Category: Money Management
Issue: Many of us live pay check to pay check and are unable to put any money aside. In order to think about our future, we need to think long-term. We need to begin to put money aside, pay debt, save and let the money work for us.
Solution: For every paycheck or commission check that hits your checking account, you must forget about 40% and put in the following:
- Pay down debt by 10%. Use it to pay down your debt such as credit card or student debt.
- Put 10% away. Place into a high yield savings account such as these.
- Invest 10%. Put your money to work for you into investments such as ETF index funds or into any companies you believe in/use on a regular basis. Personally, I use Interactive Brokers for long-term investing.
- Give 10%. Donate to your local charity. Or, give an offering to your church. Do it, because this money is tax-deductible. If giving is not an option, give your time. You must give to get.
Conclusion: Getting into this habit of saying goodbye to 40% of your paycheck is not easy, but it will be extremely rewarding down the road. If your current financial situation allows you to only do one or two mentioned above, first start with paying down your credit cards. Credit cards have the highest interest rate, usually 16% for any unpaid balances. Second, start giving of your time by volunteering at a local homeless shelter or church.