Take the F Out of Finances – A note from Melody
Sometimes that low bank balance of your finances can kick you in the gut harder than a bag of bricks.
Getting to the nitty gritty about finances can feel as fun as going in for a root canal, but it doesn’t have to be.
Once you master the basic building blocks, it’ll be as easy as riding a bike.
I had the pleasure of meeting MicKallyn through a mutual connection and since then, I’ve been able to learn
quite a bit about finances, biz building, and balancing the #wifelife.
What I love about MicKallyn is that she will keep it real and tell you what you know you need to do
to get things from bad to beautiful. Keep up the smiles, finance friends. You’re in for a treat.
(an excerpt from the CashCoach blog)
What does this mean?
Financial independence means the ability to manage your money
in such a way that you have sufficient funds to live your
chosen lifestyle without assistance from others.
There are many strategies to achieve financial independence, each with their own benefits and drawbacks.
To achieve financial independence, it will be helpful if you have a financial coach,
financial planner and robust budget, so you know what money is coming in and going out…
A financial plan addresses every aspect of your finances.
Here is the beauty of financial independence,
my above description said nothing about the amount of money you must have or make.
To some people, financial independence might mean international travel, expensive cars, or a lake cabin.
While to others it could merely mean knowing they will always have a comfortable home, time,
and resources to enjoy their family and hobbies.
Financial independence could also mean to some families not having to work a second job,
or maybe having sufficient income so their spouse can stay home with their children
or take the leap to start a small business.
Are you a Spender or a Saver?
Enough with the rat race people!
Start by understanding your numbers, establish a budget,
set goals, make a plan, and find your accountability partner.
My BIGGEST piece of advice is to pretend that you never got your last raise, bonus, or tax return.
I’m totally serious; pretend that you never got it!
Put that [extra] money towards savings, debt, or retirement.
Make your money work for you!
You must establish an emergency fund.
What is an emergency fund? In basic terms, it’s a savings account to use in times of financial stress.
It’s a simple concept, but it’s a powerful first step toward feeling in control of your finances.
My recommendation is enough to cover at least three to six months of your family’s living expenses.
Remember, an emergency fund isn’t going to solve all of your problems overnight,
but it’s one step toward feeling a sense of control.
Next, set big goals to start crushing your debt.
Don’t forget to check out HerDesignedLife’s savings planner here.
Then, consider adding your extra money to a retirement account.
Don’t get trapped in the mindset that you can’t afford this step.
With that mindset, you will never start as you will always find something “more important” or new and shiny.
It’s too easy to push this to the side when you feel overwhelmed with your finances.
I encourage you to establish an auto debit for each paycheck
and try to increase it with each raise or year-by-year slowly.
Let’s look at the numbers.
We all know the benefit of starting to save early as the power of compounding is powerful!
Starting early gives you more flexibility later on in life.
It’s all in the numbers!
I know retirement accounts don’t sound nearly as exciting…
but you can’t build your … money and a financially independent life
without getting warm and cozy with your retirement accounts.
Start with a traditional 401(k)…
notably, if your company offers a… matching contribution!
Adding a Roth IRA account to your retirement portfolio
would provide some benefits not available with a traditional 401(k).
The Skinny on Retirement Plans
Typically, 401(k) contributions are automatically withdrawn from your salary
each payday and deposited in your account.
Your traditional 401(k) is funded with pre-tax contributions,
which typically lower your current year’s taxable income,
but your withdrawals in retirement would be taxed.
By contrast, a Roth IRA doesn’t provide a tax benefit for the current year,
but any earnings on your contributions would grow tax-deferred,
and you would have the benefit of tax-free withdrawals later
if you meet the requirements for a qualified distribution.
There are several requirements that make a distribution “qualified,”
which are found in detail in IRS Publication 590.
The emotions behind money and your financial behaviors are powerful.
When there is a sense of sadness attached to money,
people may go into escape mode, where they don’t want to think about it, touch it or spend it.
Here is where you need to consider a trusted family member, friend,
or financial coach to help reshape your mindset.
If you are interested in learning more about financial independence, financial coaching, or learn to control your money,
rather than your money controlling you.