Let’s talk about personal finance. I know it’s not fun, but it is something that we all need to think about at some point in our lives. I remember when I was in college I kept saying I will get to it. Then I ended up with a bunch of credit card debts. Needless to say, it wasn’t a good idea.
Now I’m at the age of 25 realizing there is so much that I need to take into account in order to reach my financial goals. However, before we even get into planning these goals lets talk about making a budget first.
When we budget, we need to take into account all the necessary purchases meaning the cost of living, food, and transportation. Then there is a big chunk of our expenses that sometimes we don’t take into account which is very much like optional such as going out to dinner, getting coffee from Starbucks and et cetera. Don’t get me wrong these are not bad, but not exactly necessary. It is good to have moderation with these so the expenses don’t go out of control so you can use your money wisely for something better for your future.
Now after we cut these optional purchases, we start to see what we can do with our money. Sometimes this might not be a lot but don’t worry. You can always start small then eventually you will get around with your personal finance. There is so much one can do with that extra money that we saved by not getting Starbucks every day. You can make that money double or triple by investing in the stock market.
Let’s look into the other side of personal finance; how we spend the money we saved. Let’s just say, with all the savings you made from your brokerage account (stock) you want to buy a car. One thing I would recommend before visiting the dealership is to calculate how much you can pay a month comfortably.
You might say I saved all this money, I might as well just pay in full. Here’s my advice to you. A car is something that depreciates its value literally as you drive off the dealership. So you are literally losing dollars as you use the vehicle. Let’s use another example. Even if you are buying a property you should still consider getting a mortgage because while you are paying for your mortgage you can use the rest of the money to invest, start a business or simply open a CD account. What I’m coming at is, in this way you can get the best value for your money.
This was just a little summary of how I do my personal finance. There is so much to it than what I described here, but these are some good starting points for anyone who wants to take control of their finances or just wants to learn the basics.