Why These 3 Financial Words Can Change Your Life
“Budgeting”, “Saving” and “Investing”. These three words awaken different emotional reactions for people. These words commonly initiate feelings of confusion, disinterest or some level of anger. It is rare to be properly educated on these financial topics so it makes sense confusion is a common reaction. Some of us like to ignore our finances and then hope that there will always magically be money to use when we need it. Others struggle with trying to understand the finance and investing world and may even find themselves getting angry at banks or the 1% whose “out to get them.” But I can tell you this, these three words should make you excited and for a good reason! Once you learn how to use these three words to your advantage, the possibilities are endless.
Budgeting simply means to allow for or set aside a certain amount of money for a given expense or expenses. On this site I’ll often refer to a “monthly budget,” the money that is allowed for each month to cover expenses in different budget categories, such as groceries, rent/mortgage, car expenses, restaurants, etc. There are two steps that help create a successful budget plan (1) actually create a budget and (2) stick to that budget. Throughout these posts I will cover simple and efficient strategies that help you create and stick to a budget each month.
Saving money is as “simple” as spending less money than you bring in each month (Monthly Spending < Monthly Income). Or at least it is that simple in principle, but once the day-to-day realities of life come and go, saving money becomes a lot more difficult. Once you get yourself to a point where you can put away some money each month, you are then faced with questions such as “How much money should I be saving each month?” or “What should I be saving my money for?” or “What should I be doing with the money I save?” I’ll share the answers I’ve learned from my own experiences to give you the best strategies for maximizing your savings and getting the best value for your money.
The word that confuses, bores and angers most of us. Investing is using your money to purchase something (say a stock, bond, real estate, savings account, etc.) with the expectation that it will produce a positive return aka more $$$$$ for us. Sometimes the word “investing” is associated with the headaches caused by dealing with large corporate banks pushing stocks and bonds down our throats or sometimes it’s thought to just be for wealthy investors that are able to place their millions into real estate, stocks or high-interest savings accounts. Those headache inducing situations do exist, but there are plenty of opportunities for a working twenty-something year old or family of four to invest in ways that are simple and efficient. The key to investing is being able to recognize simple market trends and put your money into the best investment vehicle at the right stage in your life (sounds hard/annoying/initiate panic but I’ll help you through it don’t worry).
Learning how to master the 3 Financial Words will allow you to understand where your money is going and how to make it grow to where you want it to be. I’ll show you how I have been able to simplify the world of personal finance in my life. Lets get your finances to where you want them to be!