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Becoming more confident at work can have a great benefit for your career. In this post, you’ll learn 6 things you can do to be confident in work and life.
Self-confidence is an important trait to have in all aspects of life. Specific to the workplace, self-confidence can affect your communication skills, your decision-making ability, your overall job performance, and your job satisfaction.
Confidence is also a highly visible character trait. Your colleagues will notice your self confidence, or lack of. It may help to build trust in your skills and abilities.
Confidence in your work can also boost the morale of the team, especially when you are in a managing or supervising role!
Luckily there are some techniques you can implement immediately at work to improve your self-confidence.
In this article, I’m going to share with you 6 steps you can use to build confidence in your life and work.
The 6 steps you can use to become more confident are the following:
While this article focuses on your professional life, you should also realize that these principles could be applied to other parts of life, such as relationships, health, and money!
Let’s dive in to each of these specific tips! 🙂
Using affirmations is one of the most underrated self-improvement techniques out there, and one of my favorites.
An affirmation is quite simply just a statement of truth. The power of positive thinking through making affirmations effectively convinces yourself that you are someone great, that you will do something today.
Affirmations are best made in the morning before work. You can self-reflect using your phone, pen and paper, or just by talking to yourself. Here are some examples of affirmations that involve your professional career:
You may notice three similarities with the above affirmations. These will help you write affirmations of your own:
Don’t forget that these can be made for other areas of your life, such as personal finance or fitness. I encourage you to give these confidence-boosting affirmations a try. You may be surprised at how effective they can be!
You will not be able to change yourself and build self-confidence all at once. It still takes time, no matter how hard you try.
In that case, you should work smart, not hard. Small improvements on a daily basis can have tremendous results in the long term. Improving 1% every day means you are improving 7.2% per week, 36.1% per month, and 3778.3% per year! This is exactly why I think focus and consistency outperforms hard work.
In the workplace, daily accomplishments may look like:
A daily planner is a surprisingly effective tool for tracking consistent small accomplishments. I recommend writing down a couple career related tasks at the beginning of the day, and review the list at the end of the day to see what you accomplished.
Remember, your daily accomplishments don’t have to be limited to your professional life! Going to the gym is a great daily accomplishment, and so is having a “no spend day” where you make no unnecessary purchases.
3. Know When to Ask For Help to Get AdviceKnowing when to ask for help may seem counter intuitive at first. How can needing help be a confidence builder?
Part of self-confidence is knowing your current limitations, not just your strengths. Failure to do so may make you overconfident. If you don’t know something, accept that you don’t currently know it, and proceed to figure it out.
“If somebody offers you an amazing opportunity but you are not sure you can do it, say yes – then learn how to do it later!” – Richard Branson
This applies to both knowing how to do something, and knowing about something as well. You should be asking questions and learning all the time during your career.
You should also share knowledge with others! Being confident enough in your knowledge and abilities to teach others is a powerful trait.
You may be afraid to ask questions early on in your career. You may be afraid of looking clueless or incompetent as well; this is common especially when starting a new job. These feelings are normal, but you need to overcome them.
It is better to ask questions and possibly be annoying, than not ask questions and possibly make costly mistakes.
One way to improve confidence in yourself is to literally improve yourself. Developing a new skill can be very rewarding, both personally and financially! The harder the skill, the more income you can earn.
Technical skills are always in high demand, especially coding. Picking up a relatively easy to learn language such as Python, Java, C++ , or even Visual Basic can set you apart from others in your field (assuming this is not a skill that is already a requirement in your field.)
People with soft skills tend to be “a dime a dozen”, but they are still essential. You can have the best technical skills in the world but no one will want to work with you if you have zero soft skills (especially communication).
Luckily, soft skills can always be improved! These skills are highly correlated with self-confidence.
For example, someone who has self-confidence is more likely to excel at public speaking, negotiation, etc., and vice versa.
Building these skills through practice is a great way to build self-confidence, since they are so interconnected.
5. Know Your Worth to Get Paid AppropriatelyKnow your worth, and then add tax!
Being underpaid is discouraging. Many people sadly take what they can get when it comes to new jobs or pay raises, being too afraid to negotiate with the employer. This in turn can lower job satisfaction and even possibly your self worth.
If this sounds like you then you have a big hurdle to leap, however it is worth it. In fact, it is the best way to increase your income with no side hustle!
How do you know how much you deserve to be paid? My favorite tool is payscale.com. This site has the biggest data pool of salary information on the web to dig into.
Follow the instructions and enter as much information as you are comfortable inputting; the more information, the more accurate the answer.
With this newfound information, you can see if you are being paid what you’re really worth.
Finally, don’t forget to look the part. Take care of yourself, your appearance, and your workspace. You don’t need to wear designer clothing, but you should at least wear high-quality and presentable clothes that you feel good about yourself in.
Your workspace is also a reflection of yourself, especially if you work in an office.
Next time you work, come in a little early to the office and organize your desk. Clean out unnecessary stuff and old paperwork.
By tidying up, you can help your productivity, and make you feel mentally organized and capable as well. After all, you are a product of your environment!
With these 6 steps to becoming more confident, you can start showing confidence at work and building the career you dream of building.
Although this post focused on your professional life, many of these concepts can be applied to other parts of life as well.
Affirmations can set a positive mindset for whatever you will do, and tracking your daily accomplishments will reward you for it.
Asking questions will help you avoid making costly mistakes anywhere in life, and expand your skill set in the process!
Finally, feeling good about your appearance and your environment will lead to great things, whether it be at work or out with friends.
Thank you for reading!
House hacking is an incredible way to improve your financial situation in your 20s and 30s. House hacking allowed me to pay down my debt, increase my savings, and grow as a personal.
In this post, you’ll see the true financial results from my house hacking experience.
From 2015 to 2019, I hacked my housing expenses by renting out multiple rooms to friends in my house.
House hacking is a great way to reduce your housing expenses, and also a great way to gain experience as a landlord.
Over the past 4 years, I’ve learned a ton and improved my financial situation greatly. For anyone in the early stages of building wealth, house hacking is definitely something to consider.
In this post, I want to share with you the financial results of my house hacking, talk about how expensive houses are, and give you some inspiration to consider house hacking.
Why I Decided to Sell vs. Rent My HouseBefore I get into the financial results of my house hacking, I want to talk about why I sold my house vs. wanting to potentially rent out my house.
