You've probably hear it a million times and it's often the first thing you'll hear from friends and family once you're out on your own in your adult life. Make a budget and stink to it... You need a budget... Make sure you plan out a budget once your get your first paycheck...You know it's important and that there is a lot of merit to make a budget it but its stinks. Plain and simple.
Breaking down every little thing and staying on top of everything you spend, sounds like a job all in itself. And what happens when there is a new pair of shoes that you just can't live without? Or a friend's wedding that comes up unexpected? Is your love too expensive and killing your going on budget? Yeah, we've been there. Let's move past the details and nitty gritty and focus on what a budget is trying to accomplish. Saving money.
Track your spending
This isn't as crazy at it sounds and thanks to this thing called the internet, it's actually pretty easy. Our top pick to make tracking your cash flow and spending, Mint.com. We've been using and promoting Mint for over 6 years now and agree with their slogan - The best free way to manage your money. The software and interface is easy to setup and easy to use. Here's what you do signup, enter your login information for your online credit card account and let the tracking begin. Don't even worry about setting up a budget or using any of the other fun tools that Mint has to offer. Simply come back at the end of the money see where all your money went. Mint does pretty good job of categorizing all your spending so you can see the categories driving all your spending. You'll be amazing and scared when you see how much money you spending on the little things. All the innocent coffee pit stops add up! The other option is to put use a single credit card for all your spending for one month. Just so it's easy to see where all your money goes. Trust us, once you see how your "retail therapy" is hurting your wallet, you'll be motivated to make big changes.
Spend Less than You Earn
Okay so now that you're slightly depress and angry at yourself for spending money like a crazy person it's time to setup the worlds easiest budget. Spend less than you earn. It really is that simple. Take 15% of your paycheck every week and pretend like you never got it. It might seem like a lot but trust us, your life and standard of living will be the same without this money. Taking the one step ensures that each month you spend less than you earn.
Make Investing Automatic
Alright now that you know where you money is going and you're setting aside money each month and learning to live without, you're left with the final and most important step. Make investing automatic. This is key to and its the foundation of letting the magic of compound interest make your rich. We'll go into more details about IRAs, 4O1(K)s and Taxable Investments Accounts but the key is to make it automatic. When that 15% comes out of your paycheck it needs to go into financial markets, immediately. No waiting, no opportunity to mess it up by second guessing yourself. Putting this money in a saving or checking account is the biggest mistake that we see. Do this guarantees only one thing, you'll never be rich. This money needs to buy equity. What equity you say? The entire stock market, it's cheap and we can show you most affordable ways to own every stock in the US or World stock market.
Don't worry about details, we'll get to that soon.