieve.

Chasing someone else’s dream is a futile endeavor that leads to financial instability and a perpetual feeling that you’re underachieving. The myth of the Joneses’ prosperity is just that… a myth. It’s time to let go of the need for external validation and focus on your own financial well-being and definition of success. By being authentic, blazing our own trail, and celebrating the important milestones to us, we can break free of the societal norms and destructive cycle of comparison and create a life that authentically reflects who we are and what we value.

How Anyone Can Be a Millionaire

Posted on September 1, 2024November 24, 2024 by admin

How Anyone Can Be a Millionaire

How Anyone Can Be a Millionaire: Tips for Building Wealth

The image many have of a millionaire is often that of someone who lives in a mansion and drives a Maserati. However, most millionaires are actually your neighbors who live modestly and drive ordinary cars.

In the book, The Millionaire Next Door, by Thomas J. Stanley dives into this topic and provides some fascinating and eye opening facts about the average millionaire. This book broke wealth stereotypes by revealing that true millionaires typically live modest lives.

Before I go any further, I should define what a millionaire actually is, in case there’s any confusion. A millionaire is a net worth calculation which is determined by adding up the value of all your assets (cash, IRA’s, car’s, house, etc) and subtracting what you owe (car loans, personal, loans, credit card balances, mortgage, etc). That’s it, it’s that simple. I has nothing to do with your income or spending habits. It’s a measure of assets minus liabilities at a point in time.

Your income matters, but not as much as you might think. The key factors are your mindset and discipline. Spend less than you earn and invest the difference. If you leave these investments alone, you’ll be amazed at how much wealth accumulates over time. Eventually, if you stick to your plan you will become a millionaire.

Now that we’ve defined what a millionaire is and explained that it’s achievable for most, let’s talk about what it takes to get there. Keep in mind this isn’t happing overnight and it will require sacrifice, hard work, and determination but the juice is worth the squeeze as they say.

Start early and save consistently

The earlier you start saving, the more time the money you’ve invested has to grow. If you’re struggling to make ends meat, start with something very small to build the habit. Think of it like working out. You aren’t going to see results in your body from one workout, you see results overtime by developing a pattern of consistent behaviors and before you know it, you’ve lost weight and you’ve developed some muscle tone.

Build your investing muscles by directing a small amount of your paycheck directly to a 401k or IRA so it comes out of your paycheck before you see it. Pretend that like that small amount of money isn’t there so you aren’t tempted to touch it.

This consistent process of investing is like buying a golden goose, except.. in the beginning the goose may lay copper eggs, then eventually silver eggs, and before you know it she’s finally laying the golden eggs!

What to find out how powerful compound interest can work for you?

Live below your means

Living below your means is a key component of building wealth and becoming a millionaire. This means spending less that you earn and avoiding unnecessary expenses. Focus on the essentials and prioritize your spending. Consider using a budgeting app to help you track your expenses and identify areas where you can cut back.

Invest wisely

Investing can be a powerful tool for building wealth, but it’s important to do it wisely. It may be tempting to investing in single stocks, but consider investing in a diversified portfolio of low-cost index funds. This can help you minimize risk and maximize returns over time. Avoid high-risk investments and get advice from a trusted financial advisor if you’re not comfortable making investment decisions yourself.

Pay off debt

Debt is the shackles that keep you from building wealth, so it’s important to pay off any high-interest debt as soon as possible. This includes credit card debt, student loans, and other types of debt and avoid taking on new debt at all costs. Make a plan to pay off your debt as quickly as possible. Get radical and laser focused in your debt payoff endeavor by making large short term sacrifices to release the debt shackles and get you started down a path towards building wealth and becoming a millionaire.

To become a millionaire, it’s important to maximize your earnings potential. This means working hard and smart to earn more money over time. Some ways to increase your earning potential include:

• Advancing your education or skills to qualify for higher-paying jobs.
• Starting a side business or investing in real estate to generate additional income streams.
• Negotiating for higher pay or better benefits in your current job.