I bought this property in 2015 for $287,900. Previously, it was a rental property and was renting for ~$1,900.
In 2018, I started having thoughts that I didn’t need as much space and wanted to downsize.
While the property was amazing, and definitely had potential to become a rental property again, I started to run the numbers and I wasn’t so sure it made since for my financial goals.
When I started looking at comparable houses in my neighborhood in 2018, I looked at my house and thought I could list it for sale somewhere in the $350,000 to $400,000 range.
At the time, my mortgage balance was sitting around $250,000, and with this sale price, I could get out a significant amount of equity from the property.
In terms of it being a rental, I think I could have rented it out for ~$2,200-$2,400 a month, and with a mortgage of $1,835 a month, I would be cash flow positive.
$400 a month is $4,800 a year in cash flow, and while this seems decent, when looking at the potential of what kind of cash I could get out, this didn’t seem like an no-brainer use of the capital.
Also, even though the location and house is amazing, there were upcoming repairs and challenges with the house. It was built in 1900 and needed some updates.
My decision came down to if I could get $50,000 to $100,000 out of the property via a sale, then I could potentially buy multiple rental properties, start a business, invest in stocks, etc. With these proceeds, I could potentially make more than $4,800 a year in cash flow – and not have to worry about property management of this property.
This lead me to wanting to sell vs. renting it out.
Below I’ve created a table with all of the housing related income and expenses I had over the last 4 years.
As mentioned above, In 2015, I bought the house for $287,900, and using FHA, I put down 3.5% (and it ended up being more like 2% due to some fees).
With mortgage closing costs included, I started off on my house hacking journey with ~$10,400 into the property.
After moving in, I had 3 roommates join me. My initial mortgage payment was $1,820, and my monthly rental income was $1,650.
Increasing my income is a goal of mine, and with house hacking, I was able to accomplish this.
Over the next few years, friends and roommates moved in and out of the property, and also had a few housing improvements and repairs.
With all of this income and expense, I’ve looked to categorize it appropriately above.
Fast forward to July 2019, I decided to sell my house, and was able to sell for $375,000.
My mortgage balance when I sold was ~$245,000, and after agent commission and other fees, I walked away with roughly $110,000.
Tallying all of this up, over the 4 years of house hacking, I “made” just over $11,000 to live.
But I’ve left out where the cool part of house hacking comes in.
In the calculation above, I included the principal payoff as an expense. When you pay down the principal, yes, technically it is going back to you, but it’s not unlocked until you sell.
Since I’ve included the principal payoff as an expense, I need to make an adjustment to the final profit number.
I haven’t considered the opportunity cost of renting a place.
If I was to rent out the room I lived in for 4 years to myself, I would have charged $800 a month. Adding in $800 a month for 4 years, I actually “made” nearly $50,000 to live.
$50,000 over 4 years, or $12,500 a year to live.
As mentioned above, when I got my house, I paid $10,400 upfront (down payment and closing costs).
Looking at the final profit number, I made $12,500 a year for 4 years – a return on investment of 120.19% a year for 4 years.
Those are some ABSURD returns.
These kind of asymmetric pay-offs are what you need if you want to build wealth fast without having a lot of money.
Real estate has this type of potential, but there are also some other thoughts I want to reflect on and share with regards to real estate and house hacking.
While I made out really well on with my house hacking experience, there are a number of things which could have gone wrong, or also lead to much lower returns.
For one, I didn’t have any major repairs or accidents with my house.
For example, I could have easily had to repair the roof, replace a water heater or furnace, or dealt with water damage in the basement.
These things would have potentially cost thousands of dollars and also lead to headache and stress.
In addition to these potential repairs and damages, house prices are NOT guaranteed to always go up.
We live in a world with finite resources and finite space. Real estate is very cyclical and dependent on location and demand.
I happened to buy at a great time and rode some nice appreciation (33% in 4 years).
However, this might not be the case for other people who buy in other areas or at other times.
Finally, property taxes is another factor I want to discuss.
Property taxes keep going up all over the United States. As you may have noticed above, from 2016 (the first full year of living in my house) to 2018 (the last full year), my property taxes increased $1,500!
In 2019, they were set to be $5,200 – an increase of $2,200 in 3 years!
In 3 more years, would they be $7,400 a year? I have no idea, but depending on the area you live, this could definitely play into lower returns.
Again, I was pretty lucky with my house hacking, and am thankful for my experience. What do you think?
What are My Thoughts on House Hacking?I’m done with house hacking for now, but still believe it’s an amazing way to reduce your housing expenses and improve your financial situation.
House hacking allows you to cover some of your mortgage and increase your monthly cash flow.
One thing I should say, though, is house hacking is not for everyone.
As a 20-something person without a spouse or kids, I was able to take this risk.
However, you may not have as flexible of a situation as I did, and I want you to think critically before jumping into real estate.
There’s no guarantee that house hacking will work for you, but there is certainly great potential!
Thank you for reading 🙂
Saving more money can sometimes seem impossible, but with the right saving strategy, you can save a lot of money. I like to focus on the 3 big expenses – housing, transportation and food – to save more money fast.
In this post, you’ll learn how to save more money fast and increase your savings by focusing on these 3 areas of spending to improve your financial situation.
There are a number of ways for a person to improve their financial situation: increasing your income, increasing your savings rate, decreasing your expenses, or getting a windfall, to name a few.
My goal is to increase my income, though I’m always cognizant of the big three expenses: housing, transportation, and food.
These are called the big three because, typically, they will be your three biggest yearly expenses (shocking right?). Reducing expenses in these areas will have the biggest impact on your financial situation.
Yes, it’s easy to look at that $4 latte each day and think dropping that will help reduce your expenses, but honestly, $4 a day is $120 a month – not a crazy amount of money.
Switching houses or apartments could result in a $500 per month saving with little to no effort – and you’re still caffeinated. 🙂
I believe we all should be cognizant of these three expenses.
Here are some tips and tricks for saving more money on your three biggest expenses.
How to Reduce Housing CostsIn real estate, the main determinant of housing cost is location.
“Location, location, location!” you will hear, and it’s true.
The areas where there is higher demand, due to better schools, better jobs, and better attractions, will be more expensive than areas where there is lower demand.
An obvious way to reduce your housing cost is to downsize to a smaller house or apartment.
