All posts by Jacob A Irwin
Tour de Personal Finance, Stage 11, Round 3 – Posts 17-24
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Without further a due, let’s continue on with the 11th Stage (the second Stage of the 3rd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the one article in this case since there is only one contest (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here is today’s competition:
- This isn’t your grandparents’ recession (Grandparents):
Ever since the recession began I think there’s WAY too much blaming of the victims. I’m good and sick of hearing pundits grumble about how lazy and soft Americans have become, and how we ought to take a few lessons from the Great Depression. Here’s the thing: The world was a different place back then. Heaven knows I’m no apologist for slackers, credit-card spendthrifts or people who won’t take anything but the “right” job, but a lot of the advice our elders offered/modeled isn’t relevant today. Plenty of folks are in big trouble not because they’re lazy, but because of complex personal, local, national and global economic issues.
- The Greatest Impact On My Finances And My Best Financial Tool (Tool): I’ve got a financial tool that not only will help me build wealth but makes me a better person as well. Interested to see what I’m talking about? Read on to find out more.
***Photo courtesy of http://www.flickr.com/photos/johnthescone/2541001551/sizes/l/in/photostream/
Tips on Saving Money for the Future
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The following is a guest post by Check ‘n Go.
Saving money is hard, plain and simple. It’s tough to save when bills pile up and you feel like the future is far away, especially when you need to solve problems right now.
But, saving money is also one of the most essential parts of your finances. If you’ve resolved to start saving money, it’s a valuable and important goal. Consider these money-saving tips to help secure your future.
1. Look realistically at your finances
It’s important to understand your needs. They vary family to family, depending on your specific responsibilities. People who have children are going to have very different responsibilities than people who have hamsters or just dogs.
Figure out all of your expenses so that you know where your money is going, and where you can cut costs. Also, try keeping a list of all you’re spending in one month: it will help you realize where you need to cut back, and where your essential expenses lie.
2. Put money away every month
Once you’ve taken a clear-eyed look at your finances, start saving. Don’t give yourself the chance to back out; set up an automatic withdrawal that deducts money from your account, either every month, or whenever you get paid.
3. Contribute to a 401K or Roth IRA
If your job offers a 401K, start contributing as much as they will match. It might not feel great for your paycheck, but it’s an investment in your future. Unless you have nowhere else to turn, never borrow against your 401K. If you do, consult with a financial advisor beforehand.
If your job doesn’t offer a 401K, look into a nondeductible IRA or a Roth IRA, so you can start contributing to your retirement.
4. Put away money for your children’s future
If you have children, then you’re probably considering their future education. Based on your current responsibilities, you could have a realistic projection of your future finances. As much as you might want to pay for their education, you do have to consider your own finances. If supporting your children now means they need to support you later, you need to weigh your options. If you do decide that you can afford to pay for your child’s college, then it’s worthwhile to look into a 529 plan that can help you save for your child’s college. There are prepaid tuition programs that allow you to purchase a year’s worth of college tuition at the current rate, as opposed to the future, exponentially increasing rate.
5. Look into tax cuts
Even if you weren’t looking into tuition savings, it’s worthwhile to see if you’re eligible for tax cuts or government-supported programs. Houses, tuition, and even certain bills are deductible, and these deductions could save you quite a bit of money in the long run.
6. Flexibility
Even people with the best kept finances find themselves in trouble sometimes. An emergency can drain your finances quickly. Having a cushion of savings to soften the fall means you won’t be driven into debt, or have to borrow money from friends or relatives. Having a backup plan will help you feel safe and secure, even in a bad situation.
Saving money, even if it’s just a little bit every month, is extraordinarily important. It provides you with a valuable way to cement your personal security, and take care of your family down the road.
How about you all? What techniques do you use to make sure you are saving enough for your future and/or emergencies? Do you use any on this list?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ Developing a frame of mind that facilitates saving – It’s very true that saving is quite hard for many people. I think this is especially true when people are not raised with the saving “mindset.” It takes a good bit of mental resolve to force yourself to forgo current pleasure (spending) for enhanced living later in life.
- However, the easiest way that I have found to make saving more of a part of my life is to think of it as a challenge/hobby. This makes it fun and more motivating all at the same time!
- @ Tracking your spending to determine your financial needs – This is a practice that I personally employ in my personal finances at least every time I move to a new location or my financial situation changes. By tracking your spending, you can figure out what categories you need to devote money to and how much you can pay yourself first with in order to save for your future.
