It Works – For Dummies

It Works-For Dummies

What exactly works in your personal finance life has a lot to do with trial and error. In other words sometimes we just have to feel the pain of being in so much debt that it jolts us out of our skin. At one point in time in the eighties I found myself living off my overdraft. Which at the time was $1000.  As soon as my paycheque was deposited it was sucked up into the the bank’s vault before I could say payday. I was then forced to live on the remainder, usually $200 to last two weeks. What a way to live. My wife at the time and I fought about money all the time. It eventually led to separation and then divorce.

I know from first hand experience if you don’t get money smart and learn all that you can as fast as you can it will lead to a lot of pain. So what is it that actually works? Make money, save as much as you can, invest the remainder and enjoy your life. It works. So what did I learn from this important life lesson from my past.

Get Organized

Know exactly when you get paid and what bills need to be paid with your paycheque. Sounds simple enough, but while most people know when they’re getting paid they soon lose sight of what’s coming out of their account that they get caught short and they either go into overdraft or have to tap their line of credit. All of this will lead to more monthly costs just to borrow money when all they had to do was organize what comes in and what goes out.

The best resource I have come across for this is listed below. This is an excerpt from Amazon:

In an age of great economic uncertainty when everyone is concerned about money and how they spend what they have, this new edition of the bestselling Your Money or Your Life is an essential read. With updated resources, an easy-to-use index, and anecdotes and examples particularly relevant today-it tells you how to:

• Get out of debt and develop savings
• Reorder material priorities and live well for less
• Resolve inner conflicts between values and lifestyle
• Save the planet while saving money
• And much more!

In Your Money or Your Life, Vicki Robin shows readers how to gain control of their money and finally begin to make a life, rather than just make a living.

Pay Bills On Time

Well this sounds real easy and it is easy for me now. I have as many of my monthly bills on auto-pilot as I can. The only bill I really need to keep track of now is my credit card bill which is a must to pay off immediately when due. The internet and banking has made paying bills on time a no brainer and as simple as it gets. Look into this strategy and implement it as soon as you can. Your life will be so much simple at it works.



Save Save Save!!!

I grew up with The Wealthy Barber and he recommended the 10% rule of saving. You saved at least 10% of your paycheque when you got one. Aim even higher because who wants to work forever right? The more you save now for later, the better quality of life you’ll have when you’re older. I’m old now and still try to save at least 10-20% of my pension cheques every month. Not that I need to it’s just a great discipline to follow and I like to take trips so there’s always that. If you’re just spending everything you make your falling behind.

Be as a Frugal as You can Stand

Not cheap but frugal. Think before you spend money and ask yourself if you really need to spend money on this. It’s a great exercise to go through and sometimes you’ll find yourself saying no. The other main thing to do is to stop going into stores. Will it make you happy to go in there? Other than food keep your spending to a minimum and only spend money on what truly makes you happy. I’m happy when I’m not spending and not in a store.

Invest As If You Were Immortal

After you’ve saved your money it’s time to make it grow. Whatever you do don’t just leave it in the bank. A bank is where you go to get money, not leave it there. Many people just blindly leave their money in the hands of bank salespeople with no idea of what they’re doing with their savings. Educate yourself on investing and read as much as you can.

Winning the Loser’s Game by Charles Ellis is a good place to start. Read what Amazon has to say about it:

The classic guide to winning on Wall Street–completely updated and expanded!

The go-to guide for anyone seeking long-term gain in the stock market, Winning the Loser’s Game was referred to by the great Peter Drucker as “by far the best book on investment policy and management.”

Dr. Charles Ellis, dubbed “Wall Street’s Wisest Man” by Money magazine, has been showing investors for three decades how stock markets really work and what individuals can do to be sure they are long-term winners. Now, in this new edition of his investing classic, Ellis helps you succeed in a market that’s becoming more unpredictable by the day.

Applying wisdom gained from half a century of advising many of the leading investment managers and securities firms around the world, Ellis explains how individual investors can avoid common traps and get on the road to investment success. With fully updated facts, charts, and figures, this new edition of Winning the Loser’s Game is packed with all new material, including:

  • U.S. government bonds: Why they’re no longer a safe bet for long-term investors
  • Active management: Fees are higher than ever. Are they worth it?
  • The investment management industry: They make huge profits–but how well do they serve you?
  • Behavioral economics: Know yourself–and you’ll be a better investor

With Winning the Loser’s Game, you have everything you need to set realistic objectives and a powerful investing strategy that will take you well into retirement.

 

Have Some Fun

As time goes on and you master the dummy basics of tracking your spending, saving and then investing you need to also have fun. In my case just leading a simpler life and doing things that don’t require a lot of money is my idea of fun. I start each day working out and then going for a walk. I use the car less. I explore my local area and do what I can within my community. We all have our own definition of what fun is but it’s nice to know when that day comes we have enough money and it’s something we no longer worry about. It works, try it. What do you find works for you and what do you need help with ?

10 thoughts on “It Works – For Dummies

  1. A very well-thought out article Peter. I could have used some of your advice a while aback. But I guess It’s never too late to start doing the right thing. Have you ever read a book called Rich Dad Poor Dad? That might also be a cool book to review and include on your site.

    I totally agree with you about NOT leaving your money in the bank. The fees are so high and the interest/dividend payout is almost nil. Not to mention inflation. So leaving your money in the bank is practically giving it away – to the bank.

    Good read.

    Cheers

    K

  2. I agree with a lot of things that you say in this article, but what speaks to me most is the part about investments!

    It is essential to look for proper and legal investment opportunities to make your savings grow! We need to keep in mind that inflation is worse than the interest on current bank accounts.
    I have BTW read the book ‘Winning The Looser’s Game’ and can really recommend it to any beginning investor!

  3. Nice article. It’s very important that you know what’s happening with your money. Simple rule if you want to improve, you need to keep track and analyze. Great tip, thanks for sharing.

  4. Well I try to invest my money as if I am an Immortal but I always tend to buy something about sports. I know I should stop my self. But I cant. how much percentage of my salary do you think I should save?

    • As much as possible. I would aim high like 50% then you can retire in your 40’s and live like you’re immortal. Good luck to you my friend

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