In the metropolitan area I live, a 3000 square foot house might cost in the range of $350,000 to $450,000. A 1500 square foot house, on the other hand, might cost in the range of $200,000 to $250,000.
This immediate cost savings of $100,000 to $200,000 adds up quickly when you consider savings on interest, property taxes and insurance.
For a 30-year home mortgage at 5% interest for $400,000, you can expect to pay nearly $375,000 in interest over 30 years.
Compare that to a $200,000 home, also at 5% interest and over a 30 year period, and you will only end up paying $186,000 in interest.
That’s a savings of nearly $200,000 over 30 years – just in interest!
Another way to reduce housing costs is to share your housing space with roommates. When you are single, this is easy – just grab a friend or two and divvy up the rent and utilities to share with your friends.
If you are married, and/or have kids, then it might be a little bit more difficult to get roommates. Luckily, there are other ways to share space, while also reducing your housing costs.
I’m a huge fan of house hacking. I bought a single family house in 2015, and rented it out to three friends while I also lived there.
Because of this, I earned over $39,000 in 2 and a half years – just by house hacking!
While this sounds impressive, there have been dozens of other more successful house hackers.
One of my fellow personal finance and real estate bloggers, Guy on FIRE, has amassed a nearly $500,000 net worth by age 30 through house hacking and real estate.
By buying a multi-unit property (such as a duplex or triplex), you can have the privacy of a single family home, and rent out the remaining units to cover your mortgage and reduce your housing costs.
Another way to save more money on housing costs is to rent out your unused space through AirBnB.
I’ve never stayed in an AirBnB and I’ve never personally rented out space using the platform, but I know of many people who are successfully doing this. One of them is my friend Financial Panther, who rents out one of his rooms on AirBnB.
He makes a pretty good amount each month, which is helping to cover part of his mortgage.
There are many ways to reduce housing costs, and depending on your level of comfort with renting out your house to others, there are various solutions you can try.
How to Reduce Transportation CostsUnless you work from home, or are a hermit, there’s a good chance you use some form of transportation. Going to work, going to the gym, traveling to see friends and family – there’s always somewhere to be and people to hang out with.
Saving money on transportation is similar to housing in that if you want to own a car, buy something that is used and affordable. You’ve probably heard that when a new car rolls off the lot for the first time, the car loses 10%+ in value, just like that.
Therefore, if wealth is a goal of yours, buying a new car for $40,000 might not be the best choice, since in the first day of driving, you lose $4,000. Buying a used car for $20,000 or less might be a better choice for reducing expenses in the long term.
I bought a used 2014 VW Jetta for $13,000. It runs like new, and gets 37 mpg on the highway. I love it and since I own it in full, and drive it a few thousand miles a year, I’m going to get my money’s worth over 15-20 years. I could have bought a nicer car, but then I might still be paying for it many years later.
As the push for green travel takes place in many cities around the world, biking and public transportation continue to be a great option for people who want to reduce transportation expenses. I take the bus to work every day and pay $50 a month for the bus pass.
If I was going to drive, this would result in wear and tear on my car, $10+ a day in parking costs, and additional gas costs from filling up once or twice a week. All of this totaled up could add a few hundred more dollars to my monthly expenses.
Instead, I’ll pay my $50 and get a little bit of reading done on the bus!
Other people bike every day to work, get their exercise, and save the $50 I’ve been spending monthly to further save money on transportation costs! I applaud the people in Minnesota who bike to work in the freezing temperature. It’s bad enough standing at the bus stop in 0 degree weather!
By driving something a little more affordable, using public transportation or riding your bike, you can reduce your transportation expense, which can be another way to increase your savings fast!
How to Reduce Food CostsReducing food costs can be as simple as eating out less.
When you go out to eat, there are a lot of added costs hidden within the price you end up paying: the service, the overhead of the restaurant, the tip and any additional tax. I know this, and we all know this: eating out consistently is expensive.
I eat out for lunch at work. Typically, I go for a fast food type place (think Chipotle or something similar) and look to keep my daily lunch expense under $9.
This quickly adds up over the month (20 working days times $9 each lunch is $180). Throw in any snacks I have at work, and during a working day I will spend $10 or more.
I generally do not go out to eat for dinner, and don’t drink much anymore. I’m saving some money there, but those work lunches are my main deterrent to having a bare bones food and drink expense (and maybe I’d have bare bones then!)
Like I said, cutting the number of times we eat out a month will reduce your food costs. By eating in, cooking meals in bulk or meal planning, you can save a few hundred dollars a month.
There are many resources out there for how to meal plan, bulk cook, or couponing to save at the grocery store, and I won’t go into these – I just want to make you aware that these are possibilities to reduce your food costs.
One of the great things about having readers is being able to ask them about their strategies for financial success. A number of people contributed to the question of how they are managing their three big expenses.
Cynthia, one of my readers, said the following about housing expenses:
Our wealth began to snowball when we paid off our mortgage early. There is nothing like being truly debt free.
Congrats, Cynthia, you are one of the lucky ones! Not paying interest to the bank can add up in your brokerage or savings account!
Gwen, a blogger at Fiery Millennials, uses a three-prong strategy to attack these three major expenses:
I’m house hacking, I meal prep during the week, and I drive a 2005 car as to not be indebted to the bank and put my cash to good use in the present.
Another house hacker! I’m so impressed!
Dom, a blogger at Gen Y Finance Guy, uses a term he calls “Relative Frugality” to look at his three main expenses:
We simply practice what I have coined ‘Relative Frugality’. We don’t spend so much time managing the expense side of the equation as we focus on increasing the income side of the equation. The overall goal is to save 50% of our after-tax income and live on the other 50% guilt free. It’s a free ticket to enjoy lifestyle inflation. One thing we did intentionally do on the housing front was bought a house that at the time was 50% less than the bank said we could afford, but was still 3X the size we probably needed. The mortgage with insurance and property taxes makes up less than 10% of our gross income.
It’s cool seeing what different goals and scenarios people have, and how they are applying the strategic plan to their situation!
Being aware of how much you are spending on your three main expenses is step 1, and looking for ways to reduce these costs will help you get a handle on your expenses and increase your savings fast.
Moving to a cheaper apartment, house hacking, cooking in bulk and riding your bike or the bus to work are all great ways to reduce your expenses quickly.
As a current bus rider and previous house hacker, I’ve experienced the great benefits of these cost-cutting tactics.
