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).
