When I started writing this blog and spreading knowledge about debt and personal finance, I was (and still am) far from an expert. My plan was always to learn as I went and share what I learned along the way. Over the past few months I have stuck to that, and I have learned a ton! I can only hope that some of you have gained some new knowledge along with me.
One of the most critical lessons I have learned is simply to pay attention. To start out with figuring out and improving finances, it makes a big difference to look back and see how much you spend in your daily life. This is likely to be an eye opener, and it will probably lead to action (and maybe a little panic or concern). By figuring out what you spend, you can figure out what you should actually be spending in relation to your income and lifestyle. Suddenly, you are on your way to creating a budget.
The biggest obstacle standing in most of our way is our debt. This is the cause for much of our stress, and also the reason paychecks don’t go very far. Our income is our most powerful tool, but that power is restricted by the combined monthly payments and interest paid for items we have financed. Debt can also lead us to spend more than we should. If we get used to basing purchases off of the monthly payment rather than the actual cost, it is easier to justify that cost. It is much more difficult to pay off those items later with an accumulation of debt rather than saving up to purchase each item with cash.
While eliminating debt is one of the main focuses of financial improvement, retirement is something to put a great deal of consideration into as well. The earlier we begin contributing to retirement, the better. Many investment accounts offer compound interest, which is something to take advantage of early in order to maximize the growth of our investments. It is important to figure out how much we need to maintain our lifestyle, and set up our finances appropriately to ensure we have enough money to do what we want to do after so many years of hard work.
Once debt and retirement are taken care of, there isn’t a whole lot to worry about. At that point we will just be saving additional income and living the good life! At this point I can only imagine all of the things our family could do if all of our income (aside from our retirement contributions and regular living expenses) was going into the bank or being put towards our next adventure/large purchase.
I hope that I have been able to add some value and clarity into your lives about personal finance. Many of us need the help or insight, but may not even realize it until it is presented to us. I have enjoyed learning and sharing with you, and now it is time to focus on maintaining the focus and working toward our financial goals!