A realistic stratagy for becoming finacally secure.
31 Dec 2008, 4:06 am
How to become Finacally secure.
Written by MindOfOrderedChaos
I have been reading alot lately in books etc. On how to try and slowly attain more money even in my finacally challenged state.
I have come accross some interestingly simple rules that I am beginning to try and follow to do with money management.
1. Track your money. Know how much you spend and on what.
Go through and work out what you spend your money one each week. Where does it all go? Note down each transaction for 2 weeks should help you figure it out.
2. Live on 90% or less of your income.
Each week I put away a set amount as savings to build up for the future. By saving 10% before you use your money each week you will hardly even notice the difference. But the rewards will be substantial.
This calculator should help you work out just how rewarding it can be over a certian period of time...
http://www.sorted.org.nz/calculators/re ... /page1.php
Lets say $50 per week at 6% interest for 20 years. Now thats going to be a bloody nice stock pile of money!
3. Trim your living expenses. Decide what you really need and what you could do with out.
Lets say do you really need takeaways twice a week or that extra can of coca cola etc.
4. Target. Set realistic goals for where you want your finaces to be.
Lets say you decide you are going to save $50 a week for 10 years and put it in savings. That is a target.
5. Train. Read etc. Learn about the power of compound interest, investment stratagies and real estate.
The benifits of compound interest are largely underestimated. When you have money gaining interest the money gained by the interest adds to the total amount in the bank then you earn even more interest off that. Over time this causes great gains.
I hope you guys understand what i'm on about. And if this helps even one person i will be happy I wrote it. Let me know your thoughts and opionins and if you decide to actually follow this plan let me know.
Have a happy new years and good luck with any new years resolutions you may have .
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Unfortunately being human is a genetic disorder, and ultimately fatal.
31 Dec 2008, 5:06 am
I doubt you'd get a return of 6% on a deposit account after allowing for inflation. Here in the UK, for example, the best you'll get is a few percent above inflation, so you're only actually gaining, say, 2% a year at best. On many accounts, here, you'll actually be losing money, and it's a good idea to regularly check how competitive the interest rate you're receiving is. However, you've got the right idea, and if you can put money away every month that does soon grow. You can get better rates of return with other investment types, but they do carry greater risk, especially in the current environment. The best bet longterm is not to put all your eggs in one basket, so to speak. But at the moment cash in the bank is a good a place as any as long as your bank is covered by some kind of consumer protection scheme.
05 Jan 2009, 7:34 pm
My plan thus far:
My house is a 20' motorhome which I'm gradually working on getting off the grid (even RV parks are expensive). I learned some time ago that I don't need much living space at all. By whittling down my monthly living expenses, during the seasons when money is low, it isn't that low. During the months when money is good, it can be very good. (Seasonal worker)
And yeah, keeping track of EVERY expense for a while is a good idea. You'll be amazed how easy it is to nickel and dime yourself to death on things you never even figured into your budget!
- Jo