I hope you can take what you’ve learned here and make some changes to see bigger savings in your future.
Creating a budget can be a great way for you to improve your financial situation. There are many different budgeting methods you can use, and in this post, you’ll learn about 5 simple budgeting methods.
Budgeting is one of most common ways for a person to get on their way to personal finance success.
With budgeting, you can determine ahead of time what you will spend your money on, and what you will have left over each month.
Budgeting is to personal finance what dieting is to nutrition. Both require a self-discipline and accountability, and they can be challenging and seem discouraging at times.
However, with consistency and effort, budgeting works.
Budgeting and dieting also share another common trait: they run on deficits and surpluses.
If you want to gain weight, you need to consume more than you burn.
If you want to gain wealth, you need to have income higher than your expenses.
This deficit and surplus theory is the no-nonsense foundation of diets and budgeting methods alike.
In this post, you’ll learn about 5 simple budgeting methods, and how you can budget to make the most of your money.
First, let’s talk about your spending habits and think about what you need vs. what you want.
For those new to the site, you should know I’m a big fan of simple living. This mindset of simplicity applies to budgeting and spending as well.
First, before looking to start budgeting, it’s important to think about your financial goals and current lifestyle.
With these thoughts, then you can start to determine how much more you want to spend on other categories, and align your goals with your actions.
But first, what is a budget?
First, what is a budget?
A budget is just a plan for how you spend your money every month.
That’s it. Nothing fancy. It’s just you telling your money what to do.
But it can be a lot more than that if you’re constantly stressed over your finances. When you make a budget, it suddenly becomes a lot easier to:
That last one is really important.
Money is not everything in life, but it is a tool you can use to create the life you want and deserve – without stress.
With these pre-budgeting thoughts and questions out of the way, let’s get on to the 5 simple budgeting methods for personal finance success.
Budgeting doesn’t have to be hard or complex, and there are a number of different ways to make sure you are spending your money on what brings you joy.
Below are 5 simple budgeting methods for you to choose from:
In the following sections, we’ll go into detail to learn more about these budgeting methods.
It may take some experimenting to find what works for you. After all, personal finance is personal!
1. The 50 / 30 / 20 Budgeting MethodElizabeth Warren, a law professor and U.S. Senator, first referenced the 50 / 30 / 20 budgeting method in the book “All Your Worth: The Ultimate Lifetime Money Plan.”
Simply put, the 50 / 30 /20 budgeting method involves spending 50% of your take-home pay on needs, 30% on wants, and 20% on investing and/or debt repayment.
With the 50 / 30 / 20 budgeting method, you only have 3 line items to track every month – it cannot get much simpler than that!
What this method requires is for you to clearly define what is a need vs. what is a want in your life.
After defining your needs and wants, you just need to sort all your monthly expenses into a need or a want, and add up each category.
Then, you can review monthly to see if your spending percentages were roughly on par with the 50 / 30 / 20 guideline.
It should be mentioned that 50 / 30 /20 is just a starting point. These percentages are not practical for everyone.The nature of needs is that they are must-haves, irrespective of your income.
Say your household’s needs are $40,000 a year. If your take-home household income is $60,000, then your needs make up 66% of your income.
If that take-home income were $100,000, then needs would only make up 40% of your income!
So the percentages are variable depending on your situation.
Also, one other limitation is this method may be great for those with salaried jobs, but it’s not ideal for those with highly variable incomes.
Variable income is typical for self-employed people, commission-based jobs, and hourly jobs where the hours worked fluctuate week to week.
Luckily, there are a few other budgeting methods you can read about below.
2. The 80 / 20 Budgeting MethodThe 80/20 budgeting method is an even easier version of the 50/30/20 method.
If you don’t want to make the effort to discern between wants and needs, you can just lump them into one.
In this budgeting method, 80% goes to your wants and needs, and 20% goes to investing and/or debt repayment. That’s really all there is to it!
This budgeting method runs on a “pay yourself first” mentality. First, you should invest the 20% (or use it to pay off debt faster), and then you are free to spend the rest on your wants and needs.
This simple budgeting method is great for people who want to improve their sense of financial accountability.
Following this method will give you an impressive 20% savings rate on your income!
However, it should be noted that those who feel they are stuck living paycheck-to-paycheck would not benefit from this budget.
You’ll need to use a method that discerns between wants and needs, allowing you to see where costs can be trimmed.
The next budgeting method is the 60% Solution.
The 60% Solution was first referenced in an article written by MSN Money editor-in-chief Richard Jenkins. This budget has five categories for your GROSS income (ie. pre-tax) outlined below:
This budgeting method effectively suggests you can live off 60% of your gross income. According to the original article,
“I determined that we needed to keep our committed expenses at or below 60% of our gross income to come out ahead at the end of the month.
Committed expenses:
* Basic food and clothing needs.
* Essential household expenses.
* Insurance premiums.
* Charitable contributions.
* All of our bills — even such non-essentials as our satellite TV service.
* ALL of our taxes”
This budgeting method really simplifies expense tracking since all your “committed” costs are lumped into one category.
However, it carries the same challenges as the 50 / 30 /20 method since 60% may not work for your household.
I suggest starting with 60%, and changing it by +/- 5% depending on how easy or difficult it is.
For the other buckets, here are some examples of what they could involve:
This 5 category budgeting method is great for those who want to itemize their spending a little more, without evolving into a full-grown line item budget.
4. The Cash Envelope Budgeting MethodThe cash envelope budgeting method is the oldest form of budgeting out there.
In fact, the word budget originated from the Old French word for purse.
While the cash envelope method requires the most effort out of any method on this list, it is still relatively simple.
The cash envelope budgeting method requires you to go old school by using nothing but cash for all your purchases.
You need to create a few spending categories and make an envelope for each one. At the beginning of each month, you then put a predetermined amount of cash in it, which makes it impossible to overspend.
Here are some common categories:
This method is just great for people who struggle with impulse spending, or people who prefer visual organization.
As mentioned before, it is impossible to overspend if you follow the method correctly. This budgeting method helps build discipline for those who need it when it comes to discretionary spending.
There are some negatives with the cash envelope method however.
First off, not using any plastic means you may be forgoing credit card rewards (assuming you’d pay your balance in full and on time).
Secondly, carrying wads of cash in today’s day and age is slightly impractical and potentially unsafe.
