Tag Archives: saving

11 best Personal Finance formulae to live by

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What is one personal finance formula that you live by to help maintain expenses and create wealth?

To help you maintain expense and create wealth, we asked small business owners and professionals this question for their insights. From developing multiple streams of income to living beneath your means and giving back, there are several personal finance formulas that you can use to maintain your expenses and generate wealth.

Here are eleven best personal finance formulas to live by:

  • Develop Multiple Streams of Income
  • Set a Budget and Stick To It
  • Make and Save More Than You Spend
  • Seek Out the Best Deals
  • Overestimate Your Spending
  • Value and Invest in Yourself
  • Account For Every Dollar With Zero-Based Budgeting
  • Track Your Spending Monthly
  • Deposit Any Extra Cash to Savings
  • Set Clear Expectations With the 30/50/20 Rule
  • Live Beneath Your Means and Give Back

Develop Multiple Streams of Income

You need to develop multiple streams of income, if you can. Just trying to get wealthy from one source of income is not enough to build the sort of wealth you’re imagining for yourself. Starting with the income stream you have now, add to it. Invest, if you can, as dividends from the right stocks or mutual funds can be another income stream. In general, the more income streams you have, the greater your ability to create wealth. — Carey Wilbur, Charter Capital

Set a Budget and Stick to it

Setting a budget and sticking to it is a tried and true personal finance formula that works for anyone of any age, in any business. Fiscal responsibility is never overrated. Knowing how much you have coming in and going out, how much you can afford to spend and how much would be too much, can prevent you from making costly decisions. This is one of the key foundations of creating and maintaining wealth. — Randall Smalley, Cruise America

Make and Save more than you Spend

I live by the formula of making and saving more money than I spend. There’s no better way to create wealth than being responsible with what you earn. Save more than you spend, make smart investments when possible, and don’t deviate from your long-term goals. Work hard and stick to your budget, and your wealth will continue to grow. — Vicky Franko, Insura

Seek out the Best Deals

I try to save money wherever possible and always try to find the best possible deal on an item. A penny saved is a penny earned, after all, so I do my research in order to earn. If I see something I like, I shop around to be sure that I’m getting the best price. The same principle can be applied to anything, whether we’re talking about books, TVs or, like with us, insurance. — Brian Greenberg, Insurist

Overestimate your Spending

When creating my budget, I always overestimate my spending for each category. I round up every number so that there is a buffer for unexpected costs, and I’m never cutting it too fine. I find this removes the feeling of being too restricted by my budget and letting it rule my life by being in the way of spontaneous moments. When in reality, a budget is there to make your life easier and help you plan for the moments which bring you great happiness. It’s barely noticeable to put away a little extra for each spending category but combined this adds up and allows you space to live more freely. — Antreas Koutis, Financer

Value and Invest in Yourself

You are your own greatest and most important investment. That’s how I see it. Be sure that you’re paying yourself what you’re worth, commensurate with the value you bring to whatever you’re doing. Continue Reading…

7 Retirement tips for young Savers

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By Mikayla St. Clair

Special to the Financial Independence Hub

One might think that planning for retirement while still young is a hindrance and a waste of time. However, the truth is that early planning has its benefits because you are not just planning for your old age but preparing for every other day you live as well. Planning is not easy; you need a few retirement tips on how to go about it regardless of whether you are just thinking about it or already have a plan. Here are seven appropriate for young savers

1.) Focus on financial stability

The real aim of planning for retirement is to ensure one has financial freedom in old age. If having a retirement plan below 30 years seems off, look at it this way, retirement is like saving to ensure you are financially stable. This is feasible through working out your expenses early; save up for the coming month’s expenses.

2.) Live within your means

Often young people tend to live lives that are way beyond their means. With this, most of their earnings go into acquiring things they may not need. As a result, some rarely have anything for saving. While the idea of getting anything you want sounds good, it may only be momentary and poses dangers in the future.

3.) Have a Plan

With a single monthly pay-check, budgeting may be tricky. There are bills to be paid, debts to be cleared, and much more. That is why you need a plan, plan your expenditures, and ensure to leave some for savings. How do you achieve this?

