Personal finance - more than just income / expense accounting
About what
With this topic, I want to open a series of articles on personal finance, in which I will try to briefly outline the essence of personal finance and personal financial planning, based on my practical experience, as well as the knowledge that has been gathered (and filtered) from books and seminars. I want to share this, because “money loves the account”, and we often forget about it, which, in consequence, will get us sideways. Personal finance is not only the accounting of income and expenses in Excel or on a smartphone, it is the achievement of life goals in a shorter and perhaps the only correct way. This topic is not about how and where to invest! On the contrary, I will discourage you from doing many stupid things, because I myself was particularly concerned about my time. This topic is about how to keep and multiply safely. The most interesting thing is that everything is quite easy, it does not require self-infringement in something - you live just as you lived. But at the same time you achieve more.
Why
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Information on this topic is just incredibly much. Almost every day we are offered to “save and increase” our savings with the help of Forex, the stock market, real estate and land, banking and insurance products, etc. In this article I will describe the main points - where to start. If you try to cover the whole topic - you can read for a very long time. We need to start somewhere, take the first step. It may seem strange, but I took my first step only three years ago (I don’t regret it at all - the result is pleasantly surprising), and “in theory” I knew that it had to be done in 2004. It's hard to explain why this is needed until you try it yourself. I tell my friends what I have achieved in just three years of proper planning - and they ask to help them do the same. Because my result "can be touched" - lies on the accounts in banks.
How should I know
It is probably worth telling in brief about your experience, to whom it will be interesting - I will describe in some detail the whole story. In 2003, I readalready all the annoying Kiosaki. From that moment on I broke through, I wanted how he became interested in personal finance and investing. During these 10 years, I managed to earn and lose money (mostly to lose and VERY much, because the main movements came in 2007-2008, when even the most intelligent eHperts, not to mention ordinary people, began to lose) on the following instruments: banks, credit unions, stock market, Forex, land, real estate, foreign exchange transactions - this is what he remembered. Only about three years ago finally “awareness” came and I began to do adequate things in this direction. Prior to this, actions were taken on the basis of theories and thoughts / advice of other people. The crisis has taught me to think with my head and I do not regret anything.
To business
Now to the point. I will describe only what it is worth starting “yesterday” - what works at 100%. This is checked by me personally, it works, I am responsible for these words.
The basic principle is time and money.
Moreover, it is in this sequence. If you do something in the direction of personal finance - time works for you. If you do not - against. There may be minimal money for starting, if there is a lot of time left (you are young) and, at the same time, there should be more money if there is not much time. I will give an example:
You are 20 years old and you deposit $ 100 at 5% per annum. This is only an example, the amount is not important, the percentage is not important - time is important. So you put 100 dollars at 5% per annum and when you will be 50 - the amount on the deposit will be about 430 dollars. If you are 33 years old, then you need to put 200 dollars under the same 5% in order to get 50 dollars the same 430 dollars. Yes, at first glance, at 33, finding “$ 100” is easier than at 20, but it only seems. You need to understand the main thing - the amount is not important, it is important to start early. Even if you are 33, not 20, you still need to start.
Three personal financial plans
I heard this concept in 2006. It is very simple and, at the same time, incredibly effective. I will not write about ways to implement this concept now, this will be the next topic, I think. So far, just "what and why?". There are three plans that every person should have if he is not indifferent to his own fate and the fate of his loved ones:
1. Financial Security and Safety Plan
2. Plan for financial independence
3. Plan for financial freedom
The financial protection plan means that you have in reliable and easily accessible (this is the most important!) Places that will allow you to live at the same level of expenditures that you currently have for 6- 12 months. Let me explain by example. Now you are a young and successful IT specialist, you earn well and everything is fine. You go to the mountains to ride a board, at the turn a healthy dork skies into you (or, on the contrary, you are skiing, he is on a board - who has any preferences) - you fall and severely damage your arm. So much so that it will take from 6 to 12 months to restore it. There can be no talk about work. The example may not be entirely successful, but the essence is not in the example. So, the financial security plan means that you will continue to live by the same standards, without prejudice to yourself for six months or a year, without receiving any income (you cannot walk to work). For example, you are now spending $ 1,000 per month steadily, which means you should have savings of 6–12 thousand dollars. If something happens to you, you take out these savings and live as you did before. You are safe. 6 months or 12 is individually. I used to think that 6 months is normal, now I understand that it is better than 12. In life, things can be different. But 6 is the "obligatory". This is an emergency reserve, it can not be touched, if it is not a force majeure situation for which it is intended.
