When it comes to managing personal finances, the rules that existed hundreds of years ago still apply today. Tools and systems have changed (i.e. online/mobile banking and Excel spreadsheets), but the rules have stayed the same.
Make your money make you more money: Money that has been invested properly can earn you more money over time. Invest in things that will earn you more money than you had before (check out the Investing section of our community for more detailed information). This could be the stock market, buying a house or houses, or investing in your education.
Spend less money than you earn: If you make $35,000/year and you spend $37,000/year, you will create a debt situation that is hard to come back from. Even if you make $35,000/year and you spend $34,000/year, you have created a situation that is not conducive for being wealthy. Spending less than you earn gives you the freedom to save and prepare for the future.
Plan for the future: When people read that you need to plan for the future, the assumption is that they are talking about retirement. Yes, planning for retirement is extremely important (we will discuss retirement planning at length in the coming weeks); however, this is not the only event to plan for. You never know when an un expected accident could occur that would leave you with a large medical or car bill. An emergency fund is necessary for when those issues arise.
Managing personal finances can be intimidating, but those basic rules can go a long way to putting you on the path to success. However, it does take time to be able to master your finances. At FEELS, we pride ourselves in helping people with their financial situation. We work with our clients every step of the way to help them meet their financial goals. If you are looking for financial coaching, click the below link, scroll to the bottom of the page and take the personal financial assessment quiz (orange colored quiz). A member of our team will reach out to you once you complete the assessment!
I find that most people spend all their energy trying to make more and more money, but they fail to realize how their financial situation would also improve simply by cutting expenses. Simple principles go a long way!
@Jordan Johnson You make some great points!
I think most people think about just making more money without figuring out to how to manage what they currently have, so even when they start making more they are in same financial situation.
I personally have a rule of having 6-12mths of expenses saved up because I never know what will happen.