Finally, the amount of effort required is far greater than other budgeting methods in terms of tracking expenses. There are no monthly statements prepared for you when using cash!
The last budgeting method may shock you, but the best budget may be no budget at all! This may sound silly, but hear me out.
Of course, from a solely financial perspective, there is no valid reason not to have a budget.
However, personal finance is more than just numbers.
Psychology plays a huge role.
Many people dislike budgeting due to the scarcity mindset it may force on you. Granted, this mindset may be necessary if you’re paycheck-to-paycheck and trying to get out of that cycle.
But, is it really sustainable?
With the No Budget budgeting method, all you really need to keep an eye on is your savings rate. You can improve your savings rate greatly by reducing big expenses.
Of course, the higher savings rate, the better.
The concept of savings rate is actually incorporated in the other simple budgeting methods mentioned.
For example, if you have no budget and have a 20% savings rate, you’re actually inadvertently following the 80 / 20 budget.
This idea is great for those who aren’t in any deep financial trouble but still want to improve their financial situation.
Simply monitor your savings rate; as long as you are happy with the number, there is no reason to track more in-depth!
At this point, you are probably wondering, “which budgeting method is best and right for me?”
The best one is likely the one that resonated the most with you when reading the above.
Objectively speaking, some methods are more effective than others, but you should remember that this is not solely an objective matter.
The budgeting method has to be one that YOU think will work for yourself.
A budget is useless if you don’t think it’s a method you can reasonably follow.
If you can’t pick a budgeting method today, then to start improving your financial situation, I’d recommend to start tracking your expenses today. Don’t wait until the first of next month to act.
Look at your daily spending for a couple weeks, you can see where you’re at. With these measurements, you can figure out roughly how your budget is going to work starting next month.
Readers: have you tried any of these methods? Which have you found most effective for your household?
Are you looking to buy a house for the first time? Saving money to buy a house can be a challenge, but with the right strategy, you can successfully save up for that down payment on your dream house.
Saving up to buy a house is an amazing accomplishment – but it’s not without its challenges.
First, you need to find the right property. Then, you need to save for a down payment. After that, you get to deal with banks, lenders, mortgage brokers, etc.
It’s a lot to handle if you’re buying a house for the first time.
But being a first-time home buyer doesn’t have to be scary – as long as you approach it with a thoughtful and critical eye.
For the purpose of this article, there are 3 steps I want to focus on as you look to save up for a down payment on a house:
Then, after discussing these three steps, I’ll share with you some quick hitting saving money tips to help you increase your savings.
Let’s dive into each of these three pieces of information.
The first step to take before you even decide to save for a new home is figuring out how much home you can afford.
There are a number of ways to do this:
While mortgage lenders are all too willing to help you figure this out, keep in mind that what you want and what you can afford are two very different things.
Mortgage lenders generally have no qualms with getting people to sign up for more house than they need.
Likewise, what you need compared to what you can afford also needs to be taken into consideration. If you’re planning on starting a family soon, you won’t want to buy a tiny 1-bedroom house.
To help figure out just how much home you can afford, you’ll want to know:
You should be familiar with these as a lender is going to ask for this information, and it’s directly relevant to getting a home.
You can also use the 36% rule to determine how much home you can afford.
The 36% rule states that, on average, you should aim to spend no more than 36% of your gross income on your mortgage expense and debt payments.
For example, if you gross $3,600 a month and have recurring student loan debts of $500 a month, you’ll want to spend no more than $796 per month on your mortgage.
$3,600 X 0.36 = $1,296.00 – $500 recurring debt = $796
You can use this handy calculator from Nerd Wallet to estimate it for you.
The thing to keep in mind most is that you know your financial situation best – don’t let anyone pressure you into something that doesn’t feel right.
Next, it’s important to be aware of all costs associated with buying a home.
While saving up for a down-payment is great, did you know there are many other property and loan related fees associated with buying a home that are not recoverable?
These property and loan related fees are called closing costs.
Closing costs are fees paid (usually by the purchaser) to finalize the sale of the home. Some of these fees are rolled into the mortgage, while others are paid before the house is purchased.
Typically, you can expect to pay between 2% to 5% of the mortgage loan amount on closing fees.
If you’ve never bought a home or haven’t heard of closing costs, these additional expenses can throw you for a loop.
Some common examples of closing costs include:
These fees add up, and many of them are one-time fees that don’t build equity – meaning they don’t go into the value of the home.
For someone purchasing a $100,000 home and putting 20% down and paying a 4% interest rate and using a mortgage broker, it’s estimated you would pay over $5,000 in closing costs! That’s a hefty chunk of money.
When you’re saving up to purchase a house, it’s essential you take all of these closing costs and fees into consideration in your budget and savings goal.
You don’t want to get caught with your pants down if you fail to factor in one (or multiple) costs.
Here’s a calculator from NerdWallet that can estimate closing costs for you.
3. Take Advantage of Programs for First Time Home BuyersThere are a number of programs that FTHBs can use to their advantage when purchasing a home.
This is one of the best ways you can save money if you’re buying a home for the first time.
Many of these programs offer exclusive advantages, such as greatly reduced interest rates; grants given to help with closing costs and down payments.Others help vulnerable populations like veterans and native Americans in securing funding for purchase.
No matter your situation, if you’re a FTHB, there’s likely a program that can help.
Some examples of programs offered to first time home buyers include:
Depending on where you live, you may have different offers in your area.
Here is a list of some of the federal programs that help first time home buyers by state.
Check out the list – you may qualify!
How to Practically Save a Down Payment for a HouseOnce you know what you can afford to spend on a home, you’ll want to start saving for a down payment.
The easiest way to save for a down payment is to decide how much you’d like to put down, then divide that number by the amount of months you have until you plan on buying.
For example, if you can afford a $100,000 house, want to put 20% down, and you plan on buying in one year, you’ll need to save $1,666.66 a month.
$100,000 X .20 = $20,000 down payment / 12 (months in one year) = $1,666.66
Depending on how much house you can afford, how long you have to save and your income and expenses, this number may be easily doable or very difficult.
Something else to keep in mind is that the more you put down on a house, the lower your mortgage payments will be.
You can also avoid having to pay private mortgage insurance (PMI) if you put at least 20% down on your home. PMI is added to your mortgage payment whenever you put less than 20% down. It’s used to protect the lender against a loss in case the borrower defaults.
