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First off, an IRA (Individual Retirement Account) is NOT an investment.
An IRA is a shelter for investments. A tax shelter.
In an IRA, you have the options to buy stocks, bonds, mutual funds, money market accounts, CDs and, in some cases, real estate.
The purpose of using an IRA as an investment account to hold all of these securities is simple…
The envelope budget system is an easy budget for people who want/need to physically see where there money is going.
It’s a very simple process; in fact, all you need to get started is a few envelopes.
You will use a different envelope for each category in your budget. When you receive income, you simply put the correct amount in each envelope for that particular category.
It’s a cash system…
Discipline is the difference between financial success and financial failure. Getting disciplined means staying on track and staying focused on your goals. This applies to almost every aspect of your finances.
From budgeting to investing, discipline and sticking to your limits are the most important things, because without discipline, it won’t matter how much money you earn or how much money you invest.
You can earn a million dollar salary and invest regularly, but it you are not disciplined in spending and investing approach, you could lose everything. As far as your budget is concerned, discipline will make it or break it…
Now you should have all your income and all of your expenses for one month. Now it’s time to start telling your money where to go.
To really start getting detailed, you need to ask yourself what the main purpose of your budget will be.
If getting out of debt is the main reason, then the emphasize should be placed on using as much money as possible to pay down debt.
If retirement, investing or saving is your motivation for a budget, then it should be geared towards exactly that. Having strong goals will help you stay on track with your budget.
A budget doesn’t have to be boring. They can actually be fun. Best of all, they are not difficult! When you are getting started you have to know 2 main things to create a budget:
- How much you make
- How much you spend
So let’s start with your income. How much money do you bring in after taxes and deductions? This is called your net income. This is the actual money you have to spend every month. This includes any income you would make in a month.
If you have an irregular income, like people in the commissioned or service industry, then you have two options…
Yes, this is an actual budget that you can create for yourself in less than 5 minutes. An actual 5 minute budget.
It begins, as every budget begins, by writing down your income for 1 month, then write down your expenses for 1 month.
Budgets don’t have to be boring, and this one is so quick, it doesn’t have time to get boring.
You can track your expense for a month to get an idea, or just estimate for this budget.
If you are in the group of people who spend more than their income, which many people are, you will have to eliminate the least important things, until your spending is equal to or less than your income.
Now decide what is important to you…