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Here are 6 steps to get your finances in order so you can be ahead of the game.
Congratulations. You have finished college. Hopefully the first job has lined up. If it's not good luck on all your interviews going forward, but now you're finished and now you're realizing in your early, early twenties that our system has not taught you anything about finances. You know how to be an engineer, a teacher, a find a insurance person like myself.
You're not to do all these things. However. How to deal with your money. That's a whole different question. Here are six steps I've implemented in my life post-graduation to help me significantly get my finances in order, as well as prepare for a very, very free financial future. You probably thought your education was done when you finished college, right?
Nope. The university is a very, very good teacher on how to. Do your certain discipline, but does not teach you anything about money. I took finance as a major in college, and I can't tell you a single thing about personal finance. It's not required. So the first thing you gotta do is get educated. Begin reading every single thing.
Get your hands on in regards to finance. Listen to podcasts, receive varying viewpoints from the people who talk only about stocks. About real estate, about just budgeting in general. You want all these perspectives because the more perspective you have, the more you can apply to actually your specific situation because my situation is very different than yours, most likely.
So I can't give you very, very direct advice, nor will I ever give anybody direct advice. You got to figure it out on your own. That's just part of the part of life post-graduation. You realize learning as something that if you stop. You die. I believe your brain has atrophy. If you don't continue learning stuff, continue learning new things in regards to this.
Buy books, buy books, buy books, type in personal finance top books. Figure out a top 10 list of, buy all 10 of them and you've read all 10 of them. Don't make any excuses and don't think that things are just going to be taken care of care of by your employer or the government. Worse, neither of those two care about your financial future.
Only you can change it for the better. Next step would be awareness. Take a journal or a piece of paper and write down every single expense you have for the month as it comes up. So if you buy fuel on the 15th write down fuel, $80 from the 15th whatever it may be, writing it down physically is very important here.
And then create a plan between needs and once, yes. I need to exercise? No. Or yes, I want to have all the supplements and protein shakes. There's gotta be a balance between the two. What do you actually need? What do you want? And if you break those down and eliminate a lot of the frivolous wants, you're on the right track.
And then next would be creating a plan for where each dollar goes. If you make $4,000 a month, let's make believe. Make a plan where that full $4,000 every single dollar has a mission. Because I've seen in my life specifically and others around me that when you don't have a mission or meaning in life, you begin to wander.
And when we begin to wander, we begin to dislike existence. You want your money to be happy in the sense it can't. It doesn't have emotions. It's not an object. However, you want your money to have meaning money to have. A reason to live and for it to go somewhere because I'm wanders. It's not good. One of the seven habits of highly effective people is keep the end in mind or begin with the end in mind.
So think about yourself in five years. How do I want my lifestyle to be? And literally take some paper, pen and paper and think about it. Sit in silence. Turn your phone on. Do not disturb. Put it on the counter far away and think about how do I want my lifestyle to change in the next five years and write down the things you want to buy.
Collect the relationships you want to have, the relationships you want to be in, people around you, the PR, and most importantly the person you want to become. Yes, finances are great. Yes. Getting on a stable footing financially is very, very important for a young person. However, also getting in a stable, stable.
Base of who you are and who you desire to be. Have you been told you're a brute and you're not empathetic? Well, work on empathy? Have you been told that you don't think through decisions? Well, that criticism may save you a lot of pain in the future as opposed to living impulsively. Living impulsively is great.
Being in the moment at times. However, sitting down and thinking about what the future holds is also very important. And that's a gift we have as humans. Being able to analyze ourselves and be self aware on what, and actually think about tomorrow, not just today, how do I want my lifestyle to look like?
First question and then next question would be, what do we need to do now to accomplish these goals? If you want to have, let's just make believe a hundred thousand dollars in your retirement account, what do you need to do over the next coming days, months, and years to accomplish that? It's pretty simple.
If you want a hundred thousand dollars in your retirement account and we're talking about five years, then you got to put $20,000 a year, not including interest, which is make it easy. $20,000 a year approximately to get to the hundred thousand dollar Mark. Simple, $20,000 divided by 12 months. Do that, and now you know, your monthly figure got to put every single month and then there you go.
That amount of money has a place, has a meaning, and it can go into that and know why it's supposed to be there. It has a plan and I'm meaning of life. Prioritize your debt. You may have student loans. You most likely have student loans about one point $5 trillion worth right now in the country, which is mind boggling.
They may prioritize it. Ask yourself, how much money can I put towards that without. Making me not eat without extremely putting a burden on your life, on your lifestyle. And if the question, if the answer is $400 great, do it. Don't think about it anymore. If you have extra money, put it towards the debt, you will thank yourself because let's make believe your interest rate is, let's say 6% paying off that debt more quickly means you're receiving an immediate return of 6% on your money.
That's pretty darn good. As opposed to buying something that depreciates in value or buying something that goes in your stomach and then goes out the other end. Food food's great, but it's not going to help you. Pay off debt. So prioritize how much more money can I put towards the debt that's above and beyond the minimum payment.
Because if you make a minimum payment, you're going to pay off your debt very, very slowly. And then also prioritize emergency money. Short term cash. The thing is, you really should never have more than one year's worth of living expenses saved that because at that point, inflation is eating up your savings anyway, so it's worthless.
However, I encourage between two and six months of living expenses at every single bill you have up, multiply it by two, four or six and prioritize that. I would prioritize that almost before the debt because the debt is going to be there. It's going to be there a year from now. However, if you were to lose your job or something of that nature.
You're in a pickle, so prioritize that and you can do two months, three months less if you're living with your parents, if you don't have as many obligations. However, if you're on your own and are actually an adult, a real adult, a real adult, then prioritize more towards the four to six month category.
Because the last thing you want is to be worrying about how you're going to pay your rent next month, but you put a lot of money towards debt the last few months. It's not a constellation. So again, prioritize the short term cash once you settle in and your new financial life, others around you and even you yourself may believe, and being in to think that my life is boring.
It's like the B word. When people don't talk about my life is boring now that I have stability, and that does not mean your life is boring. It means that you're able to live and not be stressed all the time.
And for someone who's dealt with enough stress in my life, believe me, that is a very, very freeing fact. You're not boring. You are just simply. Thinking about the future and how you can continue to improve that future for yourself so you can be the best for others as well. And then as you're going through this process, instead of focusing on what you don't have and really coveting or striving towards that which striving towards greatness is a good thing.
However, I'm talking about physical stuff and instead of focusing on what you don't have, focus on what you do have. I have a roof above my head, water in my water model, food in my fridge. The ability to live a life where I can wear nice clothing and not have to sweat a lot. Although I do sweat plenty. I am blessed in so many capacities and I encourage you to focus on the things you do have and write them down.
Write down three things that you do have that a lot of people in the world don't have. It's a blessing. It's a blessing to live in this beautiful nation behind me and in front of me. And just to be breathing it. You have another day to conquer the world and another day to concrete your world another day to enjoy life and have some vitality, and that is an immense blessing.
Don't take that lightly. That's really a big deal. Something I do my best to focus on. Often those are the six steps. What do you guys think? What more steps are there? Make sure to comment like the video and subscribe the well, and I will. See you guys with your boring life soon.