Ever think “What should I do with my money?” No? Is it more like “Where did all my money go?” Either way here is a list of 11 things you should do with your money. Feel free to add a thing or two in the comments!
- Earn: Before you can do anything with your money you have to earn it. The best way to get money is from passive income. Passive income is money that you don’t have to work for, like rental income or stock dividends. Keep your eyes peeled and brain tuned towards passive income opportunities. You’ll thank me later.
- Budget: Once you have some money you have to tell it what to do. Money wants to run wild. You have to tell it what to do with a budget. If you don’t, who knows what it will do!
- Track: After you given it direction with a budget you have to make sure it’s following the rules. You do that by tracking your spending. Each day take your receipts and enter your spending into your budget so you have a clear view of where you stand. That helps you make decisions as the month goes on.
- Build and Emergency Fund: First and foremost you need an emergency fund. Experts say you should have 3-6 months worth of bills in savings for emergencies such as job loss. The first stop along the savings road is to have a whole paycheck saved. Then work towards having one month of income saved up. These two milestones will stop that paycheck to paycheck cycle and make budgeting MUCH easier.
- Reduce Debt: Debt is the cancer of finances. If you are struggling to save and budget chances are it’s because your debt payments are high. Make a plan to get out of debt and follow through. How much extra can you send to debt each month? Decide the order that you want to pay off the debts and start attacking one at a time.
- Save for Large Purchases: Once you have your emergency fund off to a good start and your debt heading in the right direction you can start saving for large purchases. Stuff that you might have once put on a credit card. Vacations, electronics, maybe even a car, or if you really want to go crazy… a house.
- Invest: Retirement planning is a big issue. The earlier you get started the better and NOW is always a good time. Make sure you are saving enough and stick with the plan.
- Save for College: Start saving for college ONLY if your retirement plan is on track. We all want to be good parents and give our kids the world. But they might be supporting you with their college degree if you haven’t prepared yourself for retirement.
- Give: Giving money to others is part of having money. Even if it’s just in the form of birthday and Christmas gifts you WILL give some of your money away. I’ve written quite a bit on my thoughts on giving, you can check it out here.
- Spend: Phew… are we ever going to get to spending money? All this talk about saving and giving and paying down debt… where is the fun part? Ok, we’ve arrived. Spending. Really at the end of the day it’s all about spending your money. We save so that we have money to spend later. We budget so that we are spending our money in the best way possible. Yes, we all spend money. There does have to be some balance in life.
- Insure: Now that we know exactly what we want to do with our money we have to prepare to die. Will our loved ones have to struggle if we are no longer around to provide them an income. Will their goals still be met? If you want to ensure that they can carry one financially without you then you will want some life insurance.
I was trying to think of a dozen so if you have another one feel free to leave a suggestion. :)