- @ Automatic deductions for savings – Once you have tracked your spending and know how much money will be left over to save/invest at the end of the month, it’s important that the money be transferred over to your savings account without you having to think about it at the beginning of the month (before your wallet has the chance to spend it!).
- This comes in very handy for me with my dream and life values savings accounts. If ~3% of my after tax income each month was not automatically transferred over to my savings account, I probably wouldn’t consistently save the money.
- @ Saving money for your children – I am in agreement with the advice above that saving money for your child’s college education should not come at the detriment of your personal finances.
- I read a book once that said that the best financial gift parents can give their children is for the children to not have to financially support them once the parents retire.
- Going along with this advice, I would encourage parents to first make sure they are saving as much as they can for retirement before looking at an educational savings plan for their children.
- Another option for keeping educational costs low is to encourage your children to attend a state school instead of an expensive private institution for the higher-educational endeavors.
***Photo courtesy of http://www.flickr.com/photos/o5com/5126344583/
Tour de Personal Finance, Stage 10, Round 3 – Posts 25-32
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Without further a due, let’s continue on with the 10th Stage (the first Stage of the 3rd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the one article in this case since there is only one contest (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here is today’s competition:
- THE Top 10 Bad Financial Lists (Lists): I grow weary and tired of bloggers putting out Top 5, 10, and 20 lists of various financial things that would make our lives better. So, I have devised a most nefarious, ugly, and downright useless list of financial lists (there is the twist) that could ever be published and still be labeled as SFW (Suitable for Work). Careful reading this, you may find yourself suddenly wanting to write a similar list mocking other bloggers.
- 24 Home-Based Business Ideas (Ideas): This article lists 24 opportunities that we can take advantage of from home to start making some extra income with a home-based business.
***Photo courtesy of http://www.flickr.com/photos/mikecogh/2569755853/sizes/o/in/photostream/
What Would I Do If I Inherited One Million Dollars?
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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About a week ago, Sandy from Yes, I am Cheap proposed an interesting idea to the Yakezie Blog Network: she proposed that all blogs that were interested write a post on the common topic of “if you suddenly inherited a million dollars from your long lost cousin Bertha that you haven’t seen since you were a baby, what would you do with the money?”
Since I absolutely love these initiatives where several different blogs write about a common topic (such as the Yakezie Blog Swap, which I always try to take part in), I was very eager to have the chance to reflect on what action steps I would personally take with $1 Million, if I were to be lucky enough to receive it. It also reminded me a great deal of a topic in the 2nd Yakezie Writing Scholarship Contest (which I helped judge several months ago) where essay applicants were asked to write about what they would do if they won the lottery.
Inheritance/Estate Tax
Like it or not, the first 30-40% of the $1 Million would most likely have to be set aside to pay Uncle Sam for any estate, or inheritance, taxes that I would owe on the money. However, according to Kiplinger’s, Congress’ lack of action lately on renewing the estate tax in 2010 may allow up to $5 Million to be exempt from taxes. This would be quite a blessing!
Since I’m not quite sure what the verdict will be on this or if a final decision has been reached by lawmakers, I will, for now, operate under the assumption that 40% of the $1 Million be paid in taxes.
Amount remaining = $600,000
Play Money
Of the remaining $600,000, I would take 5% ($30,000) and set it aside for what I call “play money.” This amount of money would be small enough that I would be all right with losing, but would still enable me to “live it up” and enjoy the $1 Million.
Several possible things I would use the play money for are shown below:
- A trip to Spain/France.
- Buying new hiking or cycling gear.
- A trip to the Grand Canyon.
- Visit Yellowstone National Park.
- Backpack on the Inca Trail.
Donate Money to Charity
Currently, I donate 5% of my income to a number of charitable organizations. However, the main one is the National Multiple Sclerosis Society, for which I participate in a bike ride each year in order to raise funds to support and find a cure for this disease.
With the $600,000 remaining after taxes of the $1 million inheritance, I would take 10% ($60,000) and donate it to the Multiple Sclerosis Society. I sure would be their top fundraiser then!!! 🙂
Amount Remaining After Play Money and Donating = $510,000
Achieve My Purpose Focused Financial Plan
With the remaining ~$500,000, I would invest it in achieving my Purpose Focused Financial Plan.
