Everything You Need to Know About Personal Finance in 1000 Words By C.J. Carlsen
Copyright Published by C.J. Carlsen at Smashwords Copyright © 2014 by C.J. Carlsen. All rights reserved. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review.
Preface Hello and thank you for downloading this eBook. You are about to learn everything you could ever want to know about personal finance in less than 1,000 words. Without further ado, let’s get started.
Chapter 1: Spending First let’s first take a look at your spending habits. Don’t use credit cards for useless purchases. This would include purchasing things that you cannot afford and things that lose value, including consumer goods. Also, always pay off your credit card balance in full every single month. Spend less money than you earn. Don’t go out and purchase items that will end up sinking you. Don’t commit yourself to making a monthly payment on something you can’t afford. This would include mortgages and car loans. Focus on those big ticket items. Be careful when buying a home or new car. These will be the largest purchases you will ever make in your life. Make sure you shop around and get the best deal that you can. You will be able to save thousands of dollars by following this one simple step. You do not have to track every single penny you spend. You will get too caught up in the minutia and forget about the big picture. This will discourage you. Instead, focus saving big on those big purchases. If you can cut down on the largest purchases you make in your life, you will be able to enjoy your latte every day without feeling guilty. Spend money on only those things that you really enjoy and not on those you don’t. As Ramit Sethi said best “live a rich life by spending EXTRAVAGANTLY on the things you love, and cut costs mercilessly on the things you don’t”. Think about your purchases before you make them. Consider how much you actually need to make that purchase. Take at least sixty seconds for each major purchase. Decide if it will help you and determine if you will be satisfied with that purchase six months from now. Do not be afraid of debt. Debt can be a useful tool if you utilize it correctly. Most people use it wrong and they end up suffering as a result.
Chapter 2: Saving Pay off all of your high interest credit cards before you even start saving. Interest rates will kill you if you don’t nip it in the bud right now. Start saving when you are young. The younger you start saving and investing your money the better off you are. If you start saving $100 a month when you are 18 and do that for ten years, and then stop saving and let the cash grow until you are 60 you will have $234,654. However, if you wait until you are 28 to start saving you will have to save $132 a month for the next 32 years to reach that same amount by the time you are 60! Save at least 20% of your income every month. If you manage to save more, awesome. Also try to save up at least six months of living expenses and expect the unexpected. Budgets suck. Nobody likes to budget. However budgets will help you save even more. Create a budget right now. It doesn’t have to be extremely detailed and complex. Just estimate how much you plan to spend and save each month and do your best to stick to it. Reevaluate it every few months and see where you can do better.
Chapter 3: Make More Money Don’t feel like you have to limit yourself when it comes to your finances. If you feel like you have cut back expenses far enough, consider ways you can make more money. Watch less TV and spend less time surfing the web. Cut out all unnecessary activities which you don’t enjoy and replace them with productive activities. Continue to educate yourself. This could be through schooling, certifications, or just by learning more about your current job and trying to move up the ranks. Whatever you do, never stop learning. Start a business on the side. This could be something your already know how to do. Provide a service to someone and use your skills to help solve their problems and get paid for it. Network like crazy. The more people you can meet the more opportunities will open up for you. Work on yourself every day and try to improve yourself. You can do this by listening to podcasts and reading books and creating other healthy habits. Read books to help improve yourself and also for pure enjoyment.
Chapter 4: Investing Make money work for you. Do this by investing your money and allowing your money to make money. Plant this money tree at a young age and enjoy the fruits when you are older. Max out all of your tax-advantaged savings accounts. This included 401(k)’s, IRA’s, SEP’s, and 529 plans. Always contribute enough to your 401(k) to get a full company match. Then contribute to your IRA up to the yearly limit. Save up for retirement first. If you have any leftover, contribute to your child’s college savings fund using a 529 plan. Invest in diversified mutual funds, this would be a target-date fund like Vanguard Target 2050 fund for example. Avoid actively managed mutual funds. These funds rarely beat the market. You are better off going with low cost index funds instead. High fees will eat into your investment returns over a long period of time.
Chapter 5: Make Life Simple Set up automatic payments on all of your bills, especially your credit card bills. Have these automatic payments pay the entire balance of your credit card bills. Set up automatic deposits on your retirement accounts. Deposit enough every month so that you contribute the maximum to your retirement account each year. By setting up automatic payments, you are putting your bills and savings on cruise control. All you have to do is sit back and let the good times roll. Don’t stress about your finances. It doesn’t have to be difficult. If you put everything that you have just learned into action, you will be better off that 95% of the population.
Thank You! You have come to the end of the “Everything You Need to Know About Personal Finance in 1000 Words.” I hope you enjoyed this brief guide on personal finance and I sincerely hope this book is useful to you. If you know someone who needs help with their finances, tell them to check this book today. If you have any questions or comments regarding this book, or anything else in general, send me an email at
[email protected]. If you want to learn more, check out my blog at The Path to Financial Freedom. Also, if you could please leave a review on Smashwords I would greatly appreciate it. Any and all feedback is welcome.
