Now that you have created a budget (Day 3) and started tracking your expenses (Day 1), I am sure that you are becoming aware of some expenses that you currently have that seem way bigger than you thought they would be.
Day 4’s challenge is to have a quick and stern look at your expenses and then pick one (and only 1!) that you are going to limit for the rest of the month.
Look at the budget you made yesterday as well as your expenses up to now, and pick one expense to reduce. Make a rough estimation of how much you might be spending on it each month, then set yourself a goal of how much you can save during the next 4 weeks. Remind yourself of this goal every day, as at first I am sure you will get tempted to go back to your old habit! Continue reading “Day 4 / 31 – Limit one Expense”→
The challenge for day 3 is to start a budget and plan on how you are going to spend your money this month. A budget not only ensures that you have enough money assigned for all of your expenses (and avoid running out of money at the end of the month), it also guarantees that you plan ahead and start setting aside some money to pay down debt or to add to your savings. Without putting in a plan, these long-term goals are unlikely to get prioritized and are therefore often forgotten about.
As you start your budget, think about the various expense categories that you have (such as utilities, car payments) and the individual expenses you have within each category (electricity, gas, water) that are likely to come up this month, both ones that are relatively predictable each month (such as rent / mortgage, groceries, utilities) as well as any less regular expenses such as birthday presents, clothes or meals out in restaurants.
Once you have a list of all expenses you expect to have, look at your expected income for the month and start assigning your money to each category, being careful not to budget any more than you have coming in. You can do this again on paper, in a digital spreadsheet or in a budgeting app or online program. Continue reading “Day 3 / 31 – Start a Budget”→
Hello again and great to have you back for the second day of the 31 Days Challenge to Financial Excellence! Today we are going to calculate our net worth to see how healthy (or unhealthy) our current financial situation is.
Your net worth is a sum of all your possessions (also called assets) minus the total of all your debts. You can either have a positive net worth, which means that you have more possessions than debt, or you can have a negative net worth, indicating the exact opposite: you owe more than that you own.
Examples of assets include: real estate, any money in savings or checking accounts, investments and valuables such as antique (don’t bother including your electronics or small jewelry though as these are unlikely to add that much value). Continue reading “Day 2 / 31 – Calculate your Net Worth”→
Hello and Welcome to Day 1 of the 31 Day Challenge to Financial Excellence! We are going to dive straight in and start with the first Challenge of this month: Track your Expenses.
When you start keeping track of everything that you spend, you gain valuable insight not just in where your money goes each month, but also where you might be able to save some money as well as taking steps to aligning your expenses with your long-term goals.
If one of your goals is to start your own business at some point in the next 3 years, and if you only have $500 of the $10,000 that you calculate you need as start-up capital saved up, then you clearly need to up your monthly savings. Continue reading “Day 1 / 31- Track your Expenses”→
In just 10 days from today, on October 1st we will be starting the 31 Day Challenge to Financial Excellence. During these 31 Days many different financial topics will be covered, including expenses, debt, savings, pensions, income, investing, financial security and many more! If you haven’t signed up yet, make sure to do so here.
Whilst you will be sent all the necessary information and challenges at the start of each day, I recommend you do the following before October 1st to be as prepared as you can be for when we start the 31 Day Challenge:
* Join the Facebook Group dedicated to this mission and connect with other people during the 31 Day Challenge to see how they are doing and to find motivation. This is also where you can go as soon as you finish your challenge and let us know you have completed it or put any specific details or questions regarding that day’s challenge.
* Follow 100 Steps Mission on Twitter for more tips and ideas every day. During the 31 Days, we will be using the hashtag #31DaysChallengetoFE so feel free to send out a tweet at the end of each challenge to let the rest of the world know about your progress!
* If you know of anybody else who could do with a financial make over, let them know about this challenge so they can join too. Or find a friend, colleague or family member willing to do this challenge with you so you have an accountability partner!
* I recommend you find an old notebook to take notes in every day, either regarding the challenge you are doing or to jot down important information or ideas. Alternatively you can of use a digital file for this depending on your preferences of course.
Are you looking to give your finances a quick make over? Do you want to learn about the 31 most important financial steps you can take right now to kick your money management skills into high gear? Would you like to become more financially organized but do you have no idea where to start? Could your current financial status do with a health check?
If so then join me for the 31 Day Challenge to Financial Excellence, starting October 1st 2017! During these 31 Days you will be given a challenge or task to complete each day that will bring you one step closing to Financial Excellence and Success.
During these 31 days we will cover a huge range of topics: expenses, debt, savings, pensions, income, investing, financial security and many more!
There is no need to read dull money books or spend hours learning about complicated financial concepts, each day’s challenge has all the information you need to get you started!
Sign up now and you will automatically receive each challenge delivered to your inbox on October 1st! Make sure to also join the Facebook group for daily tips, news, support and accountability!
This is it, you’ve come to the end of the 100 steps mission, you’ve set important new goals, maybe already completed a few along the way, you’ve implemented new habits, have learned a wealth of information on finances (excuse the pun) and most importantly you have started your mission to financial independence, getting closer with each step that you take.
But despite getting to the end of these 100 steps, you aren’t there yet. Financial Independence is not achieved by reading about money, it is achieved by taking action daily and sticking to it. Remember the examples of people who give up smoking or start a new diet and how often they fail and give up their resolutions alltogether? You’ve come to the second most important point on your mission. The single most important one was when you embarked on this mission and decided to take action and change your situation. Your next most important moment is now and it is your determination to continue with your mission, stick to your habits, keep learning and persist progressing towards financial independence.
