…to make smart financial decisions
They assume they must understand every aspect of their investments and financial plan in order to make a decision. Nothing could be further from the truth. We all delegate to professionals who have an expertise that we don’t have the time or the inclination to perfect, the same holds true with your financial life. While we do not suggest you simply “blindly” trust any professional you work with the reality is you do not have to know how to build the clock you just need to know how the clock works and can impact your life.
The Big Spender
The Big Spender has no problem spending money if the purchase seems right. They view money as a vehicle for bringing themselves and others happiness. Big spenders view life as endless possibilities; they enjoy life and what it has to offer. The downside is that they overspend when they are upset or bored.
The Saver is the polar opposite of the big spender. The saver believes in saving money at all costs. They keep track of all monies earned and spent and are extremely cautious with their finances. Many positive aspects come from pinching pennies. The positive aspect of being a saver is that they tend to have a nice emergency savings cushion, good credit and very little debt. On the negative side, extreme saving tends to come from a fear of never having enough, which means that the saver probably denies themselves things that they want and even need.
The Entrepreneur gets a thrill from overextending and stretching financially. They make investments in a business or a beach house even if it means eating canned soup every night for dinner. Thrill-seekers tend to be free-thinking entrepreneurs; they view life as a game and money as the playing pieces.
When you’re a thrill-seeker with your money, your financial journey is exciting. Living with this thrill-seeking mindset means that each day is a new adventure. However, this mindset can be risky. If anything goes wrong, this spender could potentially lose a lot of money.
If you’re a saver and find yourself constantly checking your balances to make sure you have enough, you crave the security that you feel money offers. You aren’t afraid of spending money like The Saver; you take your time making a commitment to purchases, especially large ones. While this type of spending has its definite advantages, like the fact that you probably won’t find yourself in financial trouble, the urge to check and recheck your safety net can become overwhelming.
The Idealist views money and consumerism as unsavory and the root of many of the world’s problems. They prefer to dedicate themselves to innovative pursuits that don’t focus on money. The Idealist most likely ignores their finances and pays for necessary items quickly; afterwards, they jump back into their own agenda.
The Idealist spender tends to notice simple pleasures. However, this mindset is often impractical. They enjoy life, but forget that they need money to enjoy some aspects of it.
Source: Payoff, 5 Different Types of Money Spenders
A financial plan is a written document that spells out where you are in your financial life, where you want to be, and the investment strategies you will implement to reach your goals. A substantial financial plan should include an emergency fund.
What is an emergency fund?
An emergency fund is money that is set aside to be used in the case of an emergency, such as the loss of a job, an illness, or the death of a spouse.
Why have emergency funds?
An emergency fund increases financial security by constructing a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt.
How much should I be saving?
It is suggested that you save enough money to cover 3 to 6 months of expenses in a liquid account.
It is time for you to look for a new home! Where do you start?
Start by defining you goals. Consider where you want to live, the features and amenities you are looking for, what you can afford, and a realistic date for having the money you will need. Another decision you will consider is whether you are renting or buying your home. Purchasing a home is a huge investment; you will need to take the time to weigh the benefits of renting versus buying a home.
|Renting Your Home
||Buying Your Home
- The initial cost of renting is usually lower than making a down payment on a house
- You probably will not pay property taxes and upkeep directly
- With no money tied up in real estate, you should have more savings to invest
- You run no risk that the value of your property will go down
- You can deduct the interest on your mortgage and your local property taxes on your tax return
- You build equity as you pay off your mortgage
- You may be able to borrow against your equity and deduct the interest payments on the loan
- Your house may increase in value and you may make a profit should you decide to sell
Source: Morris, A Woman’s Guide to Personal Finance
Financial independence comes from respecting and appreciating money by taking care of it. How do you take care of money? There are four rules that you should follow:
Spending less means never buying something that you can’t afford. The big secret to achieving higher earnings is to stop creating debt.
Saving more means paying yourself first. Consistently put money in your bank account until you have enough to cover emergencies and any unexpected loss of income.
Put money in assets that will grow faster than inflation and taxes can take away. The biggest risk for women is that they will outlive their money. A portion of money earned needs to grow faster than inflation.
Give Generously to Causes You Truly Believe In
Give thought about where you want to make a difference and create a plan.
The goal for you is to have choices, to have freedom to live life on your terms, and to create a fulfilling outcome from your financial decisions.
Source: Barbara Stanny, Secrets of Successful High Earners