The plan for financial independence says that having all the same $ 1000 of expenses (for example), you must have a passive income of 1000+ dollars so that you do not depend on anything. What is passive income? This is when you do not need to do anything to get it. And if necessary, then spend no more than a day per month on it. The rest of the time, you can smoke bamboo, and the income from it will not go anywhere anyway. For example, you have an apartment that you rent - and once a month you need to go and pick up your $ 1,000 from tenants. Or you have deposits and interest accumulates 1000 dollars once a month. We are not talking about ways, just about the meaning.
Plan for financial freedom - the most tasty morsel. And the most difficult to reach. He says that you must clearly define (!) The amount you need for yourself in a month in order to be financially free. For example, now you spend $ 1,000, but if you lived the way you wanted, you would spend $ 10,000 (if you had them, of course). And here the scheme is the same as in terms of financial independence - you must find a way to receive this amount in the form of passive income. Then and only then can you be free! We are not talking about millions of dollars of yachts, it’s just elementary to feel like a person and live in pleasure.
I am currently working on Plan # 2. I finished financial security (I still don’t have to forget about it, because today costs 1000, and tomorrow may be 2000 - you will need to go back to plan number 1) about six months ago, it’s even difficult to convey how much you feel more confident in life when you remember about this DK.
On this positive note, I will finish this opus, because so many letters have happened. Next time, I think it will be possible to go through the ways of implementing Plan No. 1.
For now, you can read a simple, short, but incredibly sensibleinstruction on how to live a book on this topic: "The richest man in Babylon." It's like a bible with 10 commandments for those who want to do their finances. The first reading did not bring me anything - I read and forgot. Then, when I lost a lot of money and stepped on dozens of rakes, I remembered her, read it again and realized what kind of an idiot I am. If I deliberately read it, I would not make so many mistakes. And these are not empty words.
With this topic, I want to open a series of articles on personal finance, in which I will try to briefly outline the essence of personal finance and personal financial planning, based on my practical experience, as well as the knowledge that has been gathered (and filtered) from books and seminars. I want to share this, because “money loves the account”, and we often forget about it, which, in consequence, will get us sideways. Personal finance is not only the accounting of income and expenses in Excel or on a smartphone, it is the achievement of life goals in a shorter and perhaps the only correct way. This topic is not about how and where to invest! On the contrary, I will discourage you from doing many stupid things, because I myself was particularly concerned about my time. This topic is about how to keep and multiply safely. The most interesting thing is that everything is quite easy, it does not require self-infringement in something - you live just as you lived. But at the same time you achieve more.
Why
')
Information on this topic is just incredibly much. Almost every day we are offered to “save and increase” our savings with the help of Forex, the stock market, real estate and land, banking and insurance products, etc. In this article I will describe the main points - where to start. If you try to cover the whole topic - you can read for a very long time. We need to start somewhere, take the first step. It may seem strange, but I took my first step only three years ago (I don’t regret it at all - the result is pleasantly surprising), and “in theory” I knew that it had to be done in 2004. It's hard to explain why this is needed until you try it yourself. I tell my friends what I have achieved in just three years of proper planning - and they ask to help them do the same. Because my result "can be touched" - lies on the accounts in banks.
