If you have always wondered what the secret to financial success is, you are in the right place. As it turns out, having secure finances comes down to balancing 3 things: debt, income and savings. This is the Triangle of Financial Success.
So how do you find the balance?
Be Smart With Debt
Debt isn’t always a bad thing. In fact, as long as you can keep up with your monthly repayments, taking on some debt is a healthy thing to do, financially speaking. Taking out a mortgage or a student loan is a very common form of debt but both can also be treated as a kind of investment into the future.
Bad debt is almost always bad because it is unaffordable and unnecessary. Taking out a loan so that you can go on holiday or buy a fancy car without first planning a repayment strategy is a very risky idea and you could end up in a lot of trouble. If you are already in trouble with debt, you are well advised to read more about debt settlement and management. Try DoveBankruptcyLaw.com/debt=settlement/ as a starting point.
Read about my Ultimate Budgeting Guide ?
I think we are in a time , we need to take some drastic decisions. Help us change our financial situation.
- 2 much debt.
- Just purchase a new house
- Kids in private school
- Back to school
- Car need repairs
- Credit Cards
- Student loans
- and more…
The reality is most of the population don’t have a budget in place and why is that?
Simply a question of organisation, taking the decision, know from where to start, not simple.
A budget should be at the main core of your money control. This amazing appelation will help you succeed at the game of financial stress.
Budgeting is for everyone, even if your making 100k a year or 20k a year, it is the same just at a different level money wise. The surprise is most peoples don’t even save 10% of their revenue per month. Since there is so much to do around bills, the house, work, commuting and many more situations.
It is a duty to make sure we are abble to save at least 10% of our income per month until we reach , 6 months of survival money.
Important indeed to track your expenses, it is fondamental to do so… You have to know exactly how much you have left at the end of the month.
Track everything without living a thing, even a pack of gomme or the muffin at the store. The difficult part, is to do it on a constant basis. Record every transactions you may have per day,per week and per month. How?
- Tracking with a software
- Have a excel sheet
- A Calendar
- A spiral book for notes
- and more…
Important, track with something that you know will make you comfortable. Don’t put to much pressure on you and more onward of having fun while in the process. We all know how hard it could be , to do something over and over again. To have the motivation to track all of your expenses could be challenging. Collaborate with your spouse or include a family member to keep you accountable. This will help you a lot.
Know your numbers is really important and i will repeat this word along my article, not to be annoying! We don’t realise that our income could fluctuate a lot from one month to the other.
- Part time Job
- Extra hours
- Less hours
- and more…
There is no way we could control how our income will be from one month to the other. So we should always calculate with the worst scenario in mind. When working with a budget, will give you more chance to be successful.
Calculate also any vacations time or sick leave day that was not taken at the end of the year.To apply to your budget lets say for the month of January, this should give you a boost for that month. Take advantage to pay any bad debt you have or a high interest rate credit. Any extra money coming your way, take the necessary steps to apply the money to paying down a debt in full.
Click here… to read more about my Ultimate budgeting guide.
Automate Your Savings and Set Goals
The 10% rule is a simple rule to follow but might not quite work for everyone. The trick is to work out how much you can easily go without as part of your budget and then automate that savings goal. If you don’t have an emergency fund, you should start building one as soon as possible.
Setting savings goals is also a good idea. For example, if you fancy a summer holiday, you should work out how much it is likely to cost, divide that number by the number of months you have until you would need to pay and then save the resulting amount each month until that point. This method works for everything from the small things to the big things – the longer you have, the less you will need to save each month so keep in mind the time frame you have set yourself!
Work Out Your Minimum Income
For many people, earning millions each year isn’t a realistic goal. Instead, you should be working towards earning a reasonable amount that will make you happy. For some lucky and frugal souls who like to be more with less, this might only be a small sum but for others, taking on a side hustle might be a good idea.
Working out your minimum income is a good way to ground yourself. Write down all your monthly and yearly expenses, add them up and divide by 12. This is how much you need to earn to break even. Add on 10% on top to include your savings goals and that is the number that will keep you running.
Balancing out each side of the triangle takes practice and over the years, you might find that your goals change with your circumstances. Keeping an eye on your finances and staying sensible might sound a bit boring but do it well and you can have a truly exciting life.
Take good care of yourself,
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