All tagged financial basics
A lot can happen in 365 days.
Usually, at around the time of my birthday in March, I like to get my yearly doctor check-ups done. It's just easier for me to remember and also I feel like it makes sense since I’m another year older and another year wiser. One other thing that I also like to do during this time is to check my credit report…because my birthday also means another year of being a more responsible adult.
If you are not comfortable doing this around your birthday, do this around tax season. It's a great way to put yourself in the mindset of money management. Start associating April as the month where you also take care of yourself and your finances.
A big question that often comes up is should I be investing even if I have debt?
We all have different tolerance for risk, but a little number crunching will show that paying off debt AND investing will be more beneficial for you in the long run.
Today, I'm sharing with your some tools to help you decide for yourself.
The best time to plant a tree was yesterday. The second best time is today.
The talking heads on TV are putting fear into our heads and hearts with the word “recession”. While I think we always have to be weary of the talking heads, it’s important that we start planning for an uncertain future and the best time to plan for an uncertain future is when the going is good. The thing with fear is that it paralyzes most of us from taking any action. Fear never goes away. We are wired to fear because it keeps us safe. While we sometimes think humans are complex creatures, our inner core and need is to ensure we survive from whatever could hurt us. The challenge is that wherever we turn, we are made to fear anything and everything because fear is used to sell us things. Instead of letting fear get to us, let’s put a plan in place that we know we can easily execute to get our finances in order before the slowdown happens for the sake of our future selves and our families.
“Credit buying is much like being drunk. The buzz happens immediately, and it gives you a lift. The hangover comes the day after.”
I recently came across a post on Facebook about how a woman took out what essentially amounted to be a very expensive loan for underwear. I’ve included the text below and you can find it here too. It’s a public post so hope it’s OK for me to repost. Credit to her for admitting to it. Upon reading it, it got me thinking about my own spending habits and the “loans” I’ve taken out by putting certain items on credit so here goes.
The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
There is absolutely no shortage of investing materials on the internet, but the problem is that there’s too much, it can be overwhelming where to even start. So to help you with that, we’ve compiled a list of resources, from YouTube videos, blog posts and books to help you navigate the world of investing. These are not your mother’s resources.
We recently created these postcards as a friendly reminder of the many things we can do today to set ourselves up for financial independence. The 3 Guidelines of Personal Finance is Spend Less, Earn More and Invest the Rest. These are what I also call the 3 Wealth Building Strategies. Do all 3 and you are sure to have a sizeable nest egg to help you fulfill your dreams, but I am going to change the order a bit and actually make it Invest First, Spend Less, Earn More.
There are things we don't know we don't know.
Investing is a scary act. It involves risk and reward. It involves research. It involves understanding how companies work and how company information is presented in financial statements. There's an old advice out there that says "invest in what you know" meaning support the companies that you would buy from. For a period of time, I invested heavily in an index that tracked against the growth of the S&P 500. This was a hands off approach and one that I would recommend to those just starting out. There's a lot of volatility (ups and downs) with investing in single companies so instead the idea is to invest in an index fund or a mutual fund that already has a diversified list of companies (meaning the basket consists of various companies from many industries.)
Our society is so simple and so standardized...NOT!
In an effort to simplify the tax code, lawmakers aggressively pushed and passed the Tax Cuts and Jobs Act of 2017. One of the first claims of the Trump administration was to reform the tax code and streamline tax filings so far as to allow people to file their taxes on a postcard-sized piece of paper! Do I think it’s possible? Yes! But I think it will only be applicable for taxpayers with little to no complications in their tax returns.
Is being basic costing you money?
There's been a term floating around for a few years now called "basic." Urban Dictionary defines it as someone who "engages in typical, unoriginal behaviors, modes of dress, speech, and likes." Is there anything wrong with liking the things that are being mass marketed to us? Absolutely not, BUT, sometimes we have to start doing the unconventional to be able to get off of the same hamster wheel that everyone is on. Being average in the world of Financial Independence sometimes carries a price.
"Modern society will find no solution to the ecological problem unless it takes a serious look at its lifestyle."
One of the things that we talk about a lot here and in the FIRE community is the concept of living an alternative lifestyle that focuses less on consumption. An average American will spend their day working and then consuming what they just earned without thinking about the consequences. Today, I want to bring up the Zero Waste Lifestyle.
Money is just a tool. It is neither good or bad. It's value comes from how it is used.
BUT...depending on how you grew up, you may not think of money that way. Money may be a source of fear. Money may be a source of strength. Money may conjure up good or bad memories.
Most people live for the 5-10% pay increase every year. Many think they deserve the increase for putting in another year on the job. The reality is that most of the time this increase is typically eaten by lifestyle inflation and taxes and does not result in incremental wealth.
At Sisters for Financial Independence, we are broadly terming financial independence as the means to replace a wage income (9-5 salary) with income from an investment portfolio. It is generally passive and it comes regardless of how many hours one spends at the office.