With all that you have learned til now and everything you’ve started, now is the time to make a new commitment to keep financial independence as one of your top priorities for tomorrow, next week, the next month, next year, the next 5 years and indeed the rest of your life. Don’t let all you’ve learned and done go to waste. Don’t allow for your hard work to have all been in vain. Keep tracking your monthly spending, making a new budget, noting down your networth, reviewing your investment strategy and tracking your progress towards your various financial goals whenever you can. Continue reading “Step 100: Stick to Your Mission”→
Having money is one thing, but making sure you keep it and don’t lose it on dodgy scams or to people getting access to your accounts is a whole different thing. Now that you can access your accounts via the internet pretty much 24 hours a day, anywhere in the world and from any device you have, it has also become significantly easier for those with bad intentions to gain access to this money if they want to. This steps looks at ways to protect your money online to minimize the risk of you money being taken away from you.
Keep money in accounts with verified or associated accounts access only
Many savings and investments accounts already offer this option, which essentially means that you can’t access your savings or investments directly and instead requires you to transfer money into a regular checking account first before being able to get access to your money. That regular account needs to be validated first when you set up your savings account and it means that others even if they gain access to your savings or investments account, can’t just divert the money into non-associated accounts, but to verified accounts only.
Choose difficult passwords and change them often
Most people have very weak passwords with their pet’s or children’s names, they don’t change their passwords very often and they tend to use the same passwords for several accounts, which makes it them easy target for fraudsters to try to hack. Make sure to choose difficult passwords and change them often. One way of doing this is by using a password manager that lets you store complicated passwords so there is no need to remember each one. Examples of password managers include LastPass, KeePass and OneSafe. When using these password managers you only need to remember one master password to get access to all your other ones. You can use a very difficult one by keeping a long string of random characters saved somewhere of which only you know which chunk(s) actually represent your real password. Continue reading “Step 99: Protect your Money Online”→
The 100 steps mission to financial independence has hopefully propelled you into the world of money savviness and wisdom. Every step has taught you a new skill or raised your awareness on a specific personal finance concept and has thereby expanded your knowledge on money-related issues. I sincerely hope that you have been completing every single step along the way and that your efforts are paying off and that you see your debt decreasing, your income increasing, your net worth improving or your financial security in the form of insurance or pensions getting better. The plethora of topics that have been covered in the many steps has made you an insider on saving, investing, pensions, income and much more!
Although we’re getting to the end of this mission, it is certainly not the end of your own financial journey. In order to now stay on top of your finances and to keep putting your financial situation as one of the main focus areas of your life, it is of major importance to keep expanding your knowledge about money and personal finance. Reading books is a great way to do this and offers you all of the following:
Provides more (specific) information and teaches you new or more specific skills or habits to implement.
Allows you to keep up with the latest developments as new knowledge, information or practices emerge.
Keeps your motivation up – the more you know about a topic, the more enjoyable it becomes to put it into practice, the more likely you are to keep budgeting, saving and investing.
With this in mind, I believe reading personal finance books is a key part of achieving financial independence. To start you off, below is my own personal top-5 books on money: Continue reading “Step 98: Read Personal Finance Books”→
Sequence of return – or sequence risk -can pose a serious threat to you portfolio and is a factor to be very aware of and take measures against when you are planning your retirement. Sequence of return can hamper a secure retirement, whether you plan to retire when you are 40, 65 or 80 and it can seriously increase your chances of outliving your portfolio, meaning you might be left with no income towards the end of your retirement.
So what is sequence of return?
Sequence of return is the risk of your portfolio being hit by bad market returns early on in retirement when you start making withdrawals from your portfolio. Like for anybody a bad market return affects the value of your portfolio, but whereas you have time to recover from a few bad years if you are still building up your portfolio, once you start withdrawing you no longer have this time to recover. The value of the portfolio can be affected (i.e. decreasing) by it so much that it threatens its own chances of survival. Not only does your portfolio reduce in value from your withdrawal but also from the market drop.
Let’s have a look at how devastating this effect can be by looking at the portfolio of a retiree who is hit by this phenomenon Let’s say they have $1,000,000 and that the market returns an average of 8% over the first 20 years. This retiree takes out $40,000 (4%) in their first year and then adjust for inflation by 3% each year. Below is the chart with how well they do.
market returns
start portfolio
take out
Total left over
-10%
$ 1.000.000
$ 40.000
$ 864.000
-15%
$ 864.000
$ 41.200
$ 699.380
-25%
$ 699.380
$ 42.436
$ 492.708
5%
$ 492.708
$ 43.709
$ 471.449
0%
$ 471.449
$ 45.020
$ 426.429
-15%
$ 426.429
$ 46.371
$ 323.049
5%
$ 323.049
$ 47.762
$ 289.051
20%
$ 289.051
$ 49.195
$ 287.827
10%
$ 287.827
$ 50.671
$ 260.872
25%
$ 260.872
$ 52.191
$ 260.852
30%
$ 260.852
$ 53.757
$ 269.224
15%
$ 269.224
$ 55.369
$ 245.932
-10%
$ 245.932
$ 57.030
$ 170.012
15%
$ 170.012
$ 58.741
$ 127.961
25%
$ 127.961
$ 60.504
$ 84.322
30%
$ 84.322
$ 62.319
$ 28.604
-15%
$ 28.604
$ 28.604
$ 0
15%
$ 0
$ 0
$ 0
30%
$ 0
$ 0
$ 0
25%
$ 0
$ 0
$ 0
Despite the average 8% return, as you can see, this portfolio takes a big hit at the start of retirement with big negative returns and therefore a big decrease of value early on. Unfortunately after 16 years this person has run out of money and is no longer able to draw anything out of their portfolio. Of the $1,000,000 they started with, they were only able to take out just over $806,000. Continue reading “Step 97: Sequence of Return”→
100 Steps Mission 