Budget For Fun
If you have accomplished some of the basics (paying high-interest debt, having an emergency fund, having a retirement plan, and having a budget), it is essential to make sure you leave room for fun when it comes to your financial plan. This may be setting up a savings account to save for a vacation, an expensive toy, or investing in something outside of your plan. We put some money into individual stock picking (which we do not expect to get rich from). Still, we believe it helps us learn about buying stock in individual companies, and it is just more fun than ETFs and Index funds (which is our primary investments).
We believe that you need to give yourself breathing room. This is like your exercise “cheat day.” If you do not allow yourself enjoyment, you may burnout, and honestly if you do not leave yourself room for fun, what is the point?
Determine How Often you Check-In
This one is not something many people think about when it comes to their personal finance but being aware of how often you should do check-ins is very important.
Understanding Your Credit Score
Many sites will give you access to see your credit score. But always keep in mind that you have A LOT of scores (link). The critical thing to know is generally what your score is and what you need to do to improve it. Many of the sites like Mint, Credit Karma, or your credit card provider will give you the score and break down some of the pieces impacting it.
Some topics that impact your credit score:
- Have you been paying your debts on time?
- How much credit do you have, and how much of that are you using?
- How long have you had your credit for?
- How many credit accounts do you have?
- How many inquiries and derogatory marks do you have?
The credit agencies take these topics (and more) into account and determine your credit score from this information.
You can also get your credit report from each credit agency once a year. You can do so here (https://www.annualcreditreport.com/index.action). This is more in-depth documentation about what information the credit companies have on you. These are also important to check every once in a while to ensure there is no incorrect or fraudulent information on your reports that could impact you.
Determine Your Financial Principles
Just like we are writing here, you should set your financial principles to help guide you and make decisions with less cognitive effort. This is especially important during times of stress. If you have principles to fall back on, you will find it easier to make decisions. A good starting point may be to look to some experts. Reading books and articles will help you set your own financial and investing principles.
Setting Goals
One crucial part of personal finance is setting your own goals. While this is similar to determining a financial plan, we consider goal setting more short-term and pieces of the puzzle to get you to your financial plan. We talk about goals in general in this post, but financial goals are essential to help you focus on what you need to improve. Is it saving for retirement? Building up an emergency fund? Paying down your debts? Having a SMART goal allows you to keep track of your progress and gives you a finish line to strive to reach.
Determine a Financial Plan
Many of the points above will get you to where you are starting to determine your financial plan. This is just to call out that you should plan long term for how you want to handle your money. Setting goals will help you get there in the short/mid-term, but a big picture financial plan will help you in the long run.
Resources
Here is a list of resources that we use to continue to learn and stay up to date with finance topics. We will continue to add more as we come across them. If you have some you would recommend, please let us know.
Read About Personal Finance
Whether it is through books, articles, or even blog posts on the internet (like this one!) You should read and learn as much as you can about personal finance. You should learn from legitimate sources and make sure that they are not trying to sell you something themselves, but the more you learn, the more comfortable you will feel about making money decisions. Below you will find some resources that we use for learning more about this topic.
Books
The Intelligent Investor by Benjamin Graham
The Little Book of Behavioral Investing by James Montier
Websites
https://www.reddit.com/r/personalfinance/
Podcasts
https://www.npr.org/sections/money/
All opinions above are those of the writer and not of their employer(s). Nothing written above should be considered investment, business, or legal advice. These blog posts should be used for educational purposes only. This post is also not sponsored or endorsed by any company (unless expressly stated otherwise). For more information, please read our Terms.