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PEOPLES DAILY, THURSDAY, MAY 2, 2013
Things you can look forward to when you have money
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ou work hard to make money, create multiple income streams, and live below your means, which allows you to diligently save every month. At a certain point, you will accumulate enough money to be financially free. But then what? What really happens when you finally reach a goal that you've worked years, perhaps even decades for? For those of you close to your goal, or on track enough to start thinking about this, here's what you can look forward to. You can ignore individual costs as long as you focus on the big picture Finally, you can breathe a little easier, because even if you don't plan to start reducing your nest egg by withdrawing from it, you can at least start using some of your surplus every month. As a fellow frugal person, I know all too well the difficulty in picking the more luxurious option when you believe that the lowest cost version will do. A trick you can try is to start ignoring the price (yes, this is not a typo!) and actually buying the option
that you want once in a while. Don't do this for everything, of course. In order to still be responsible, you should set a monthly limit on these "lifestyle expenses" and remember that as long as you don't go over the set budget every month, it's perfectly okay to live a little. You can take less risk
Once you feel financially secure, it isn't a bad idea to be more conservative with your investments than most people recommend. Many high-networth individuals simply wouldn't put a huge amount of their wealth in the stock market even if they were decades away from retirement because they just don't need the extra
performance. If you can live off the interest from a high-yield online savings account, why would you want to risk your capital and try to get 8% in the long term, but potentially suffer 50% losses? Sure, you can feel even wealthier, but is the stress really necessary? You can look long-term The more money you have, the more you can take advantage of what's best for you long-term. Paying cash (or financing at an extremely low interest rate) can be financially more responsible than leasing a car for instance, but you need to have the cash on hand first. Investing in the stock market is theoretically more advantageous in the long-run, but you better have the luxury of not needing that money in the short-term. And quitting your job to further your education so you can make even more money in the future? That's simply an opportunity only people with the financial means can make, which is now you. You can work less
There is a sizable portion of our population who simply love what they do, but let's face it: the majority of us work simply because we need that paycheck. And even if we love our work, we can probably find enjoyment by working fewer hours every week. When you have the means, you can start planning your way to a much more enjoyable work environment. You can be more generous to those around you When you are generous, you will truly start seeing your quality of life. You can start tipping more at restaurants, be more generous with gifts for your loved ones, and even help your relatives start a business. Even the most ungrateful person will appreciate your generosity to a degree, and if anything, they will be nicer to you too! You can donate to charity And you can extend this generosity to people you don't directly interact with by giving some money away to charity as well. When you donate, you feel great too. The power of giving is almost magical, but the best way to understand the feeling is to try it yourself.
Money Tip: Strive to discover that critical aspect in your expense budget Get a look from the outside
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cBean recommends meeting with your accountant, attorney and other key advisors. Sure, they provide vital services like keeping your finances straight and your business on the right side of the law, but the real reason for a friendly chat over lunch is to get a broader and fresh perspective on market forces that impact your business. Becoming an expert in your field can oftentimes narrow your view. Recounting his time selling cars, it was easy to view his business through a single lens, said McBean. "All I really knew was my car market," he lamented. It dawned on him that there were other professionals whose insights on the economy could help him move more cars off his lot. "I talked to my banker, I wanted him to tell me what else is going on in my market," he said. Sure enough, his banker's knowledge of how money was moving in the local economy helped McBean better tailor his practices for his market. Likewise, a sit-down with your accountant can help you map out money-saving tax strategies. A chat with your attorney can give you a glimpse at the legal landscape before you embark on a new venture or pursue new ventures.
Quote As a bull market continues, almost anything you buy goes up. It makes you feel that investing in stocks is a very easy and safe and that you're a financial genius. -Ron Chernow
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ne important reasons home budgets fail is because individual users fail to take their time to determine critical parts of the budget. This step is critical in developing a practical budget, and when ignored, can ruin your financial planning. I will discuss how to assess your expenses and prioritize them so you can ensure you are never spending more money than you are bringing in and are spending that money on what matters. Always determine what your expenses are. There are several different types of expenses, as listed below. The Unexpected - Bills relating to medical issues, prescriptions, home repair,
and car maintenance are all examples of unexpected expenses. These expenses occur when you least expect them, and are often costly and devastating to your budget if you are not prepared for them. Annual and Semi-Annual Expenses - There are certain expenses you have to pay every single year, or sometimes two or three times per year, that must be calculated into your budget. These expenses can include your home, life; health, and auto insurance, land used charge, homeowner's association fees and license renewals Monthly Expenses - The payments you make each month are generally the easiest to plan for, because you
expect them and paying them becomes habitual after a while. Just in case you aren't aware, however, these payments include mortgage payments, rent, telephone, internet, credit card payments, child support, car payments, and utilities. Weekly ExpensesGroceries, child care, personal care, and transportation expenses all occur on a weekly basis and are essential parts to any budget. Discretionary Expenses Discretionary expenses are those items or services you typically buy each day or every week that you could really live without. However, living without them is something that probably won't
happen, so they must be included in your budget as well to ensure they do not corrupt your budget and take the place of more important financial priorities. The Essentials Come First When you look at the many different types of expenses listed above, it can be overwhelming to think about which ones should come first in your budget and which ones should wait at the back of the line. I have made it easy for you, however, with a few simple suggestions. Your top priorities should always be expenses that relate to food and shelter. This can include your groceries, rent or mortgage payment, taxes, and home owner's association fees. Second on the list should always be your utilities, like electricity, heat, and water. These most important items are essential to a healthy life. If you use a vehicle to get to work, making your car payment and car insurance payment each month should be next on your most important item budget list. Remember, if you can't get to work, you can't earn a paycheck. Your next priority should be other insurances, like life, home, and medical. Your child care payments should also be a part of this category, as they are essential to your child's safety and well-being when you are not around. Finally, your credit card payments, unsecured loans, and discretionary expenses should be listed last on your budget. These should be provided for, but other expenses take priority.
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