Money money money
Do you have a stable financial base? This is pretty basic, but I was surprised on how many people don’t even have the basics. Here is a simple checklist:
1. Disability Insurance.
Sure health insurance is probably the most important insurance to have. But what’s the next most important insurance that most people neglect? It’s disability insurance. This is an insurance for your income. If something ever happens to you and you can’t work anymore, what are you gonna do? Well, this is where the disability insurance will come in and save the day.
2. Emergency Fund
If you get laid off right now, can you live for 2-3 months without a steady paycheck? If not, hopefully you can crash at your parents or friends’ place. Having 2-3 months of living expenses stashed away in a savings account will help to cushion some unexpected things.
4. Retirement Account.
When you retire, are you gonna have money to live comfortably? Or are you gonna work the rest of your life? Either that hope that your family is gonna leave you a fat inheritance. Or maybe you can hit that lottery. Maybe your business is gonna take off. But if you don’t think these are in your future, you should set up a Retirement account. There’s the 401k and the Roth IRA. If your company matches the 401k, you MUST let them match it. It’s basically free money. And you have to try to max out your Roth. That’s practically growing tax-free. The rest of the money can go to stuffing your 401k as much as possible.
5. Investment/Savings account.
This is just another account to let your money do the work. If you’re like bland food and watching paint dry, you can choose a high interest money market accounts, CD, or federal bonds. If you like to have a pulse and add some spices to your foods, you can try index funds or mutual funds. If you love roller coasters and experiment in exotic spices, you can try stocks. If you are a gambling crazy who’ll eat stuff they throw at Fear Factor you can try FOREX, options, futures, or online poker.
The rest of the money you can do whatever you want with them. I would suggest giving at least 10% for tithe or charity to teach you to not get too attached to your money. Besides, you’re actually using your money to help something other than yourself. You can also budget some other arbitrary amount for fun stuff like trips, good food, shoes, or whatever your vice is.
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