Cut back on unnecessary costs; if your workplace requires long commutes, consider moving somewhere closer. Spending those extra dollars or minutes on the road may not seem harmful, but they accumulate into a significant loss of wealth with time. Start small; often, the ideology people have is that each contribution must be in high number in saving. However, you may invest too much and exhaust everything. Start small, and eventually, things will build up. Continue Reading…

8 experts on the first step in Retirement Planning

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There are many articles about retirement planning written by qualified financial planners and advisors.

But what about the first step in retirement planning? Where should you even begin? And, what do people like you (small business owners, business professionals) have to say in addition to the advice from a financial planner?

We asked hundreds of people the same question: What is the first step in retirement planning? Here are some of the best tips and answers we received to the question.

Create a Retirement Budget

Retirement planning is about determining how much you need to live the life you want. A smart first step in retirement planning is creating a retirement budget. You’ll need to identify the amount of money you’ll have coming in during retirement, how much it will cost to enjoy the retirement you have in mind and the amount of debt you have. The last thing you want is a financial surprise in retirement, and creating a retirement budget is one healthy step to putting a solid plan in place. — Carey Wilbur, Charter Capital

Determine Retirement Age

In order to set yourself up for success, you should start planning for retirement early. By extending your runway, you can start saving money early and investing that money in areas that will make retirement even more comfortable for you. The best place to start is by determining what age you want to retire and how much money you will need each year to maintain your retirement. — Blake Murphey, American Pipeline Solutions

Get Curious

Reading The Richest Man In Babylon at 19 years old inspired me to start thinking about money. Next came books like Think and Grow Rich by Napoleon Hill, I Will Teach You To Be Rich by Ramit Sethi, The Millionaire Next Door, and many more. I think the first step in retirement planning is getting genuinely curious about the topic. Many people will labor over compound interest calculators and investment decisions, but if you can find something that ignites your interest, doing the hard stuff like saving and sacrificing becomes a little easier. — Brett Farmiloe, Markitors

Figure out where you are now

When planning for retirement, figure out where you are now, or your starting point. Far too many people focus solely on the endpoint (their retirement number) without fully examining where they are today. Imagine you’re taking a road trip and want to get to Kansas. How you get there depends a lot on where you’re starting. If you’re starting in New York, the route will be a lot different than if you’re starting in Montana. The same is true with finance. Overspending, not contributing enough to retirement, contributing to the wrong accounts, or paying too much in fees will add unnecessary headwinds to your trip. As uncomfortable as it may be, you need to examine your financial situation with cold objectivity. — James Pollard, The Advisor Coach LLC

Create Five-year Goals

The first step in planning for retirement is determining where you want to be financially once you hit your retirement age. Continue Reading…

The Fundamentals of Financial Independence for the long haul

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By Howie Bick

Special to the Financial Independence Hub

 

Financial Independence is a goal that many have and encompasses a variety of different elements into its equation. Depending on the type of lifestyle you live, the type of costs and expenses you have, and the amount of income you generate, Financial Independence is something that incorporates each one in a different way.

Becoming Financially Independent is a process that takes a bit of time and learning a few important principles. Understanding what you can and cannot afford, what is essential versus non-essential, and the type of security or stability that you’re comfortable with as well, are all important when it comes to Financial Independence (aka Findependence).

Continuing to work and generate Income

Working towards Financial Independence is an ongoing battle, one that requires constant effort, continuous working, and keeping a close eye on expenses. Continuing to work is an important element to the Financial Independence equation, as it allows you to continue producing income, and keeping the flow of money coming in.

One of the aspects of life is the way it continuously moves and flows from one thing to another. Along the way, there are often costs, unexpected expenses, and bills that may arise. By continuing to work and generating income, you can not only have the ability to pay your current expenses or costs, but you can also maintain the assets or resources you’ve been able to acquire as well. If the time comes when the flow of income stops, you might look towards the assets or resources that you’ve been able to acquire or build up over time. Continuing to work and generate income is an element to the Financial Independence equation that is important to consider, and important to continue producing, in order to continue managing and keeping your expenses in check, while also protecting or preserving the assets or resources you’ve been able to acquire over time.

Managing Expenses

One of the important elements to the Financial Independence equation are the types of costs or expenses you have as well. Depending on the amount of costs or expenses you have, you can then figure out how much you need to generate or income you need to produce. Considering the amount of costs or expenses you have, gives you a framework of how much income or money you need to generate in order to continue moving forward, or to continue affording the lifestyle you’re currently living.

