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Financial Advice, Blog, Money, Budget
Home / Tools / Going Back to Basics
Going Back to Basics on 9/29/2022

Going Back to Basics

Since starting this blog in 2020, we’ve covered a wide range of topics. We have talked about taxes and learning how to file on your own, understanding your 401(k) and the benefits of owning a credit card. We’ve discussed budgets in every way you could think of; how your personality effects your budgeting, different types of budgets and the 50/30/20 budgeting rule. At one point, we even threw in a financial challenge that proved to be a total failure if you don’t have great willpower (for me, anyway). It has been fun doing deep dives into the world of personal finance. All this big thinking, though, can cause us to gloss over basic financial principles.

Let’s go back to basics. These may be obvious but are definitely worth repeating.

  1. Save your money

Saving money is one of the best financial habits you can adopt. It allows you to cushion the blow of a financial emergency, assist in large purchases, avoid debt, reduce your financial stress, and provide you with a greater sense of financial freedom! Saving your money doesn’t always come easy but there are some practical ways to help get you on the fast track to saving money. For instance, start paying off your debts from smallest to largest. This snowball method allows you to gain momentum as you pay off each remaining balance! When you pay off one debt, roll that minimum payment over into the next smallest debt payment.

  1. Don’t buy what you can’t afford

Spend less than what you make! It is a simple premise, but one that is often ignored. If you live on more than you earn, you’re going to have a harder time getting ahead.

Let’s use this principle as an example when buying a home or car. When buying a house, always look at your financial health beforehand and don’t even consider buying until you have an emergency savings account with three to six months of living expenses. Buy within reason and realize that the more you spend on housing, the less you’ll have for everything else.

When looking for your next car purchase, don’t go into crazy debt over it. I have had a few cars in my life and trust me when I say my $10,000 KIA drives me from point A to point B just as well as the latest $75,000 Audi.

  1. Use a windfall for financial freedom, not a Yacht

Well, first off, what’s a financial windfall? A windfall is a large amount of money that someone comes into unexpectedly. I listed this as a basic financial principal because, at some point, we will all end up with a lucky break or two in our lifetime. Maybe it’s a surprise bonus from work, a large inheritance, a spike in a stock you hold, or you score the jackpot from a winning lottery ticket (side note: as an honorary basic principle, don’t try to gamble your way into wealth!). It is a fair assumption that most people will go out and splurge with this newfound money, but it should go straight into something that targets your financial future rather than the short term, like your mortgage or highest-interest debt. I know, where is the fun in that?! Your fun will come later when you’re granted greater financial freedom. It’s just one more step to getting ahead!

If you win a million-dollar windfall on a lottery ticket, maybe then, and only then, you can splurge and buy yourself a Trenti coffee from Starbucks because, let’s face it, those things aren’t cheap! But that’s about it.

  1. Learn to invest

You work hard for your money and your money should work hard for you! Not only can you grow your wealth, but if you’re able to invest young then you set yourself up to have more financial freedom when you’re older. If you’re just starting out, begin to look at your company’s 401(k) and Roth IRAs. If you’re interested in safer options, Certificate and Money Market accounts are good choices to keep and grow funds in.

If there's anything that I've learned from writing these blogs, it's that creating a financially sound like can be overwhelming. As I grow older, it almost feels like a daunting task that requires a financial GPS - where am I today, where do I want to get to, and which is the best route to take that won't veer me off into costly detours? It is in these overwhelming moments that I take a deep breath and go back to the basics of what I've learned. 

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