.Essentially, what the strategy is all about is that people/couples should plan for their specific values and life dreams, as opposed to planning what material possessions are needed for life (can be easily influenced by contemporary culture).
- Define the 1) importance and 2) purpose of money in your life.
- 1) Involves ranking the importance of money in your life on a scale from 1-10.
- 2) Involves a qualitative description of how you view the role of money in your life.
- Determine and take action on your life values.
- Your life values action plan is based around goals that you specifically want (and one could almost say need) to do in your life in order to be fulfilled.
- Determine and take action on your life dreams.
- Your dream action plan is based around “fun” things that you want to accomplish in life that will enable you to live an extraordinary life, based upon your standards.
- Place your dream and life values savings on autopilot.
- This involves setting up savings vehicles to ensure that your values and dreams are met.
In particular, the things that I would use the inheritance for (relating to my Purpose Focused Plan) are listed below:
- Ensure that I continue to contribute 5% of my income each year to charity.
- Pay for traveling and participating in running and cycling races in various locations.
- Max out my Roth IRA and/or 401k each year.
- Maintain an emergency cash fund with 6-9 months of expenses.
- Pay off my condo mortgage of ~$90,000.
- Achieve my life dream of owning a cabin in the mountains.
Looking at this list, it’s impossible to think that all of these actions can be taken at once. Therefore, it will be important that the inheritance funds are invested in financial instruments whose liquidity, risk horizon, and maturity match the time frame in which the funds will be needed. A description of this time frame investment matching process/concept can be found here.
How about you all? If you won or inherited $1 Million, what would you do with the money? Would you save it, spend it all, or a mix?! Share your experiences by commenting below!
***Photo courtesy of http://search.creativecommons.org/?q=million%20dollars
Tour de Personal Finance, Stage 9, Round 2 – Posts 9-12
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
Without further a due, let’s continue on with the 9th Stage (the third and final Stage of the 2nd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the one article in this case since there is only one contest (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here is today’s 3rd competition:
- Bicycle In The City (Bicycle): This article was produced out of both frustration at city traffic congestion, and with optimism for real alternatives to the car. Cars are stressful, from financing the purchase to filling the tank. There must be a better way. Cities that integrate the bicycle and support carless lifestyles are the way forward.
- Gratitude: The Key to Happiness (Key): There was a quote I heard as a young girl that I have never forgotten. “If the only prayer you say in your life is ‘thank you’, that would suffice.”- Meister Eckhart. It’s amazing how one simple, easy, positive action can change so much in a person’s life. One of the things that has had the biggest effect on my life is the realization of the power of gratitude. Simply giving thanks. It has affected everything. It has made me a more positive person; A more productive person; A better achiever; A better wife, daughter, and sister; A happier person. I’m still not perfect, but gratitude has made me better for everything and everyone. Can it change your life as well? I can guarantee it!
***Photo courtesy of http://search.creativecommons.org/?q=luis%20leon%20sanchez
Tour de Personal Finance, Stage 9, Round 2 – Posts 1-8
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Without further a due, let’s continue on with the 9th Stage (the third and final Stage of the 2nd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the two articles (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here are today’s first two competitions:
- How to feed a family of 6 on roughly $200 per week (Family): Groceries account for one of the highest household expenses. However, it is also a variable cost that we can all budget for. Nikki Holloway, a Canadian mother from Arrowwood, AB, who feeds 6 on roughly $200/week, has provided her top 11 tips to putting the money back in your bank account and not on your plate.
- People Who Don’t Have Cable Are Better In Every Way, Say Those Without Cable (Cable): People who have given up cable are a special kind of annoying. They look down on those of us who choose to watch TV as some sort of sewer creature. Are they really so much better than us time wasters? You’ll probably not want to click through if you’ve dropped cable…
- Not So Extreme Couponing: Couponing for the Rest of Us (Couponing): The Extreme Couponing show on TLC may be entertaining to watch, but it’s not very practical or appealing for most of us. Here’s how the rest of us can save big money with couponing without using extreme couponing tactics.
- Getting Stated With Your Money Idea (Idea): Don’t know where to start or how to promote yourself? This article gives you the starting steps as well as a stack of ways to advertise and promote for free or very cheap. It is also an excerpt of my book 365 Ways To Make Money.
