Saturday, February 21, 2015

Essential Money Skill 2 Save it

      SAVE IT                                                                                                                    reusable facemask

OK, we have covered that you need to find ways to make money and control the money you make, simple huh? Well if it was so simple you wouldn't be reading this and seeking help just like me I personally am always looking for a better way and something I can adapt for my nee
I was going to start out by saying, “let us look into nature for more examples of saving and redistributing resources but in all honesty I just couldn't go there. Let's talk planer, you have come up with a budget that allows you pay your bill and have something left over so what do you do? Run out and spend the surplus? NO! The first thing you do is start a saving plan, look for somewhere to store your money, not CD (certificate of deposit) that come later. Look for a saving institution that will give you the highest rate of return on your money, check out credit unions they have good saving plan, what you want to do is build a nest egg that will carry you if you have and immediate or emergency need, the standing rule is three to six months of your pay. This is not easy but worth aiming for, if you take ten percent of your gross take home pay and divide that into different areas of saving that should help you build you nest egg, you don't have to put the whole ten percent in that one account but that's a good percentage to shoot for.

Another good point to no is that if you qualify for a 401k thru your employer get in as soon as you can, many employers have matching programs, this is free money so go get it, you can find all kind of information in most financial institutions but the buck stops at the IRS so check their website first www.irs.gov very helpful website. Start slow when funding your 401k or IRA until you have the swing of things use two or four percent of the ten percent you set aside. Another note for you to understand is that ten percent is the amount that you are paying yourself first! It is vital that you understand this, this money is not for entertainment, this small percentage is what will fund you nest egg and set the stage for you to have funds to invest for profit. You can borrow money to invest but like the song say's GOD BLESS THE CHILDTHAT'S GOT HIS OWN, and this is a sure fire way to get it, you just have to discipline yourself and have the desire to get in done.

There are two very powerful allies you have on you side in this endeavor, COMPOUNDING AND TIME. The definition of compounding say's; The ability of an asset to generate earning, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings. This is also known as “ compound interest”. Now imagine doing this with a sum of money for threes years, five to ten years, even one year. I am not going to give you any numbers that is for you to figure out I am just giving you the concepts of ideas.

So now hopefully some time has passed and you have save some money to work with. You should have several pools (accounts) designated for specific purposes and needs such as. A retirement account which can consist of a 401k or IRA (wroth) or investment account just for the retirement age. Next a saving/emergency account, these funds should only be used for immediate needs, like auto repair's appliance replacements unforeseen home repairs, you can even divide the two saving and emergency so you have more control of the money and what it is used for. *note whatever you designate each account for you must stick to it for it to be successful, and now the investment account. You want to get this one as good as you can because this account is the one you are hope to show profit from and one that can become a vessel for accomplishments or can crash and burn losing all your money. In using this account as in all the other accounts you acquire you need to do your homework but in this one it would be to your best interest to study everything you can about investing such as “investing for profit” “return on investments”, “minimum risk”, “high risk”, “business structures”, you don't have to have a masters in business, but it is to your best interest to be knowledgeable if you want to succeed. You can always just stick with first few accounts mention and you can be fine. Remember all of this funding is to come from the 10% of your net income that you will pay yourself first. It may seem a little hard but practice practice and when you think you understand practice some more. This will not happen over night and you will need to discipline yourself and be patient. Remember the longest journey start with a single step.


 This can be used as the basic framework for any savings plan for beginners and young people who have not had any real training in financial matters. The main two factors you need to focus on are coming up with a good plan for yourself that fit's your needs and stick-ability (see it through to the end).


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