Money Management Made Super Simple

0
68

Money Management Made Super Simple

You can’t afford to ignore this.

-Advertisement-

Most people ignore money issues and act like they’ll work themselves out.

Sigh.

I was broke once. I ignored money issues.

It stayed like that until I got sick of being broke.

The process to go from low triple digit net worth to high 6 digit net worth was simple. Not always easy, but always simple.

Money management comes down to 2 things.

1. Increasing income.

2. Reducing spending.

Regarding spending

First things first- budgets suck.

Instead try a cash flow sheet. What comes in, what goes out, how much you invest.

My problem with budgets is that so much of the costs are out of your control. You may only budget 1k for rent, but the lowest rent in your area is 1,500. Okie doke.

Food budget is 500 a month for a family of 4. Well, inflation showed up to say naaaah.

So, a cash flow sheet gives you a real world snapshot of exactly how you’re doing each month.

Next step, cut costs of the big 3: housing, food, transportation.

Housing- best way to cut? Less house than you want. A smaller home is not only cheaper to buy, it’s lower taxes, lower utilities, lower upkeep. Do you need a 3,000 square foot house? No. If you’re renting, get a 2 bedroom and a roommate.

Food- best way to cut? Eat at home. Grocery shop, clip coupons, shop sales and make bulk meals at home. Eating out adds up real quick.

Transportation- best way to cut? Used vs. new. In 2018 I was in the market for a new car. Would it be the 50k 2018 Mercedes?? Nope. The 10k 2014 Mazda was perfect. Also, shop insurance. You’re not reward for your loyalty.

Finally, use the ‘cost to value’ ratio.

Whenever I’m about to buy something I ask myself a simple question.

Does the cost paid equal the value provided?

If the answer is yes, fine- buy it. If it’s no, then don’t.

It’s no more often than you think.
Regarding building wealth

Back to first things first- build a 3–6 month emergency fund.

You hope you never need it, but if you do, you’re glad the cushion is there. Think of it as personal insurance.

This is a cash cushion you don’t tap into unless it’s an absolute emergency.

Next up, build cash flow

Never stop skill building. Sales, marketing, UX design, coding, etc.

Because you can translate skills into side hustles, a new higher paying job, etc.

You want multiple income streams that you continue to increase over time.

And finally, buy assets

Every single wealthy person in the world owns assets.

Stocks, crypto, real estate, businesses, etc.

It really doesn’t matter which you pick. I prefer a mix.

Bottom line, buy assets at regular intervals.

Read More: 5 Money Making Chinese Rules That You Can Use to Get Rich

Read More: 7 More Money Cheat Codes

We do everything possible to supply quality information for readers day in, day out and we are committed to keep doing this. Your kind donation will help our continuous research efforts.

LEAVE A REPLY

Please enter your comment!
Please enter your name here