The Index Card (Why Personal Finance Doesn’t Have to Be Complicated)

I’m about to be 28 and I’ve decided that 2020 will be my year to practice financial health. I started to dapple in practicing saving money this year. I had a very lofty goal that isn’t quite working out but I’ve definitely learned quite a few things and still managed to save a decent amount. I learned the lesson that buying groceries might be expensive but it is still a lot cheaper than eating out (even though I despise cooking.) That might seem like a no brainer but when you cut out as much Starbucks as possible your whole financial life glows up. My 401K at work is still one of my favorite things to participate it. And using cash has been my savior in stopping me from overspending. And I still really like using Digit even though there is a small fee related to it now.

I decided to read this book because it really breaks down good financial habits in a very easy manner to understand and remember. A lot of these things I’m not quite ready for but it was still a smart idea to read about. One thing I want everyone to take away is that even saving a little will really help in the long run.

I’ve taken my favorite lessons and put them in this post. Everyone should read this book by Helaine Olen and Harold Pollack if you are ready to take on those baby steps to build up some savings. I recommend reading it yourself because it might have ideas and knowledge that I don’t need at the moment but you might!!!


Ultimate Goal: Aim for saving 10-20% of your pre-tax income. You can start small though!!! Don’t force the saving, just do it wisely

-Take 3 months to monitor your spending (I will start this in 2020)- the 1st month will show you all the non-negotiable spending (ex. Rent, power/water, car insurance)

  • Every single purchase will have to be put into a category
  • Make sure cash purchases are noted
  • At the end of each month make sure to go over what you spent
  • Emergencies: try to reach for 3 months of expenses – paying for those non-negotiable
  • -Set up an automatic savings plan- basically an account in which you don’t manually input the money yourself (You can use direct deposit to do this)
  • * the average household owes an average of $15,000. I don’t know about you but that scares me

    Credit Card Tip (if you are able to reduce your credit card spending splurge and buy yourself a little prize)

    • Try to avoid high interest cards and pay off the balance each month: always pay down the card with the highest interest 1st and then the minimum on the other

    * don’t be afraid to declare bankruptcy

    -We all know about those deathly student loans: studentaid.ed.gov- find federal loans first and then private

    Use your workplace retirement fund! I am all about this and I check mine religiously

    • 401K (there are also IRA’s)– hopefully you’re lucky and your employer will match at least some percentage of what you save (max that percentage if you can) pre-tax or post tax are two kinds
    • My personal rule is don’t forget to check when the money is fully vested (each company has a fixed amount of time you have to work before all the money in your 401k becomes completely yours)
  • *most money in a retirement account is shielded from creditors during bankruptcy
  • *college financial aid offices often exclude retirement when determining how much a family can afford to pay for college
  • – Home ownership is not in my cards anytime soon but you can go to page 155 to read about it: one note I took from it is to have 20% for a down payment

    Insurance

      Life insurance: check on term life pg. 179
      Disability insurances
      Home and auto (high deductible can be worth it!) pg. 186
      Health insurance pg. 191- don’t forget about the health marketplace! Do your research though***

    A great word to know: fiduciary. “Legal and regulatory duty to put your interests ahead of his or her own”- if you need help going over your finances try to find someone who has fiduciary in their title or description of what kind of financial help they offer

    * Happy saving everyone! go 2020!

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