Starting point

Understand your expenses and your income

Divide your expenses into three basic categories:

-FIXED which are the same and unavoidable every month no matter what, like your rent or loan payments. Which makes them your number one priority. No, your mojitos sadly cannot be housed here, group hug, I feel you, we’ll get through this together.

-VARIABLE are the expenses that vary each month. Examples include car maintenance, gasoline, food, electricity, heating gas, phone, etc. Basically your resource expenses will go into this category. So the burning question here is, do you consider mojitos food? They are basically 99% carbs, so…

-PERIODIC are the costs which occur on an irregular basis, rather than monthly. Some may be predicted and planned ahead, say holiday gifts, others will be an ‘Oh-No’ kind of surprise that comes for free with adulting.

GET A GRIP ON YOUR INCOME.

Start with your basic budget which is the relative measure of what incomes are necessary to attain a specific standard of living. This includes housing, monthly bills, food, child care, transportation, health care and taxes.

 Then make sure you have a perfect understanding of what you make, especially if you have multiple sources of income. A financial calendar may be the perfect solution for you especially if you are a visual kind of person.

-Be aware of the difference between Gross Pay vs. Net Pay

Your Take-Home-Pay is your net pay. It is the amount you will take home after deductions for payroll taxes and other items such as health insurance.

-If you have multiple sources of income, keep track of everything to manage all your existing income streams.

Actionable thinking

Daily Money Minute:

Dedicate a few minutes every single day to check your account balances, recent transactions, and progress toward your goals. In just a few minutes you’ll be able to tell where you stand and what needs to be done that day to stay on track. Being on top of things will give you a sense of control which is a great motivation to work towards your goals.

Costly habits?

We all have our habits and that is totally ok, as long as we set some priorities and spend mindfully, otherwise those habits can put a sizable dent in our wallets. Have an honest self-evaluation of your spending habits and what you can or cannot live without. Your quick bites away from home, your caffeine fix or a mini trip to the mall without a list of the things that you need to shop for, may seem harmless at the moment but the costs will add up and pose a risk to your budget.

All you need to do is monitor your spending and decide if the total cost is worth it. There is no set formula when it comes to that, as we all have different needs, different wants and different priorities.

Emergency Fund

Having a safety net is probably the smartest thing you can do when it comes to your finances. Start building your emergency fund slowly but steadily and to the best of your ability. Unexpected events such as medical emergencies, a job loss or unplanned travel expenses will seem less daunting when you are well prepared by setting some money aside each month.

The grown-up Cookie-Jar Approach

A truly effortless way to do that is by Automatic Transfer. Have a portion of your paycheck direct deposited into savings on a monthly basis, watch your stash of money grow and you’ll be able to cover the financial surprises life throws your way, stress-free.

Invest

Once you have secured your basic budget, prioritized you expenses and your emergency fund you can take it one step further and think about investing. Investing means are simply having your money work for you and you can even start investing with little money. Beyond stocks and bonds, there are many other, alternative ways to invest. Like real estate investments. BUT since investing is not guaranteed to make you money, the best thing you can do is play it safe and consult a licensed expert. When your hard earned capital is at risk you should take things very, very seriously and do an in-depth work and research before you decide on a strategy according to your financial goals.

Keep trying even if you face setbacks, adjust to each new situation and keep in mind that financial health is a life-long journey that will grow with you!

Good luck,

Chelf