Here are some tips on how to save some additional money you can put down towards a house.
With all of these tips, I’m sure there’s something in there for you to utilize to help save more money!
Buying a home can be a big expense and stress, but depending on your own circumstances, it can be a good investment. If you’re a first time home buyer, you can make the experience much more pleasurable by doing a little work beforehand.
By researching how much home you can afford, saving money for a down payment, and taking advantage of offers for first time home buyers, you’re far more likely to make it a pleasant experience.
Purchasing a home is one of the major financial decisions you will make in your life – don’t take it too lightly! Best of luck!
Are you looking to learn how to live life intentionally? Do you want to take action, reach your goals, and find success in your life? In this post, you’ll learn how to live life intentionally, learn how to think proactively, and read about a 5 step plan for success in life.
Are you in control of your life, or are you just letting life pass you by? Are you living intentionally, or living unintentionally? Does life happen for you, or does life happen to you?
One of the most effective ways to take control of your life is through intentional living and proactive behavior.
I try to practice proactive behavior in all parts of my life – trying to play catch up is stressful and takes away from getting after my goals and dreams.
Instead of reacting to situations, I prefer to wake up and try to do what I want to do with my life.
By proactively thinking about what to do next, I can make a plan for my life and then take action towards my goals.
Doesn’t it feel good to set your own schedule and do what matters to you, instead of following someone else’s schedule and dreams?
Luckily, becoming more intentional and forward thinking in your behavior and actions isn’t too difficult.
In this post, I will share some tips on how you can take control of your life through intentional actions, how you can live life intentionally, and how to use proactive thinking to make smart decisions.
First, let’s talk about intentional living.
“You have complete control over the direction that the rest of your life takes.” – Jeff Olson, The Slight Edge
What is Intentional Living and Why is Living Intentionally Important?Before talking about proactive behavior, let’s talk about intentional living.
What is intentional living?
Intentional living is living your life in a way you have consciously decided to live it.
Living intentionally involves coming up with dreams, goals and a plan, and living out that plan. In addition, these plans and goals are usually informed by your values and beliefs.
Put simply, intentional living is living the kind of life that is meaningful to you, and makes you feel like every day matters.
Unintentional living is the opposite of intentional living.
Unintentional living is going through life without a plan, letting life happen to you, and not taking control of your situation.
Days, weeks and months can pass by if you don’t live intentionally, and this is where proactive behavior comes in.
What is the Difference between Proactive and Reactive Behavior?What is proactive behavior?
Proactive behavior involves acting in advance of a future situation, rather than just reacting. It means taking control and making things happen rather than just adjusting to a situation or waiting for something to happen.
Proactive people generally do not need to be asked to act, nor do they require detailed instructions. Proactive people practice intentional living.
Reactive behavior involves acting after an event occurs, rather than acting in advance of the event. It means waiting for something to happen, rather than making something happen.
Why are some people reactive in their behavior? What would happen if they changed started practicing proactive behaviors? Would they take control of their life and achieve wild success?
“Your philosophy creates your attitudes, which create your actions, which create your results, which create your life.” – Jeff Olson
People who are successful in life are proactive and make things happen.
Proactive behavior helps you take control of your life by making intentional choices about what you want your life to look like, and following through with your behavior to make that life vision a reality.
Not only does this lead to a positive end result, but it encourages personal growth along the way as you navigate and problem-solve.
What are Some Examples of Proactive Thinking and Behavior?Now that you know what proactive thinking and proactive behavior is, now let’s talk about some examples of proactive thinking.
Proactive behavior is all about living life intentionally and with purpose.
One part of life which is very important to be proactive in is your personal finances.
Part of living life to the fullest is having a handle on your personal finances.
Only 39% of people have $1,000 saved up in the United States. With $1,000 or more in the bank, the stress of an immediate emergency decreases.
This $1,000 can be saved with planning ahead and taking control of your financial life.
A few years ago, I was house hacking and had 2 roommates.
One of them was a great guy but was very reactive in his nature. He is someone who loves to get out in the world and do things with his time and money.
Being a part of a few different sports teams and going out on the weekends, I didn’t know the exact nature of his finances, but given his struggles to pay me on time for monthly rent, I could tell he was paycheck to paycheck.
At the time, he had a decent job, and from a simple Google search, was probably in the $40,000 salary range.
With this sort of salary, I would have hoped with a $700 monthly rent payment, he could not be living paycheck to paycheck, but after some bad luck, it was a certainty.
During the Spring, playing kickball, he ended up breaking his hand and with this must have came a significant hospital bill.
“I’ll pay you the 10th after I get paid.”
I wasn’t going to kick him out for being late, but I had a lot of thoughts on the situation.
Make no mistake, bad luck happens to the best of us.
At the same time, with planning and proactive behavior, what if he had $1,000 saved up to help deal some of his expenses?
As a single and employed Millennial, saving $83 a month for 12 months is certainly doable to get to $1,000.
Double that saving from $83 to $166, and in 12 months, you are approaching $2,000 in savings.
This is just one example of how proactive behavior and intentional living will lead to success.
Let’s think a little bigger now, talk about questions and your dream life, and discuss about how you can apply the practice of proactive behavior in your life for success.
“Try not to become a person of success, but a person of value.” – Albert Einstein
Two Questions to Answer for Creating a Great LifeFirst, a principle: without questions, there are no answers.
Figuring out your dream life or my dream life can’t be solved without breaking it down into smaller questions which get at the core of who you are, how you enjoy your time, and what you like to do on a daily, weekly, and monthly basis.
I believe there are two question sets which will get you started towards creating your dream life. The first part of the two sets of questions is:
When are you most happiest and what are you doing when you are experiencing this joy?
This is a simple question. When do you feel happiest? What activity or thing are you doing which brings the happiness?
For me, happiness comes from creation and helping others. I love creating content, building things, and solving problems. If life was a huge puzzle, I’d love it (which it kind of is, but the pieces are constantly changing 🙂 )
Happiness also comes from doing things on my own terms and having the freedom to create what I want when I want.
The second part of this set of questions is:
How often are you able to do these activities, and what’s holding you back from experiencing them whenever you’d like?
If you are already doing what makes you happy all the time (from the first question), then the second question doesn’t really make sense.
In my opinion, life is all about pushing towards doing what makes you happiest and understanding that while today might not be where you want to be, over time you can get there.