How should I know
It is probably worth telling in brief about your experience, to whom it will be interesting - I will describe in some detail the whole story. In 2003, I read
To business
Now to the point. I will describe only what it is worth starting “yesterday” - what works at 100%. This is checked by me personally, it works, I am responsible for these words.
The basic principle is time and money.
Moreover, it is in this sequence. If you do something in the direction of personal finance - time works for you. If you do not - against. There may be minimal money for starting, if there is a lot of time left (you are young) and, at the same time, there should be more money if there is not much time. I will give an example:
You are 20 years old and you deposit $ 100 at 5% per annum. This is only an example, the amount is not important, the percentage is not important - time is important. So you put 100 dollars at 5% per annum and when you will be 50 - the amount on the deposit will be about 430 dollars. If you are 33 years old, then you need to put 200 dollars under the same 5% in order to get 50 dollars the same 430 dollars. Yes, at first glance, at 33, finding “$ 100” is easier than at 20, but it only seems. You need to understand the main thing - the amount is not important, it is important to start early. Even if you are 33, not 20, you still need to start.
Three personal financial plans
I heard this concept in 2006. It is very simple and, at the same time, incredibly effective. I will not write about ways to implement this concept now, this will be the next topic, I think. So far, just "what and why?". There are three plans that every person should have if he is not indifferent to his own fate and the fate of his loved ones:
1. Financial Security and Safety Plan
2. Plan for financial independence
3. Plan for financial freedom
The financial protection plan means that you have in reliable and easily accessible (this is the most important!) Places that will allow you to live at the same level of expenditures that you currently have for 6- 12 months. Let me explain by example. Now you are a young and successful IT specialist, you earn well and everything is fine. You go to the mountains to ride a board, at the turn a healthy dork skies into you (or, on the contrary, you are skiing, he is on a board - who has any preferences) - you fall and severely damage your arm. So much so that it will take from 6 to 12 months to restore it. There can be no talk about work. The example may not be entirely successful, but the essence is not in the example. So, the financial security plan means that you will continue to live by the same standards, without prejudice to yourself for six months or a year, without receiving any income (you cannot walk to work). For example, you are now spending $ 1,000 per month steadily, which means you should have savings of 6–12 thousand dollars. If something happens to you, you take out these savings and live as you did before. You are safe. 6 months or 12 is individually. I used to think that 6 months is normal, now I understand that it is better than 12. In life, things can be different. But 6 is the "obligatory". This is an emergency reserve, it can not be touched, if it is not a force majeure situation for which it is intended.
The plan for financial independence says that having all the same $ 1000 of expenses (for example), you must have a passive income of 1000+ dollars so that you do not depend on anything. What is passive income? This is when you do not need to do anything to get it. And if necessary, then spend no more than a day per month on it. The rest of the time, you can smoke bamboo, and the income from it will not go anywhere anyway. For example, you have an apartment that you rent - and once a month you need to go and pick up your $ 1,000 from tenants. Or you have deposits and interest accumulates 1000 dollars once a month. We are not talking about ways, just about the meaning.
Plan for financial freedom - the most tasty morsel. And the most difficult to reach. He says that you must clearly define (!) The amount you need for yourself in a month in order to be financially free. For example, now you spend $ 1,000, but if you lived the way you wanted, you would spend $ 10,000 (if you had them, of course). And here the scheme is the same as in terms of financial independence - you must find a way to receive this amount in the form of passive income. Then and only then can you be free! We are not talking about millions of dollars of yachts, it’s just elementary to feel like a person and live in pleasure.
I am currently working on Plan # 2. I finished financial security (I still don’t have to forget about it, because today costs 1000, and tomorrow may be 2000 - you will need to go back to plan number 1) about six months ago, it’s even difficult to convey how much you feel more confident in life when you remember about this DK.
On this positive note, I will finish this opus, because so many letters have happened. Next time, I think it will be possible to go through the ways of implementing Plan No. 1.
For now, you can read a simple, short, but incredibly sensible
Source: https://habr.com/ru/post/198892/
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