***Photo courtesy of http://www.flickr.com/photos/petitbrun/5837136708/sizes/z/in/photostream/
Tour de Personal Finance, Stage 8, Round 2 – Posts 13-20
Without further a due, let’s continue on with the 8th Stage (the second Stage of the 2nd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the two articles (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here are today’s competitions (Sprints 1 and 2 of Stage 8 went live this morning, so be sure to cast your votes for those articles as well!):
- 6 Easy Ways To Get Advertisers for Your Blog or Website (Easy): A look at six easy ways to get advertisers for your blog or website. This article gives a step-by-step description on what to do and how to sell yourself and your site.
- This isn’t your grandparents’ recession (Grandparents): Ever since the recession began I think there’s WAY too much blaming of the victims. I’m good and sick of hearing pundits grumble about how lazy and soft Americans have become, and how we ought to take a few lessons from the Great Depression. Here’s the thing: The world was a different place back then. Heaven knows I’m no apologist for slackers, credit-card spendthrifts or people who won’t take anything but the “right” job, but a lot of the advice our elders offered/modeled isn’t relevant today. Plenty of folks are in big trouble not because they’re lazy, but because of complex personal, local, national and global economic issues.
- An Argument for Privatizing Social Security (Argument): Just as our country’s finances reach a critical point, Social Security is set to start failing. Social Security makes up 1/5 of our federal budget and is facing a huge deficit if changes aren’t made quickly. This article argues that privatizing Social Security could be a permanent and sustainable solution.
- Will You Be Able to Retire on $1 Million? (Retire) Inflation is eroding the value of that $1 million nest egg; as the years march forward, there is a very real possibility that you will need much more than a $1 million nest egg to live the lifestyle you want. Here’s what you can do to stretch your nest egg further — even if you don’t have $1 million to retire on.
A fairly new rider (to my knowledge), Rui Costa, won the stage in dramatic solo fashion! I’m looking forward to the coming days of racing when the mountain-top finishes come!
***Photo courtesy of http://www.flickr.com/photos/romyarlyn/2714690394/sizes/l/in/photostream/
Tour de Personal Finance, Stage 8, Round 2 – Posts 33-36 & 21-24
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Without further a due, let’s continue on with the 8th Stage (the second Stage of the 2nd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the two articles (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here are today’s competitions (these are the 2nd competitions of the 2nd Round of the Tour de Personal Finance, so enjoy!!):
- If I Had a Million Dollars, I’d Go Into Debt (Debt): What would I do if I won a million dollars? This post describes how I’d invest every last penny, scrutinizing tax benefits, risk, returns, real estate, and why I would go into debt — yes, I would go into debt — if I were a millionaire. And don’t just take my word for it: Einstein backs me up, and so does third-world poverty theory. Read this post to find out more.
- Random Acts of Kindness Can Bring Riches of Happiness and Experience (Kindness): Quite naturally, many of us – including me – are focused on our own finances. That said, it’s often so profitable in a broader sense to practice kindness and generosity. This post shares a simple story of an encounter that brought me happiness in helping someone in need.
- The Greatest Impact On My Finances And My Best Financial Tool (Tool): I’ve got a financial tool that not only will help me build wealth but makes me a better person as well. Interested to see what I’m talking about? Read on to find out more.
- How To Get Rich In A Recession (Rich): The article is about strategies to undertake to build wealth in difficult times.
***Photo courtesy of http://www.flickr.com/photos/atbaker/883298837/lightbox/
Tour de Personal Finance, Stage 7, Round 2 – Posts 25-32
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Without further a due, let’s continue on with the 7th Stage (the first Stage of the 2nd round of competition) of the 2011 My Personal Finance Journey Tour de Personal Finance (to follow all of the action, click on the Tour de Personal Finance category link and scroll down to read all the posts involved in this subject).
Also, if applicable, I will give a brief description of the stage of the Tour de France that took place the same day as the competition.
How to Vote
You can vote for the two articles (one from each intermediate sprint) you’d like to see proceed in the Tour by commenting in the comments section below and telling which are your favorites.
I’ve listed a keyword after each post title to make it easy to vote (as a made-up example, you can just comment: Sprint 1: Mutual; Sprint 2: 401k, etc.) Be sure to comment which one you like the best out of each set of two! Criteria for the best article is completely up to you, but you can use these factors as a guide: 1) post of your favorite blogger, 2) most interesting post, 3) most thought-provoking post, 4) most unique post, or 5) most actionable post.
