For many people, issues such as saving money, budgeting, and their finances in general are
major challenges that they like to postpone to the distant future because they think they
have to save every single penny now, live far below their means, and can't afford to
indulge in anything anymore. But what if it is also possible to bring all these issues
in line with the enjoyment of life ? That's what this video is all about, where I show
you how to get control of your money and save more money for your future, your retirement
or as a safety cushion and still live well in the present moment.
And before we dive into the topic : Hello and welcome back to our channel ! And if you
are new here : We are the finance nerds and on this channel we are helping hardworking
people like you to get more out of your hard earned money by showing you how to use your
money in the most effective way. Remember to give this video a thumbs up at the end,
if you got value out of it. And now let's start with the 5 money mistakes you should
avoid at all costs if you never want to have money worries again at the end of the month.
Do you need to save money ?
Many people live their lives thinking that only the present moment counts anyway and
don't even think about the future. Therefore, the question arises quickly whether it is
even necessary to save money and whether it would not even be more sensible to simply
enjoy the moment to the fullest? This is a question you can only answer for
yourself and also depends on your situation, however, let's finish the thought : if you
are living from paycheck to paycheck every month, not building a nest egg and having
the constant challenge of paying unexpected bills, can you really enjoy the present moment
? Stress vs. enjoyment, that's your choice. If you answered "yes" to this question now,
the next question is : "How can I save money ?"
The answer is simple as well : through a budget. Now you're probably thinking "I've heard that
a 100 times" but have you ever implemented it or are you someone who listens to one piece
of information after another and doesn't implement anything?
I know financial planning can be very exhausting especially because it is not done once. It's
an ongoing process where you have to deal with a rather unpleasant issue over and over
again and face reality. But you also have to think about which actions exactly lead
to the financial one looking the way it does. The main reason for a budget is this: to plan
exactly what you're going to spend your money on, how you're going to save your money, and
to track and measure it all in the long run. So it's a way to spend your money and see
if it is aligned with your goal. It's a personal decision on what you want to spend your budget
on. My budget has the main reason to build wealth over the long term and so it's also
geared differently than yours might be. Ok after talking about whether you should
save money, what tool we use to do that and what function a budget has, now it's interesting
how we use the budget to save money and still enjoy our life.
Now this is just a rough overview and serves mainly to show you how to reconcile both sides.
If you would like to see a detailed step-by-step plan on how to create a budget, feel free
to save the video, which is now linked in the upper right corner, and watch it later.
Step 1 : Life Vision
The first step is to give your budget a purpose, meaning where you want it to take you.
If you just want to create a budget without trying to achieve a concrete result, sooner
or later you will find yourself not implementing your budget consistently.
That's why it's important to set money goals that are in line with your life vision.
For example, do you want to retire earlier? Then a goal would be, for example, the certain
amount of money you want to have in your savings account or, for example, the amount of money
you also need in your investment portfolio to live on the returns.
Step 2 : Live within your means
Living within your means is crucial to your financial success. Why ? Well, if you spend
more per month than you earn, it's an easy math problem to see where you stand with your
account at the end of the month.... Correctly in the minus.
This means that your ultimate goal should be to earn more than you spend and that's
what your budget is for, to show you clearly how much you earn, how much you spend and
more importantly where you spend your money. To do this, you first calculate your complete
net income, which you have available in the month. In the best case, you immediately deduct
10% as a savings rate, which you put on a separate account. This will make it easier
for you to save money and you will not fall into the trap of saving too little or no money
at all. It is important to keep track of how much
money you spend and especially what you spend it on. Keep a simple list for a month, that
can be an Excel spreadsheet or a simple notebook, where you list all your expenses.
Step 3 : Find a system what works for you
After you have determined exactly where you currently stand financially, i.e. what exactly
you earn and what you spend, and have determined exactly where you want to go, i.e. your money
goals, the next step is to find a system that works for you. In concrete terms, this means
adapting your budget to your needs. You can now define in your budget exactly how much
money you want to spend in a month and also categorize your expenses and give them percentages
to divide your expenses exactly. You can define exactly how much you want to save or invest
and accordingly make changes in your consumption behavior that are in line with your life vision.
As I said, I explain exactly how you can do this in the video above right.
Step 4 : Track your Process
Now you just need to track your progress and make changes if necessary. For tracking, there
are countless ways from Apps to Excel spreadsheets. Choose the best way for you, what you feel
most comfortable with. Check out the video description for the providers
and resources we use to track our finances. It is by implementing your life vision into
your budget that you have the opportunity to save money and still enjoy your life, because
you have designed your finances exactly according to your needs and have found your personal
balance. Many who show you how to create a budget don't even go into this and just show
you how they do it. But who says that their way is also yours ? Everyone has different
goals in life and therefore everyone should use their money differently. The money should
serve us and not we serve the money. If you enjoyed the video and now want to know
more about how to take control of your finances, click on the video to the right or check out
the video description. There you will find more videos and resources to help you have
more money at the end of the month.
And hit the like button if you are willing to take control of your finances.
We hope to see you in the next video!