The road to Financial Freedom

The Money Rule (50,30,20)

Today I learnt about the 50-30-20 Rule of Money and, in a nutshell, this golden Rule can help us create our budget considering our specific needs, which means that it can be modified depending on the specific situation of each and everyone of us. But first let’s explain more about it, shall we?

First of all, this rule is as simple as a division of our money. Let’s imagine we have three boxes an each of them is of a different size. In the bigger one we keep things we don’t really like but need to have, for example student loans. Then in the one in the middle we keep things we like, for example a new guitar. In the smallest one we keep just money that will let us buy, in the long run, all those things we don’t like and the ones we do like.

This Rule works just like that. We divide our money in different percentages for it to be spent in different things. The standard division, the one you should start with, is the next one:

50% goes to all your needs. This takes into consideration housing, food, transportation, health insurance, loans, etc. Everything that you really NEED to spend your money on.
30% goes to your wants. Life is not life if we do not live it, so you should use part of your money in things you really like/want. In this part of your money you can buy material things like a guitar, a new TV, a videogame console, etc. Also you can buy cravings of food for example. If there is something you really want, but your 30% is not enough, you should wait until you have enough because altering your initial strategy can affect your long term goals.
20% goes to your savings. It can go to you retirement account, the stock market, a business. The point is for you to make that money work for you.

That is the basic structure for this golden rule of the creation of a budget, but remember that you can change it in order for it to adapt to your needs. If you consider you need more percentage in your savings than in your wants, you should change it. At the end, it should help you achieve your GOALS in a more structured way.

And remember, keeping your money under the mattress is just a waste of money.

How to survive Valentine’s Day (Financially)

Valentine’s day can make your wallet suffer if you are not careful, that is why in this text I will show you a way you can survive Valentine’s day without taking all your budget for a ride. First of all, you need to be conscious and remember that it is not necessary to have a specific day to give some love to your friends, family or your partner. Remembering this will help you create more strong relationships with all the people who are close to you. Obviously this does not mean that you have to give them a gift everyday. In my opinion, you can demonstrate love in many ways that doesn’t require money. Let’s go back to the topic. Valentine’s day is a day charged with a lot of pressure because not many people have this idea of giving love as I have, so everybody expects you to give them something. But if you are as invested in this journey as I am, you know we cannot afford to spend all that money in just a moment, so there are many ways in which you can give love without giving your savings. The rule number one for you today is not to buy gifts made for “this occasion” for example, chocolates, plushes, and flowers, because they will overcharge you when buying them. The best idea is to prepare something yourself, It doesn’t need to be super complicated, the idea is for you to demonstrate that you care for them. For example, I made a very easy sweet for someone with my own hands, I just had to buy some oreo cookies, some cheese and that is all. I prepared my gift for like 30 minutes and now I am ready to gift it. That is the idea, make something easy, something that shows that you care for that person. More examples of gifts can be: a letter, a sweet, a poem, or just a hug. This day can be as special as you want it to be, because money does not buy you love.

Remember, love can be expressed in many ways, everyday.

Frugal Living has its limits

Frugal Living is very useful. As you know, I started this week with this way of life and I have already noticed a difference. This week I have already saved some money that I am considering using in two things. But that is a talk for another time. Now, I understand Frugal Living isn’t everything. There is nothing more precious than time. If you lose your time, you basically lose everything. So, Frugal Living isn’t about stopping living that time. It is important to be conscious about all of our spendings, but we shouldn’t feel bad for buying something we like, or going to the cinema. In general, doing stuff that we love just feeds our soul. We have to live happily. The idea behind Frugal Living is for you to understand the way you spend your money and to be more conscious about it.

So remember, cherish time, because it goes faster than we think.

P.S. I will do Budget soon, I promise.

Frugal Living

Today I learnt a new term called Frugal Living. It’s funny I hadn’t heard about it since I consider myself a Minimalist and both things seem to be related or people debate their relationship. So, what exactly is Frugal Living? It is a way of life in which you focus on buying only what you actually need. This can help in your finances to stop buying things jut for the sake of having them. This idea can also help when you try to save some money. This is why now I am going to try living frugally for the next months, so we can see how much money I can save, and also learn about all the things I really need to buy for my survival.

It was my first day at the supermarket buying just the essentials for my week, and let me tell you, it was kind of difficult. The idea was to buy just food for all the week, but at the end I had to consider other things I actually needed, so at the end, I spent more than I was supposed to.

For this kind of scenarios it is important to consider the big picture. For example, I bought a pen I really need for school, it costed me roughly 3 dollars, and could look like a lot if you don’t consider it is going to last me, hopefully, more than one year. It is important to look for what you buy in the present, but also consider if it is going to be useful in the future. That is the real way to buy useful stuff.

Back to the Frugal Living. I looked for the list of nutrients my body needs to develop better. Because now I understand that saving money is not worth it, if you have to give up your health. In the past I used to buy junk foo, because it is the cheapest you can find. But today I found out that, with a little bit of time, you can find healthy food at a good cost.

So remember, don’t give up your health just for a few bucks, If your body can’t work, how do you expect to be Financially Free?

P.D. Tomorrow I think I will create my first Budget.