In my situation, I don’t have the level of savings and/or passive income to be helping others and creating what I want, when I want.
At this point in my life, I go to a corporate job at 8 AM and leave after 5 PM. While I’m making great money, there’s still an entrepreneurial itch which is always in the back of my head.
Currently, I’m working on building up my savings with the intent to move to something more flexible in the next year or two. We will see, but it’s a work in progress and that’s okay.
Things can change and I’m going to stay patient. I can influence this through my actions, but whatever happens is meant to happen and should be accepted.
Over time, I’ll get to where I want and need to be, and I hope you will as well.
Now that you have these thoughts in your head, below are 5 concrete steps for you to take control of your life and live intentionally.
When beginning to think ahead about your life, your family, your job, your business, etc., we first need to start with questions and goals.
First, let’s identify what you want with your life.
We both only have one life and limited time. In my life, I want to be doing things I enjoy and that are bringing joy to the people around me.
After understanding your goals and dreams, then it’s time to come up with a game plan, and take bold action.
With this plan, you will be living life intentionally and proactively. Through your proactive behavior, you’ll be on the way to reaching your goals.
Here are 5 steps for intentional living taking control of your life through proactive behavior, and creating a great life for yourself this year:
What are your goals? What makes you happiest? Where do you want to be in 1 year?
As we discussed in the last section, there is a lot that goes into answering these difficult questions.
However, with a picture of what you want, you can start to work towards your dream life and ideal situation.
Split your goals, thoughts, and dreams into multiple buckets:
Some example questions for you may be:
After asking yourself these questions, KEEP GOING! Let your powerful brain do some more work!
After getting some answers to the questions which matter to your situation, now it’s time to work backwards.
You are trying to create a great life for yourself and these questions will help you form a more concrete image of that life for before you create your action plan for success.
You know your goals, now it’s time to come up with a game plan.
You have your dream. What do you have to do to MAKE it happen?
Let’s take the example of losing 10 pounds.
If you want to lose 10 pounds, it’s time for more questions. Let’s see how this line of thinking plays out:
After you’ve asked and answered these questions for yourself (and there are probably 3+ more levels to go if you want to go that deep), again KEEP GOING!
Let your powerful brain and body work towards your goals and dreams!
After coming up with your game plan for success and happiness, it’s now time to take ACTION.
3. Be Intentional in Life and Take ActionIt’s great to know what you have to do, but if you never take action, you will never achieve your goals and dreams.
Intentional living is all about taking action and working on bettering your life situation.
Sitting on the couch and watching Netflix is fun and relaxing, but it probably won’t lead to a very fulfilling life.
Taking action involves getting out and into the world.
Start today with your actions and live intentionally. You’ll be pleased as you start to see your dream life come to fruition.
“A journey of a thousand miles begins with a single step.” – Lao-Tzu
“An ounce of action is worth a ton of theory.” – Ralph Waldo Emerson
Humans overestimate what they can do in a day, but underestimate what they can do in a year.
Have you ever started on your goals only to stop? Did you end up reaching your goal?
Each day, if you can spend at least 10 minutes working towards your goals, you’ll be amazed at your progress.
At the end of one year, you will have spent 3650 minutes, or 60 hours.
60 hours over a year? How much closer to your goals would you be after 60 hours?
That’s the power of consistency. Consistent actions over time WILL lead to massive success.
5. Reassessing and Tweaking Your Game Plan Over TimeFrom time to time, you will need to see if you are still on track.
I stay accountable to myself monthly. You can do a personal check-in weekly, monthly, or every few months. It’s up to you.
If you aren’t on track, make the necessary changes to your actions and daily habits to ensure you are working towards your goals.
It’s okay if you realize you aren’t on track; this doesn’t mean you failed.
All this setback means is you now have the opportunity to pick back up where you left off and keep getting better!
Just because you eat one unhealthy meal doesn’t mean your whole healthy eating plan is ruined. It just means you ate one unhealthy meal. You can always continue eating healthy for your next meal, and it will in fact be beneficial.
This outlook works for every part of life.
Being self aware on your path to the life you want and deserve will help tremendously.
Living an intentional life requires patience and understanding, and also will require some flexibility.
The life you want won’t happen in a day, but over time, through tweaks and consistency, you’ll get there. 🙂
You have the keys to your life. It is up to you to unlock your full potential and lead a great life. Through proactive behavior, you can take control of your life and create the success you crave.
Planning, strategy, or thinking ahead are examples of proactive behavior, and with these thoughts, you will become more successful than the day before.
Things take time and a level of patience will be required. At the end of the day, through proactive behavior and having a plan, you will be where you are supposed to be in the next few months.
Start with your goals and asking questions. Continue asking questions until you’ve formed a plan for the actions which should set you up for success.
With this post, you now know how to live life intentionally, how to use proactive thinking and proactive behavior to set goals, and how to create a plan for success.
Get after it and make sure to update me on your fantastic progress! 🙂
“Your level of success will rarely exceed your level of personal development, because success is something you attract by the person you become.” – Hal Elrod
“The only person you are destined to become is the person you decide to be.” – Ralph Waldo Emerson
Readers: Do you take a proactive approach to life? Are you in control of your life? What is stopping you from achieving your goals and dreams?
There are so many different ways to invest. As a beginner, it can be a daunting task to try and figure out what investment accounts make sense. This post is a guide for beginners to help you learn about the different investment accounts for your money.
Getting into investing can be intimidating with all the different options out there. Not only are there different investment choices; there are also many different types of accounts to put money into.
With all these overwhelming choices, how do you know which are the best investment accounts for beginners?
First things first, you need to figure out what your investing goals are. What are you putting away money for?
Secondly, you need to know what options are out there, and what each account is best used for.
Finally, you can put together some simple contribution strategies for making the most out of your investments and reach your goals in the best way possible.
Disclaimer: I’m not a financial adviser or financial professional. Please do your due diligence and research before buying or selling financial securities and assets.
Before investing, what are your investing goals?You need to determine your goals before you decide which of these investment accounts to prioritize. You also need to tally up the current state of your portfolio if you have any of these accounts already open.
What are you investing for?
Are you investing for retirement? Maybe you’re saving up for that home down payment? Or, perhaps you just want to build financial wealth in general.
The first piece of advice is to not get tunnel vision.
