What’s the “Rizz” with Personal Finances?
Imagine this, you took the leap of faith to learn how to manage your finances (finally)! Let’s make sure we are clear on things before we dive in a bit:
- Personal finances are personal, so don’t get discouraged if someone else is further along than you, or may have some advantages.
- Always remember, there are multiple ways to build your wealth, but there is never a quick & easy option. You might have a few bumps in the road, but it’s nothing that you can’t turn around with a little consistency and keeping your end goal in mind.
- It’s never, how much you make, but how you choose to spend it on what you truly value. Because if you can’t manage and plan $30,000, how the heck can you manage and plan $1,000,000.00 or more in 25+ years? Unless you’re interested in having to work forever…yikes, time to figure this out together.
- Ask yourself, “what sacrifices do I need to make in the short term to build for the long term?”
Taking care of your personal finances is always in style at JORD. We believe you are capable of growing strong financial roots, allowing you to conquer life's most unexpected moments, and spend the rest of your money on what brings you joy.
The secret sauce is quite simple, but again, takes some consistency and you’ll have some learning to do along the way, but these three steps are guaranteed to get you started on your path to financial freedom.
- Create a Money Plan (and stick to it!)
- Pay Yourself First. Retirement is a number, not an age.
- Open a High Yield Savings Account
1. Create a Money Plan (and stick to it!)
Money plan, budget, finance management…whatever you want to call it. It’s important to have an idea of what’s coming in ($$$), and what’s going out ($$$). The sooner you get a pulse on your finances, the sooner you can figure out how soon you can pay off any debts, build your emergency fund, retire, and how much money you can spend on yourself today to enjoy your life. How cool?
Here are some helpful tips to setup your monthly budget:
- Calculate the minimum amount of income you expect to bring in each month (Bonus: anything extra will accelerate reaching your goals)
- Look back the past few months and understand what your recurring monthly expenses are so you can plan your dollars accordingly (every dollar has an important job)!!
- It’s important to think about what other “surprise” expenses that came up in the past year, as this will help you be prepared for the “unexpected” aka, unplanned, short-term expenses you have in a year. For example, this could be your car insurance payment if you pay this expense annually, subscription renewals, etc.
- Take your monthly income and subtract your monthly expenses and you should get a number that is positive or negative. If this number is positive, GREAT JOB! If this number is negative, WE’RE SO PROUD OF YOU FOR FIGURING THIS OUT. This just means you need to adjust your expenses and make some sacrifices until you’re in the positive range. No biggie, we believe in you and time is your friend here.
Let’s take a look at this simplified example:
Income: $3,500/month
Expenses: $3,350
- Rent $1,600
- Utilities $300
- Groceries $500
- Gas $350
- Short term savings goals $100
- Money to SPEND ON YOURSELF, HOWEVER YOU WANT (you deserve to) $500
Leftover: $150
Now in this example we came up with an extra $150 and everyone’s personal finances and bills are different. If you have debt obligations or short term expenses such as a car insurance payment, etc. it would be a good idea to make extra debt payments first, and then once your debt is paid off save the extra money in your high-yield savings account to plan for those upcoming short-term expenses. Once you have a good pulse on your income and expenses, consider what short-term savings goals you may want to plan for in the next 5 years and embrace the essence of our Purpose Collection to live wealthy with us.
Questions? Reach out to JORD.
2. Pay Yourself First. Retirement is a number, not an age.
For example, if you make $50,000/year and contribute 20% of your income, you will have over 1 million dollars invested over the next 30 years for your retirement.
Don’t get us wrong. 20% is a big amount if this is all new to you. Start off with 1-10% contributing to a 401(k) plan through your employer, get the match if it’s available, and bump up that percentage by 1-2% every month or two until you reach 20% or more. This way, you’ll be securing your future and slowly adjusting to your income adjustments.
Learn more about a 401(k) plan and the 2024 maximum contribution limits.
This is where it truly gets personal! Focus on yourself and your family here and figure out what lifestyle you desire and make it happen with planning and support from the JORD community.
If you want to spend $80,000/year in retirement you would need $2,000,000 invested to safely withdraw 4% from your investments portfolio.
How did we get this number?
$80,000 x 26 years = $2,080,000
For our truly determined community members, share in the comments how you hustle to reach your financial goals sooner and other options that are available!
3. Open a High Yield Savings Account
Think of this as a savings account on steroids, earning you up to 5.5% on your money vs the standard 0.5% savings account does. This type of savings account won’t tie up your money and will allow you to safely save your money for any expected expenses in the next 5 years. A good rule of thumb is to build an emergency fund using your short term savings account which should include 3-12 months of living expenses, or whatever you’re comfortable with, and then begin contributing to other short term goals. These may include upgrading a car, cosmetic upgrades to your property, a new pair of shoes you want, etc. As long as you’re planning for it, you deserve it and it will feel a whole lot better when you earned it.
Again, this may not be possible in your current situation, but small steps towards achieving these milestones will put you on the path to Manage Your Finances with Rizz.
Word of advice: Instead of saying “I can’t do that”, give “How can I do that?” a shot. You’d be surprised how much your brain will thank you. Slow and steady always wins the race.
Are you interested in discussing something specific in “Part 2: Mastering Personal Finance with Rizz”? Contact us! We love to hear from our community members.
Disclaimer: The information provided is for educational purposes only and should not be considered as financial advice. Investing involves risk, and you should consult a qualified advisor before making any financial decisions.