Money is a story you tell yourself. It’s a promise to everyone that the piece of paper is valuable. And also, the government enforces certain things.
Things appear stable but it rarely is.
As of now, your central bank aka government can print money as and when they wish. They do so many times and suddenly your value of money stored goes down.
You can’t do anything about this.
What you can do is plan things about your money so you get a sense of security. And you know where your money goes.
You might not think so – but you need a budget. So, you think less and save more. Get more out of your money. And make better decisions along the way so you can make big decisions when the time is right.
Earn More Money
Let’s say you have a job with a $1000 per year salary. It will take about 5 years for you to reach a $2500 salary. What if you switch jobs by learning some skills and get a $2000 per year salary in your second year. Now, you have jumped how much you can earn.
Always, be open to going to a better job that appreciates your skills and pays you better money.
Don’t think of your job as a permanent place to be. Instead, actively pursue new things, improve your skills and grab new opportunities, either in your own company or some other company.
Remember, if you are going to do your job with the best possible inputs, it’s your onus to make your boss fairly.
And if that’s not the case, don’t be hesitant to look somewhere else. Know your worth, your skills and be bold to work in a respected environment.
A Simple Budget Formula
There are many ways to budget your money. Below I am sharing with you some simple budget ideas. Feel free to change things to suit you.
- Whenever you get your salary, save 20 per cent in your book account, invest 20 per cent in some equity-related products and use the rest for your expenses.
- There are some things in your life, you will probably do like to buy a car, marry and go on vacation. Make some buckets of them – save actively for them every month. For example, out of your 20 per cent savings, allocate 5 per cent to marriage, 5 to vacation, 5 for medical bills and so on. The investment money is usually for your retirement.
- Debts can be used for leverage. But for most people, you are better off without one. If you don’t understand what compounding, risk-factor analysis and markets are – you should avoid debt in general.
Why this works is simple – if you let yourself spend first then you will consume all of it. And maybe save/invest very little amount.
By deliberately saving/investing first, whatever amount is left, you will adjust accordingly.
P.S. Of course, if your salary is awful low, try to get a better job – take help from peers, family and friends.
P.S.S. If you are in debt, put some amount to pay off debt too.
You should put this action from day 1 of you earning some money. Even if the amount you earn is small, it will help you form a habit.
And you don’t know your future. What if you are stuck on your same salary for years, this happens for many reasons. Having a budget helps. And if you outgrow yourself by earning way more, the habit helps to do it that on a bigger scale.
Inflation makes sure the value of your money goes down, government printing money means value goes down and hence, investing a portion of your money is needed. Also, you can buy some great assets which grow in value over time.
A general idea is to invest in more risky stuff while you are young and less risky stuff when you approach your retirement.
All of this sounds good but it takes a lot of mental energy to execute. Hence, this budgeting thing works when it happens automatically. So, make sure you have accounts that auto-debit every money without your intervention.
Be On Lookout
There are many schemes that are rolled out by the government to help you with retirement issues.
For example, if you invest in a pension scheme with your employer, they add the same amount of money to it. So, you instantly double your money and also get guaranteed interest. Also, most of it is tax-free.
Always be open and talk with your peers – where they invest. And if it’s a scheme by the government, explore and see it’s a benefit. Guaranteed returns with a tax-free scheme is a gold mine. And you want to invest in them asap.
Because compounding does magical things. Your money invested might seem small. But till your retirement, it will grow to a million dollars or more. And you can enjoy your post-retirement life.
Don’t leave your retirement to fate, you won’t work forever, there can be health tolls and many unexpected things. Prepare for your life so you can enjoy tension free.
Your Financial Education
To wrap it up, if there is speculation involved then it’s a high risk, most of the times you want to avoid it. Only invest if you are okay to lose money and be okay with it. For example, Bitcoin as on 2021.
Every month, read up on schemes by the government and consult with a financial advisor, your employer might have a free one to help you. And invest if you can. Again, compounding is magic.
Don’t keep checking on your investments, they tend to go up and down but long-term it goes up. For example, stock market investments.
Avoid debt as much as you can. If you keep upgrading your lifestyle then you will never have enough. The key is to keep the extra raise and not upgrade your lifestyle. Wait it out. For example, for every 3 raises in your income, upgrade your lifestyle once equal to 1 raise.
At the end of it, you want peace, a loving family and good health – optimize for that. Your budget, you need it, you should rock them.