Keep Your Eye on the Prize

Becoming a millionaire is a long-term goal that requires patience, discipline, and hard work. Stay focused on your goal and be willing to make sacrifices along the way. Keep your eye on the prize and never lose sight of why you’re working towards this goal. In conclusion, becoming a millionaire is achievable for anyone who is willing to put in the effort and make smart financial choices. By starting early, living below your means, investing wisely, paying off debt, and continuing to learn and grow, you can build significant wealth over time and achieve your financial goals.

Conclusion

Becoming a millionaire is not an impossible goal. With the right mindset, habits, and strategies, anyone can accumulate wealth over time and achieve financial freedom. Start by adopting a millionaire mindset, developing good money habits, maximizing your earnings potential, networking and learning from others, and staying focused on your goal. Remember, becoming a millionaire is a journey, and with perseverance, dedication, and a lot of hard work, you can achieve financial success.

8 Money Tips for Your 20’s

Posted on August 11, 2024December 13, 2024 by admin

8 Money Tip's for Your 20's

Your 20’s are an exciting and transformative time in your life. It’s a period of self-discovery, personal growth, and building the foundation for a successful future. While many financial advice columns emphasize the importance of building credit, this article will focus on alternative steps you can take in your 20s to secure your financial future without heavy reliance on credit. By adopting these strategies early on, you can pave the way for a more stable and prosperous financial journey.

1. Educate Yourself about Personal Finance

Take the time to educate yourself about personal finance. Read books, attend seminars, or follow reputable financial websites to understand investment strategies, budgeting techniques, and financial planning. Knowledge is power, and by equipping yourself with financial literacy, you’ll make informed decisions and avoid costly mistakes.

2. Minimize and Manage Debt

While we’re focusing less on building credit, it’s important to address debt. Minimize and manage any existing debt responsibly. Prioritize high-interest debts first, such as credit cards, and develop a repayment plan. Avoid taking on unnecessary debt, and be mindful of living within your means. Managing debt effectively will alleviate financial stress and pave the way for a more secure future.

3. Invest in Your Retirement

While retirement may seem far off, investing in your retirement savings early has significant long-term benefits. Consider contributing to a retirement account, such as a 401(k) or an IRA (Individual Retirement Account), taking advantage of any employer matching programs, if available. By starting in your 20s, you can benefit from compounding returns and grow your nest egg over time.

4. Create a Budget and Stick to It

One of the most crucial steps to secure your financial future is to create a budget. Track your income and expenses diligently, categorize your spending, and set realistic savings goals. By living within your means and saving consistently, you’ll develop good financial habits and avoid unnecessary debt.

5. Establish an Emergency Fund

Life is unpredictable, and unexpected expenses can arise at any time. Building an emergency fund is paramount to financial security. Aim to save at least three to six months’ worth of living expenses in a separate savings account. This fund will act as a safety net during challenging times, preventing you from relying on credit cards or loans.

6. Invest in Your Skills and Education

Investing in yourself is one of the most valuable investments you can make. Consider advancing your education or developing new skills that align with your career goals. Increased knowledge and expertise can lead to higher earning potential, job security, and improved financial stability in the long run.

7. Diversify Your Income Streams

Relying solely on a single income source can be risky. In your 20s, explore opportunities to diversify your income. This can include freelance work, part-time gigs, or even starting a side business. Generating additional income will provide you with more financial flexibility, help you save and invest more, and reduce your reliance on credit when unexpected expenses arise.

8. Protect Yourself with Insurance

Insurance plays a vital role in securing your financial future. Explore options such as health insurance, life insurance, and disability insurance. Though it may seem like an additional expense, having appropriate coverage ensures that unexpected events don’t derail your financial stability and long-term goals.

Conclusion

Building a secure financial future in your 20s goes beyond just focusing on credit. By taking these key steps, you can lay the groundwork for long-term financial stability and success. While it’s natural to make mistakes along the way, these challenges will test your determination. However, with discipline and resilience, you’ll be surprised at how quickly your financial position improves!