Hey, do you know where all your money went? No?
Then you might want to learn how to do personal finance right and probably not regret this decision when you retire. Or any major life change.
Budgeting is something which should be taught by parents at the early stages of childhood. In this post, I will also show you examples of how people have failed to take care of their budget, and how you can NOT be like them.
Put it real short and simple, personal finance is the most important skill to learn for your survival.
Another way to put it is: If you want to stay free of all tension from monetary problems (like no retirement funds, no savings, and $$$$ loans), then the only way is mange your budget. Learn how to make and stick to a budget.
It is important because you need to know where your money goes. It is necessary to not make mindless purchases (like Fyre Festival tickets using your emergency fund) and have a clear path to whatever you want… like a car. Or a house. Maybe that professional makeup kit you have been dying to have.
To understand, let me give you an example of personal finance management gone WRONG.
Bella is 29 years old. Just got married in like 3 months ago. Their household income is $250,000 annually.
$335,000 is her insurance loans.
$300,000 is her credit card and personal loans.
Let’s pretend to be Bella for a moment now. She just got married, works in the government policy making section and cannot afford to pay her bills on time.
She and her husband earn a handsome annual income, and they cannot afford to pay the bills.
She has student loans, insurance loans and credit card debt piled high up, and growing higher every time they miss a payment.
Do you wanna be like Bella? I bet you don’t.
Yeah, so to cut all the BS, this is why you need to learn personal finance management.
The following tips can apply to anyone – married couples, families, and even bachelors. It’s usually the extension and disciplined implementation of these budgeting tips that make or break the paycheck.
Every time you see a beautiful gown or new branded multi-featured smartwatch, open the dictionary app and see the definition and examples of “need” and “want”. Seriously. Read it aloud. Soak ‘em.
It’s all a matter of strict definitions of “need” and “want”. If we take Bella’s example, she has $300,000 as credit debt and personal loans alone, because she purchase things which FELT good ONLY FOR THE MOMENT.
Marketers are smart. They use the emotional component of all products to appeal to the show-off-to-peers generation and make you pay for it, literally all your life.
This I can vouch from my personal experience – the more you see the handsome balance in your account, you’ll be tempted to gratify yourself quickly… like I did. Now with this month’s payroll, I am gonna make up for all that lost savings (I got a huge-ass tattoo, he he).
Yes, emergency funds are an extremely important aspect of anyone earning. Anyone. You could be an 18-yr old and working in McDonald’s part-time, but you still have to save some amount. Save like 10-20% of whatever you got out.
And the most often asked question is “Is $1000 emergency fund enough for me?”.
Well, the answer is “it depends”.
Are you living in a city with high living expenses? Do you get a salary which allows you to survive in the said city?
Then a meager amount of thousand bucks does no good. The best answer to the above question is “save up-to 6 months (at least) of living expenses stocked aside as an emergency fund.
Now, you may be thinking, “Man, I gotta put aside for my emergency fund savings fund AND retirement plans?? What am I gonna use for myself?”.
Well, Honey, perhaps you didn’t have to experience the recession (or worse, the depression) first hand, and after a bit of history digging, you’ll soon find out how nerve-wracking it was for broke AF people.
Canada lost more than 968,000 jobs in the span of just 8 months. All these people…if they didn’t keep an emergency fund, they would have perhaps lived these 8 months a bit more peacefully.
Not having an emergency fund is just one of the worst financial decisions anybody can make, let alone Canadians. Want to make sure you don’t make them too? See what you are missing!
And no, this does not mean any person with whom you can go shopping. What I meant by a money buddy is someone who constantly reminds you about your financial status (like debts, earnings and savings).