Category: Finance

As a follow up to my previous personal finance posts: Here & Here. I want to share the next tips I have learned that may benefit you.

I try to use accounts that have no fees so I can save on costs that. Look for online banks that can be used as your main bank account to save on monthly fees. I still recommend having 1 no-fee account at a big bank to ensure you can visit the branch if required.

I try to avoid using cash so I can track everything in the statements and use a simple spreadsheet to track the accounts on a monthly basis. I recommend using credit cards that have good notifications via the app or text message to alert if you have any transactions.

Here is the fun part, set up direct deposits as much as you can for your payroll, gov deposits, insurance deposits etc. Then also set up pre-authorized debits for your fixed costs such as a mortgage, insurance, investments, credit card bills. Where possible pay by credit card and automate there.

Review the monthly statements carefully and ensure you have a reserve fund setup 1- 3 months worth so there is a buffer in case there is a delay or problem with any deposits.

I feel automating the investments is the real key here as you are paying yourself first and helping to secure your financial future. Eliminating the worry of paying bills on time is stress relief as well.

I started on my personal finance journey a few years ago.  I remember it was such an exciting journey. This is a follow up to that post.

Overall I am gaining confidence in my money management skills and am on track with my goals. I have learned a few practical tips along the way that has helped me make better financial decisions.

Credit Cards:

I have learned the power and convenience of using these plastic cards. Being responsible and diligent is key to unlocking the full potential. I have find it is convenient to have all three Visa, MasterCard, and Amex.

I always use credit card for all purchases and use different ones for different credit categories. I optimize the cash back rewards, travel benefits, and fees to gain maximum value. I am slowly getting better at this.

There can be perks such as insurance on trips, purchases, and fraud protection not gained in paying with cash. Doing the math of which card provides what value and with how much annual fee can be extremely useful.

Credit Score:

Building a credit score is vital and by getting a credit card and using it wisely can set you up for financial good health. I always make my payments on time and use a about 0-30 % of the credit limit  between all the cards.

It is important to understand how the credit score is calculated and the difference between hard and soft credit checks. Additionally getting your credit report annually and using free credit monitoring services will help you keep track of all activities.

Buying things:

• Big Ticket Items > $100 = Think about for a day or plan ahead before purchasing.
• Major Items >$1000 = How much long term value will this have in 3- 5 years?
• Food/Drinks – Treat yourself once in a while, try to be healthy

Buying experiences:

• Day events < $100 = 2-3 times a month
• Day events > $100 = Must be special and worth it
• Vacation – Think about difference between relaxing trip or busy sight seeing trip

Budgets:

I often had a tough time to sticking to a budget. I feel a more trend based approach is better. This starts with tracking every single last cent of your money. Using software such as excel, bank websites, and mint makes this much easier. Giving you an overall big picture of your money makes it much easier to see where you can spend or save more. 

Savings:

My goal has always been to save 20-30% of my pay. Firstly by having an emergency fund of a month or two gives you a mental buffer to overcome unforeseen circumstances. Then by saving for certain goals gives you the foresight to see how much you may need in the future. 

Investments:

Maximizing your tax free savings account is the goal first, then retirement savings, then any other investment vehicles such as taxable account, education savings, medical savings etc

Utilizing broad market index funds in those investment vehicles mentioned above is ideal as they are diversified and can be purchased from a online brokerage saving you fees. Look out for transaction fees and aim for a low MER of less than 0.75%.

Debt:

Ideally no debt should be the goal. Student, credit card, car debt should be payed off first due to high interest. Mortgage can be a calculated risk to pay off over long term if looking at inflation and compound interest. 

Insurance:

This is a key one and I am still developing my knowledge base on this. I find it is best to combine policies when possible and always shop around. Home, auto, personal, life those are the main ones.

Taxes: 

Optimizing tax incentives and understanding all your benefits is the key. Spending time reviewing deductions, tax brackets, and learned how your tax dollars are at work will give you a deeper satisfaction knowing you have done your part in optimizing this mandatory part of life.

As with anything in life, constant learning is key. I am looking forward to grow my personal finance knowledge base in the coming years. It takes a lot of effort understanding the the big picture and intricate details but you feel better about it each time.

Value for Value!

Abundance and Scarcity!

Energy Transfer!

It simply amazes me how much a monetary based society can create so much prosperity and havoc at the same time. With fiat money, the fractional reserve banking system, and the taxation system makes me understand the broader implications of wealth in my quest to achieving financial independence.

In my eyes, money is simply a tool which is amoral. I see money as potential employees eager to work 24/7 hours a day, 365 days a year. Learning about compound interest, investing, and credit, I was motivated to build good financial habits at a young age to set my future self up for success.

I started reading books such as the Intelligent Investor, Your money or your life, Early Retirement Extreme, and Rich Dad Poor Dad. I quickly learned the power of savings rate, asset allocation, and made me curious to venture into the stock market.

Having a diverse portfolio of low MER index funds and ETF’s and knowing a historic average stock market return of 6%-10%. I simply plan to use the power of dollar cost averaging and continually invest till I reach a tipping point where my investment returns are more than I am putting in. At that point, I will simply let compound interest do its magic and be financially free.

Understanding that net worth and self-worth are independent of each other, I take the time to think before purchasing anything and think in the long term will this add any value to my life? I consider the cost of anything I buy as $0 to buy from a position of strength and analyze objectively.

With rapid technological advances, there is a lot of demonization. As a result, I try to maximize every dollar to the fullest and look at the net present value and net future value to gain a better perspective. Coming from a mindset of abundance and thinking there is more than enough for every day makes day to day life easier and relaxed. Every day new solutions are found, new ways of thinking,  and new emerging technologies disrupt the marketplace.

With the internet as the great equalizer, the next billion are coming online creating more and more opportunities for generating wealth. This is a promising time for any investor, emerging markets are my favorite investments as they are hopefully empowering people and raising consciousness.