The expenses you have is something that is very well within your control, even though controlling them might be difficult. Whether it’s reducing the amount of money you spent on food or entertainment, or cutting down the costs of the monthly subscriptions or memberships you have, the costs or expenses that you have is something that is well within your control, and important to manage when trying to become Financially Independent (or “Findependent.”)

What you can afford versus what you can’t afford

This element is important, as it will guide you or direct you on the type of spending decisions you make, the type of purchases you decide to purchase, and the type of lifestyle you decide to live. The amount of income you have often plays an important role in what you can and what you can’t afford.

Based on the amount of income you have, you can get a sense of the type of house, apartment, or living space that you can afford. You can figure out what you may think is too much, or will be pushing the envelope too far, or what you feel comfortable with and is within your means. Part of figuring out what you can and cannot afford is also how you like to live. Whether it’s with a high level of security of comfort, or you like to push it to the limit, and try to maximize or utilize all the resources you do have. Part of it comes down to what you feel comfortable with, and what you’re ok with, because Financial Independence is something that is different for everyone, with different types of lifestyles, costs, expenses, and goals alike.

Living below your means

Part of transitioning and becoming Financially Independent for the long haul, is learning how to live below your means and what you can manage for the foreseeable future. Especially in the beginning it may be tough, as you’re accustomed to or familiar with a different type of lifestyle: one that you may not be able to afford, or able to manage, but by living below your means, you can begin your journey of Financial independence.

Living below your means means earning more than you spend, and deciding to make purchases or increases in lifestyle in a slow fashion, in a way that you can accumulate or save and prepare before taking on a larger share of expenses or costs. While it might not be what you once had, or what you envisioned, living below your means allows you to have the freedom and flexibility to navigate the other costs, expenses, or spending decisions you may want to make. Whether that’s opening a business one day, investing into assets you like, or rewarding yourself with something you desire, living below your means can be the engine to getting to where you want to go, and give you the ability to manage or navigate the different life expenses or unexpected costs that may come your way.

Saving and Preparing

Another element that can be important for your Financial Independence is saving and preparing for what may be ahead. Whether it’s a goal you have, a path you want to pursue, or something that unexpected that arises, through saving and preparing you can plan in advance, and use time to your advantage, or work your way to where you want to go, or be prepared for whatever comes your way.

It’s often very difficult to manage and navigate situations at the time they arise, without the resources you may need, or the resources you would like, which is the reason why saving and preparing can be helpful. By putting money aside or keeping a certain amount of funds or reserve on hand, you can be better prepared to manage whatever life throws at you, and to navigate any murky waters you might encounter. Continuing to put money away, whether it’s slowly, or quickly, can help you be prepared and navigate any unforeseen or unexpected life expenses that may come your way, or put you on a path to achieving or pursuing the type of lifestyle or goals you may have in mind. Continue Reading…

3 ways to build your Finances with minimal sacrifice

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Image by Pixabay

Gary Bordeaux

Special to the Financial Independence Hub

Money is an ever important facet of living in human society. As they say, “money makes the world go ‘round,” but it often seems like your bank account is never full enough to meet all your needs, let alone desires. However, there are methods available to help the average person get ahead of the curve to improve their finances and otherwise build their dream lives. Here’s what you need to know.

Financing Luxuries

When thinking of financing, one tends to think of a house or a car. This service has been integral in providing the working class with things that are necessary but prohibitively expensive for quite some time. However, there are other scenarios in which financing expensive products can be the best way to balance smart financial decision making with living your best life. For example, you can finance swimming pools to get the summertime recreation and relief you desire without spending a fortune on it in the moment. By spreading that cost out over time, you can bring your vacation to you without breaking the bank. This principle can also apply to many high end electronics, such as iPads, and it can also apply selectively with general retail products via layaway programs. Using these methods, you can gain the advantages of living beyond your means without actually taking the risk of doing so.

Reducing Costs

One of the most important methods of saving money is by spending less. Some might argue that refusing to spend money on creature comforts and luxuries is the right choice, that is only partially true. While some luxuries can be eliminated, those that enrich your life are important to maintaining mental health. Instead of making meaningful sacrifices, costs can be cut by simply buying less expensive alternatives to costly staples. Name brand products often fill that role, but you can often get the same value at a lower price by choosing off brand products instead. Continue Reading…