Invest in You: 3 Tips To Start Budgeting

Written by on June 11, 2012 in Money - No comments | Print this page


The most difficult part of the investment process is getting the money to start. Learning how to budget spending so that money is left to make investments is a difficult task, but there are ways to make it easier. By working to build good habits, you can eventually make budgeting a simple and automatic action.

Everything is An Investment:
The first step to investing is realizing that you already are an investor. You have been from the moment you received your first paycheck.  Everything you buy, every dollar you spend, is some form of investment.  Whether its immediate joy or long term retirement planning everything you spend money on has a reward and also many missed opportunities.  Money spent buying snacks or sodas does not grow wealth.  Every dollar put into a retirement account is a moment of pleasure denied.

It is important to make decisions with the understanding that every purchase is an investment.  Before parting with any money decide if it is worth the real cost.

Make A Plan:
Is it better to spend a life time building a fortune while denying all pleasure?
Is it better to enjoy life now and deal with the future when it comes?

Most people would say it is a balance between those two extremes.  Each of us has to decide for ourselves where to find the balance.
Making decisions; that is the point of thinking of every dollar as an investment.  Everyday we are all confronted with hundreds of opportunities to spend cash.  There are two ways to handle those decisions. You can act impulsively spending what you feel like at the time. Or you can put every purchase within the context of a ready made plan.

When shopping don’t part with any cash before thinking of the returns that will never be seen because that money was not invested.  When investing take a moment to think of the joys that you are giving up.  Always be aware of the tradeoffs so that you are always in control of your finances.!–

Do The Basics First:
There are some major issues that should be a priority for anyone.

The first step for solid personal finances is to pay off all high interest debit.  Get those credit card balances to 0.  Paying off a credit card that is charging 18%-24% is, by far, a smarter financial move than putting money in a 2%-8% investment vehicle, and it is certainly a far better use of money than buying a candy bar.
The second step is to build a nest egg for emergencies.  Bad things happen in every ones life.  The trick is to not let those unfortunate events force debit.  Setting up an emergency fund is the easiest way to provide financial protection in the event of a personal disaster.  The money in these funds needs to be easily accessible.  A savings account is the best balance between accessibility and growth. Look for an online account as they often have much higher returns than brick-and-mortar banks.

With every purchase or investment a person should ask themselves “Is this the best investment I can make with this dollar.”  If they do that they will so get into the habit of making sound financial decisions. Good purchasing habits are key to financial independence.



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About the Author

Matt Brand

Matt Brand is QLR's money saving expert. His experience with credit cards and student loans have made him take a strong interest in personal finance, saving money and sharing his knowledge. He is passionate about teaching others how to avoid the trap and make smart financial decisions. View all posts by Matt Brand.