Learning Basic Financial Lessons

by Stephanie Annis

Las Vegas, NV – July 1st, 2023

As the summer travel crunch hits businesses it’s important for those new employees enjoying their first vacation to consider some financial aspects of a new position. While you take break and celebrate it’s important to set aside a few hours to re-group and evaluate budgets and financial decisions. For example, do you have a 50/30/20 budget or any budget? Are you planning any large purchases, expenses, or investments for which you should start a new account like college, marriage, or expecting children? When should you start planning for these expenses?

When it comes to personal finance, there are several budgeting methods that have gained popularity in recent years. Here are a few of the best budgets of modern finance:

1. 50/30/20 Budget: This budgeting method suggests allocating 50% of your income to essentials (such as housing, utilities, and transportation), 30% to discretionary spending (like dining out and entertainment), and 20% to savings and debt repayments. It provides a balanced approach to managing your money while allowing for flexibility in your lifestyle choices.

2. Zero-based Budget: With a zero-based budget, every dollar of your income is allocated to a specific category, ensuring that your income minus expenses equals zero. This approach requires you to allocate money for savings, debt payments, and expenses, while leaving no room for unplanned spending. It can help you track your spending meticulously and prioritize your financial goals.

3. Envelope System: The envelope system is a cash-based budgeting method. You assign a specific amount of cash to different categories, such as groceries, transportation, and entertainment. Each category gets its own envelope, and you can only spend what’s in each envelope. This method encourages conscious spending and helps prevent overspending on non-essential items.

4. Pay Yourself First: This budgeting method prioritizes saving by automatically setting aside a certain percentage or amount of your income before allocating it to expenses. By making saving a top priority, you ensure that you are building your financial future while still meeting your monthly obligations.

5. The 80/20 Rule: Also known as the Pareto Principle, this budgeting approach suggests allocating 80% of your income to cover your living expenses and saving the remaining 20%. This method allows you to maintain a comfortable lifestyle while building a substantial savings cushion.

Remember, the best budgeting method for you will depend on your financial goals, spending habits, and personal preferences. It’s essential to choose a budget that aligns with your values and enables you to achieve financial stability and success.

When it comes to starting new accounts for milestones, such as college, marriage, or expecting children, it’s important to plan ahead and make smart financial decisions. Here are a few tips to consider:

If you’re planning for college expenses, consider opening a dedicated savings account specifically for this purpose. Look for a high-yield savings account that offers competitive interest rates and allows you to save consistently over time. Additionally, explore options like 529 college savings plans, which provide tax advantages for education savings.

When planning for marriage-related expenses, it can be helpful to establish a separate account for wedding costs. This allows you to keep track of your spending and stay within budget. You may also want to consider setting up a joint bank account with your partner to manage shared finances effectively.

Starting a family often comes with various expenses, such as medical costs, baby supplies, and child care. It’s advisable to create a dedicated account for these expenses. Consider automating monthly contributions to this account to gradually build a fund for future needs. Additionally, explore insurance options like life and health insurance to ensure your family is financially protected.

It’s always recommended to consult with a financial advisor who can provide personalized guidance based on your specific circumstances and goals. Remember, starting new accounts for milestones is a proactive step towards securing your financial future.

Re-evaluating budgets regularly is an essential practice for maintaining financial stability and ensuring you are on track to meet your goals. Here are a few reasons why regularly re-evaluating your budget is important:

1. Changes in Income: As your income changes over time due to promotions, raises, or career transitions, it’s crucial to adjust your budget accordingly. Re-evaluating your budget allows you to allocate your income effectively and make necessary adjustments to your spending and saving habits.

2. Expenses: Your expenses can change over time. Regularly reviewing your budget helps you identify areas where you can cut back on spending or find opportunities to save more. It also enables you to factor in any new expenses that may have arisen since your last evaluation.

3. Financial Goals: Re-evaluating your budget allows you to assess your progress towards your financial goals. Whether you’re saving for a down payment on a house, planning for retirement, or paying off debt, reviewing your budget helps you determine if you’re on track and if adjustments are needed to accelerate your progress.

4. Lifestyle Changes: Life is full of changes, such as getting married, starting a family, or buying a car. These changes often come with corresponding adjustments to your budget. Regularly re-evaluating your budget ensures that you account for these lifestyle changes and make the necessary financial adjustments.

5. Financial Awareness: Regularly reviewing your budget increases your financial awareness. It allows you to be more mindful of your spending habits, identify areas of improvement, and make informed decisions about your financial priorities.

To establish a routine for re-evaluating your budget, consider scheduling it on a quarterly or semi-annual basis. During these evaluations, review your income, expenses, savings, and financial goals. Assess any necessary adjustments, identify opportunities for improvement, and create a plan to implement these changes.

Remember, consistent budget re-evaluation is a proactive approach to financial management that can help you stay on top of your finances and work towards a more secure financial future.

“Rich Dad Poor Dad”: A Book That Shaped Modern Perspectives on Wealth

“Rich Dad Poor Dad” is a highly influential book that has had a significant impact on modern financial thinking. Authored by Robert Kiyosaki, this personal finance classic challenges conventional wisdom about money and provides valuable insights on how to build wealth.

The book revolves around Kiyosaki’s experiences growing up with two fathers – his own biological father, who struggled financially, and the father of his best friend, who was a successful entrepreneur. Through the contrasting values, beliefs, and financial advice given by these two father figures, Kiyosaki shares his lessons and provides readers with a fresh perspective on wealth creation.

One of the key concepts explored in “Rich Dad Poor Dad” is the importance of financial education. Kiyosaki asserts that traditional schooling often neglects teaching crucial financial principles, leaving individuals ill-equipped to manage their own finances. He emphasizes the need to learn about assets, liabilities, and how to make money work for you, rather than working for money.

The book also emphasizes the mindset shift required to achieve financial independence. Kiyosaki encourages readers to challenge the status quo, overcome limiting beliefs about money, and strive to become financially literate and self-reliant. He advocates for building assets that generate passive income, such as real estate investments and businesses, as a means to achieve financial freedom.

“Rich Dad Poor Dad” has resonated with millions of readers worldwide due to its simplicity, relatability, and practical advice. It has inspired individuals to take control of their financial lives, think differently about wealth, and make conscious decisions to secure their financial future.

However, it is important to note that the book has also received some criticism. Some argue that the author oversimplifies complex financial concepts and that the book promotes risky investment strategies without sufficient emphasis on risk management.

In conclusion, “Rich Dad Poor Dad” has undeniably left a lasting impact on modern finance literature. With its straightforward and thought-provoking ideas, it has motivated countless individuals to re-evaluate their relationship with money and pursue financial independence through education and asset-building. Whether one agrees with every aspect of the book or not, it is a seminal work that has empowered many to take charge of their financial well-being.

You can access the audiobook “Rich Dad Poor Dad” via YouTube.