I know a very rich man that will die with everything he owns still in the bank. It reminded me of Scrooge McDuck – swimming in his vault of gold and money each morning. For some reason, I thought Scrooge’s vault of gold meant he too would die alone and with everything he owned still in the bank. That was until I saw this below clip and my take on Scrooge McDuck took a turn for the best.
Organize your finances through budgeting
All of us have general ideas regarding budgeting, even if we never thought about it for too long. As Scrooge McDuck would say:
- You have to budget your money so you can see where it is going.
- Save a piece of the pie for yourself.
- Make it grow!
While this sounds so simple in theory that it can be accompanied by a snazzy little show tune number when we first start to think through budgets and building wealth it can quickly become a daunting task. But it doesn’t have to be.
The key is just to start.
The pseudo-minimalist approach
I have found that with most things in life, the less of something we have, the easier it is to do something with. So, don’t wait until you reach your goal income before you start to save and invest – organize what you have now, however little or grand the number is – because it is all relative anyhow. You will be thankful you organized now than when spending or income growth, as they inevitably do, and you are stuck with a bigger task to organize.
When it comes to the three bullet points above, take a pseudo-minimalist approach.
You have to budget your money so you can see where it is going.
Easy does it, start simple. Start by tracking your money. Mint.com has a great app for tracking your spending. Start there. Once you see where your money is going, it’s easier to say, “Hey wait; I didn’t know we were spending $300 a month going out to eat, I’d rather save that for a summer vacation.”
Cut back your spending on things that don’t matter, say another home is decorating treasure, a 20th American girl doll for your daughter and 15 pairs of yoga pants you aren’t wearing. Again, it’s easier to organize a smaller group of things. Think about the things you love and make you happy, and the things you buy out of obligation or keeping up appearances. Drop the latter. My motto, I pinch every penny on those items I don’t deem as adding value and splurge selectively on things that do. I’m not a slave to my budget; I am in control.
Save a piece of the pie for yourself.
You simply have to start saving. There is no way around it. Once you have at minimum three months of expenses saved up, even things like your job don’t seem so stressful. You have a safety net at the end of every possible bad situation. You will clear your mind and finances and find confidence. Even if just a little, start saving. When my husband and I started to save, having previously lived paycheck to paycheck, we started out with 1% and increased 1% every paycheck until we reached the average suggested 10%.
I know that 1% may sound silly but can add up over time. Let’s say 1% of a $1,500 paycheck is only 15 dollars, but with 24 paychecks a year and with adding 1% each pack check (meaning paycheck 1 you save 1%, paycheck 2 you save 2%, paycheck 3 you save 3%, and so forth until you are saving 10% each paycheck) brings you $2,925 saved in 12 months. Saving any extra income (bonuses, gifts, etc.) on top of that gets you there faster.
Make it grow!
It’s common belief that we need to have loads of money before we start investing. Not so. Start now. Modern technology has made that super simple to do with the use of robot-advisors like Betterment. Use the same 1% rule above and get going.