Figure out your Finances

You need to have an idea of where you are going to get your spending money. If you still have don’t know, I would recommend looking into a part-time job of some sort. If you are interested in some possible jobs, I have ten I could share with you. Just respond to this post and I will give them to you.

Anyway, if you have figured out where your discretionary funds will be coming from, now is the time to name every dollar. What I mean by that is have a plan for it. If you don’t name your money, it will run off and you won’t be able to call it back or recall where it went. This may sound elementary and simple (because it is), but I would recommend using an envelope system. Get some regular size envelopes and write on them the different things of which you know you will need money.

For example, take a white envelope that says “gas” and when you get paid, or get your allowance, go ahead and set aside a certain amount for gas money. You may need $40 total for a month or less, but this way you won’t be trying to borrow money with a credit card every time you need to go somewhere. My wife and I practice this process. We get paid for the month and we immediately pull some money out to put in envelopes. We leave enough money in the account for bills, transfer our pre-determined amount into savings, and then we divide the rest up into our envelopes for the month. We have an envelope for grocery, gas, entertainment, pills, and gifts for Christmas and Birthdays. You could also have an envelope for clothes/CDs, eating out, books, ect. The key is that you know where your money is, what you will spend it on, and how much you plan to save. Every dollar has a pre-determined destination or “name”.

By the way, because of this simple step of saving and budgeting, my wife and I are on the road to being millionaires when I retire. It is possible, but it all starts with living below your means and saving consistently. The compound interest of investing can do the rest!