Odds are, you have more than one goal, and you should be contributing to them all.
The main purpose is to determine which one to prioritize to obtain the maximum financial benefit.
First, take a look at all the investment accounts available to you. Then, we’ll discuss investing strategies.
There are two broad categories of accounts. The first is Tax Advantaged Accounts, which are designed to encourage saving for retirement or other goals. The second is Taxable Accounts, which have no restrictions, but unfortunately are fully taxable.
Let’s dive into some more information on each of these different types of investment accounts.
As mentioned, these types of accounts were designed to encourage and incentivize saving. They do this by saving you tax payments; either you will pay less taxes in the present, or you will pay less taxes in the future!
The IRA is the simplest investment account of them all.
A Traditional IRA is a retirement account that lets you make tax deductions on the amount you contribute. Effectively, you don’t pay taxes on this money today, you are deferring the tax to the future when you are retired and are (hopefully) paying less in taxes. The money you invest comes from “pre-tax” dollars.
You can choose stocks, bonds, ETFs, index funds, or other assets, in an IRA. The main restriction is that penalties may apply if you withdraw this money before age 59 ½. The one exception is when buying your first home (hopefully by house hacking), where you can withdraw up to $10000 penalty free.
The annual contribution limit as of 2019 is $6000.
A Roth IRA is nearly the same as a traditional IRA with one notable difference. You pay tax now on income that is contributed to a Roth IRA, but you don’t have to pay tax when you withdraw funds! We call this investing with “post-tax” dollars.
The other main difference is that you can withdraw funds at any time, for any reason. This means you may consider a Roth IRA if you are saving for a long-term goal besides retirement.
The annual contribution limit as of 2019 is $6000. Note this is the same $6000 as the traditional IRA; you cannot contribute more than that amount between these two account types in a given year.
401(k)A 401(k) is offered through your employer. Your employer is part of a plan that you can contribute your “pre-tax” dollars into. Typically there are limited investment options to choose from in a 401k, most often mutual funds.
Like a Traditional IRA, a 401(k) has penalties if you withdraw from it before age 59 ½, however there is a long list of exceptions to that rule.
Now, why would you want this heavily regulated retirement account over a traditional IRA?
The answer is simple: contribution matching.
Contribution matching is a unique perk for a 401(k). This is when a company matches your 401(k) contributions up until a certain percentage or dollar value.
For example, if your employer offers $0.50 per dollar contributed up to $2000, then a $2000 annual contribution will actually add $3000 to your account. That is an instant 50% return on investment.
This is free money, no exaggeration here! All you need to do is contribute at least enough to get the maximum contribution match possible.
There are other types of employer-sponsored accounts that are far less common than a 401(k). However, you should still become familiar with them in case they apply to you.
A 403(b) plan is something your employer may offer in lieu of a 401(k), although they are very similar. This plan is common for nonprofit organizations, some public-sector organizations, and religious organizations.
These plans have commonly been associated with expensive annuities, which you should avoid. However, this restriction is long gone and you should have different mutual funds available to you in your 403(b).
The other notable plan, the 457(b) plan is a variation of a 401(k) available to public servants. You contribute pre-tax dollars like you do in a 401(k) and 403(b), and your employer may offer contribution matching. The main advantage is that there is no withdrawal penalty for those under age 59 ½ !
The above mentioned accounts are the likely investment accounts for beginners. However there are a handful of other tax-advantaged accounts that will be briefly mentioned below:
Taxable Investment AccountsTaxable accounts (sometimes known as brokerage accounts) are the simpler of the bunch. They carry way less restrictions than tax-advantaged accounts, however, sadly you must pay tax on all net investment income.
This is the most simple investment account you can have. No tax advantages, no restrictions!
It is called a cash account because you actually need the cash on hand to purchase a security. Virtually all tax-advantaged accounts are forms of cash accounts.
Borrowing to invest is not allowed inside these types of accounts. However, you can borrow money externally to contribute to these accounts, such as a 401(k) loan.
Opening a cash account may make financial sense once your tax-advantaged account contributions are all maxed out.
Finally, there are margin accounts. Let me start off by saying margin trading is risky and NOT for beginner investors!
Margin accounts allow you to borrow money from the broker to make trades. This allows you to put leverage into play, similar to real estate. However, given the high cost of borrowing (compared to a mortgage) you have to earn a significant amount of money for this to be worth it.
There is no one-size-fits-all answer here. After all, personal finance is personal! Also, there is no one “best” account, but there is an ideal combination of accounts out there for you.
There are some rules of thumb that can help you figure out which investments and investment accounts to focus on first.
As I mentioned earlier, this is literally free money! You should at least contribute enough of your pre-tax dollars to get the maximum contribution match that your employer will give you.
Remember, even if you don’t like what your employer’s 401(k) plan offers in terms of investments, it is still worth it to contribute and earn that employer match. You can always roll over your account to a more flexible IRA at one point in the future!
The one you choose to prioritize depends on your preferences and goals. Here is some food for thought:
I really like this calculator from Bankrate.com that allows you to compare which type of IRA may be better for your situation.
Maxed Out? Make use of brokerage accountsInvesting doesn’t need to stop once you max out your 401(k) and/or IRA contributions. A brokerage account allows you to contribute an unlimited amount of money!
One downside of brokerage accounts is taxes, but thankfully both capital gains and dividend income are taxed lower than regular income if you do it right.
Here are a couple common strategies to minimize your taxes owed:
** Note: Corporate bonds are typically fully taxable. Government bonds may be different; for example, interest from municipal bonds is often non-taxable. This is why you should consider consulting a financial professional to help lower your tax bill.
Having an optimal strategy for your investment accounts can be a game changer, especially if you start young.
While everyone’s situation is unique, one likely common aspect is an employer’s 401(k) contribution matching. You need to take full advantage of 401(k) contribution matching. I cannot stress this enough!
From there, you need to create your own answer to the Roth IRA vs. Traditional IRA dilemma, based on what works for you. Personal finance is personal!
The fun doesn’t stop once you have all your tax-advantaged accounts maxed out; you can continue to invest through plain old brokerage accounts. Keep in mind some of the basic strategies mentioned above to reduce your tax bill.
Finally, you should consider hiring a financial professional down the road! The wealthier you become, the more complex your tax situation may get. A good accountant or CFP (Certified Financial Planner) will save you more money over the years than what it cost you to hire them.