Here are today’s competitions (Sprint 1 and 2 started earlier today, so be sure to cast your vote for those articles as well!):
- THE Top 10 Bad Financial Lists (Lists): I grow weary and tired of bloggers putting out Top 5, 10, and 20 lists of various financial things that would make our lives better. So, I have devised a most nefarious, ugly, and downright useless list of financial lists (there is the twist) that could ever be published and still be labeled as SFW (Suitable for Work). Careful reading this, you may find yourself suddenly wanting to write a similar list mocking other bloggers.
- 35 Ways to Make More Money (35 Ways): Even in the best of times, one of the most common questions asked is, “How do I make more money?” While an increase in income can ease the way things work in your personal economy, it won’t necessarily solve all your problems.
- 24 Home-Based Business Ideas (Ideas): This article lists 24 opportunities that we can take advantage of from home to start making some extra income with a home-based business.
- Invest in Both Fitness and Finances (Fitness): Your health is a much more important investment than your personal finance life. Learn how to master both and you’re set for life!
***Photo courtesy of http://www.flickr.com/photos/agathman/3904850129/sizes/o/in/photostream/
What Motivates You To Be Financially Responsible?
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The following is a guest post I wrote back on April 7th of this year for KNS Financial as part of the 5th Yakezie blog swap. During April’s Yakezie Blog Swap, everyone wrote about what motivates them to be financially responsible. I wanted you all to have a copy of it here as well. Enjoy!
You can view KNS’s swapped guest post on My Personal Finance Journey by clicking here.
There are three main things that motivate me to be financially responsible beyond all else – 1) achieving my Purpose Focused Financial Plan, 2) keeping a running financial/net worth progress update each month and making adjustments to maintain my asset allocation targets, and 3) communicating the results with the blogging community.
Let’s tackle what each of these things are one-by-one below.
1) Achieving My Purpose Focused Financial Plan
If you haven’t read it already, I would strongly recommend that you pick up a $0.01 (cheap!) used copy of the book from Amazon – Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner
.- Define the 1) importance and 2) purpose of money in your life.
- 1) Involves ranking the importance of money in your life on a scale from 1-10.
- 2) Involves a qualitative description of how you view the role of money in your life.
- Determine and take action on your life values.
- Your life values action plan is based around goals that you specifically want (and one could almost say need) to do in your life in order to be fulfilled.
- Determine and take action on your life dreams.
- Your dream action plan is based around “fun” things that you want to accomplish in life that will enable you to live an extraordinary life, based upon your standards.
- Place your dream and life values savings on autopilot.
- This involves setting up savings vehicles to ensure that your values and dreams are met.
Basically, the overall goal of a Purpose Focused Financial Plan is to live a more proactive life, instead of just responding to whatever the environment around you throws your way. Once you have defined your Purpose Focused Financial Plan, it is important to review it once per year to see if your life values and dreams have changed.
Having a plan to follow and revisiting my goals once per year very much helps me keep on track financially.
You can view the complete description of how I set up my Purpose Focused Financial Plan by clicking the following link – My Personal Finance Journey’s Purpose Focused Financial Plan.
2) Tracking Net Worth and Financial Goal Progress Each Month
After setting up my Purpose Focused Financial Plan and reviewing it once per year (in step #1 above), the next thing that I do is to create short-term, mid-term, and long-term goals that reinforce my Purpose Focused Financial Plan.
Then, on a more frequent, monthly basis, I track 1) my progress on all of these goals and 2) my current net worth and asset allocation.
General wisdom and advice recommends only tracking net worth and asset allocation once or twice per year. However, since I am a finance nerd (and enjoy it!) and tracking my progress keeps me motivated financially, I do this action once per month. Furthermore, as a passive (index fund) investor, asset allocation and rebalancing is pretty much the only thing I can do with my investing strategy!
In this monthly review, I check my current asset allocation percentages against my investment strategy allocation targets, and rebalance allocation levels if I am outside the +/- 5% band level.
3) Updating My Progress On My Blog Holds Me More Accountable
Last but certainly not least, having a public place (My Personal Finance Journey) where I post these net worth and financial goal updates helps keep me much more accountable than if I was just plugging along by myself.
It is very refreshing to have a place where I can share my thoughts and progress with other link-minded folks and learn new things that I can deploy in my financial strategy.
How about you all? What motivates you to keep “on-track” financially?
Share your experiences by commenting below!
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