I admit that this step should have probably been way earlier on in the list, since if you share your household and finances with your partner, then discussing money matters and making sure you have the same short-term and long-term goals in mind is essential to not only achieving your financial goals but also keeping your relationship healthy and happy. At the end of the day if you are trying to save, invest or grow your capital whilst your partner is more of the “let’s spend it all now” school, you likely both wind up frustrated with each other, meaning both your financial goals and your relationship happiness will take a hit and suffer at some point.
Sad but true: finances and a lack of shared financial goals or financial compatibility are not uncommon reasons for people to end a relationship, so let’s get this sorted once and for all and make sure that you and your partner discuss your individual and joint financial beliefs and goals. You might not have exactly the same ideas about how to spend or save your money, but discussing will at least create more understanding and hopefully pave the way to an agreement that satisfies both and leaves some (financial) room for both to do your own thing.
Of course it might be that your partner is not into finances at all and is happy for you to take control of the (majority) of the money decisions and responsibilities. If that is the case, it might sound easier in the short-term to simply assume that role not inform or even consult your partner, but remember that long-term this might not be in the interest of neither your relationship nor of your finances. Continue reading →
Up until now we have made great progress in the areas of our savings, debt and reducing our spending in order to increase our cashflow on our way to financial independence by putting extra money towards a secure financial future. We are now going to move away from these areas for a little while and start with a new theme as there is another way to increase your cash flow: by increasing your income.
The vast majority of people see income as the money that they get from their job, and we have already touched upon income increases such as a bonus or pay rise in previous steps as a way to increase your money. Whilst income from a job is normally not only a very decent provider of money as well as a financially secure way to guarantee a steady and satisfactory income, it doesn’t have to be your only way of bringing in money. Continue reading →
In step 28 we’ve looked at how to put away extra money that you might get at a certain moment in time, such as a bonus or as a gift, in order to find a balance between rewarding yourself in the moment, whilst at the same time making the most of the extra payment in the long-term by saving a part of it.
From now on, you are going to do exactly the same when you get a pay rise. In this case you should interpret “pay rise” in a broad sense and think of it of an increase in your monthly cashflow, which can come about for many different reasons. This could indeed be a higher pay from your employer, but it could also be a little side income you might be getting from doing extra work, or even a lower mortgage pay or some other favourable reduction in your expenses on a structural basis, resulting in a little extra money left over at the end of each month. Continue reading →
Once you have built your emergency fund of $1000 (or the equivalent in yourn own currency) for unexpected or emergency expenses, you are going to continue with the new savings goal in line with our mission to reaching financial independence. In this step we look at the ins and outs of a 3 months living fund and you are going to start working towards putting together this fund.
The rationale behind a 3 months living fund is that it would cover your basic living expenses if for whatever reason you no longer receive an income. This might be because you lose your job, are unable to work or voluntarily decide to take time out of work, for example to care for an elderly parent or sick relative or because you want to take time to focus on something else. It a safety net that ties you over for at least three months that will at least cover your basic living expenses for some months, leaving you time to find a new job, an alternative income or just allowing you to take those three months off before returning back to work. Continue reading →
Simply put, in personal finance your cash flow indicates how much money you have coming in on a monthly basis, how much is going out and how much the difference is.
As you might expect, having a positive cash flow, where you earn more money than that you spend, is what you want to pursue, as if the reverse is true, you are either building up debt or you are eating away your savings. Having a positive cash flow means you are living within or below your means, and not beyond.
This might sound easier than it is: there might be some months when you have more money coming in than going out, but other months the opposite might be the case, and if your income fluctuates a lot, this might concept might be especially difficult to control. Continue reading →