For my first post I thought I would start with some key basic finance fundamentals that I practice to keep myself focused on my financial goals. I am calling this the “BREW$$$” basics. These are items to keep in mind that can adjusted or modified to fit your needs.
B – Budget! This is probably the most obvious one but taking the time to make a plan will go a long way. It seems like everything I see on how you are to do this is by budgeting monthly. Most people like to budget monthly, personally I like to budget yearly. I budget yearly amounts for each category and track how I am doing throughout the year by comparing current spending to my budgeted amounts. Using this approach, I know exactly how much I’m spending in each category for the year. When I first started budgeting yearly, my scope was anything that I spent more than $1k on in a year would get its own category. This was mainly because I wanted to know what was costing me more than $1k a year so I could decide if it was necessary to spend money on. I will go into more detail on my personal budgeting techniques in future posts.
R – Really understand where your money is going. You have fixed and variable expenses. Fixed expenses are expenses that are normal recurring expenses/bills that you have to pay each month, quarterly or yearly (ie utilities). These are usually pretty easy to plan since you know the bill is recurring throughout the year. It may fluctuate but you can expect this bill to come each month, quarter or year. Variable expenses are the expenses that you have the most control over, these are expenses like food, retail, shopping, etc. These are the categories I take the most time to plan since I am thoughtful about what brings me value, happiness and joy. I also don’t want to feel guilty spending on these items, so if I plan for it I know I am covered. It’s also important to me to understand and plan for how much I want to save and or invest each year. I also like planning how much money I am going to give each year to a charity of my choice.
E – Earn More. Challenging yourself to try to earn more income can benefit you in so many ways. This can be done in many different ways, maybe it’s by getting a new job at a different company to increase your income or finding another form of income. I believe that trying to earn more will allow you eventually save and invest more. As I found myself being a single mom at 25 with a baby the first thing I thought about in my own personal finance journey is how am I going to make more money to provide for my son and pay for a house that I had purchased. Over the past 10 years I have found different ways of doing that. More detail on this to come in future posts!
W – Worry less. Once your budget is set and you have a plan in place, I think the hardest part is done. Panning is probably 50% of the work the other 50% is sticking to it. This is why I take the time once a year to thoughtfully come up with my yearly financial plan vs duplicating the same budget each month.
$$$ – Stay focused, Save and Spend on items that bring you value. I take the time each week to make sure I am staying on track to my budget. I do spend on items that I value such as coffee shop visits and traveling. I can spend this money on these things without worrying or feeling guilty since I have planned for these expenses.
So there you have it, the BREW$$$ basics! I will expand more on these topics in future posts and will provide more detailed tips that I personally use. Think of your BREW$$$ and hope they work for you as they have worked for me!
Cheers! See you at my next post!