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5 Things You Should Know About Personal Finance

5 Things You Should Know About Personal Finance

    Money.  Oh money.  It makes the world go ’round.  It’s one of the biggest reasons for divorce.  It either frees us or enslaves us.  It is the commodity of all commodities.  And yet, as much as many of us make, most of us know so little about how it works.  I blame our parents.  They should have known.  They should have taught us.  Well, either way, I’m about to give you a quick crash course in cash money 101, and how personal finances should work.  Buckle up and enjoy the ride.  Hopefully you’ll be enlightened.

    1. How a credit card works

    Credit cards are an interesting commodity.  They can either work for you or against you, depending on how much you know about them and how smart you are with them.  The biggest problem with credit cards, though, is that we gain access to them before we know enough about them.  Your parents should have taught you how they work, but sadly, many adults don’t even know exactly how they work.  This article should help.  Read it.  Then read it again.

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    2. How to create a budget

    Budgeting is something that people either love or hate to do.  Personally I hate it.  But I keep a general budget because it’s important to know where my money is going.  A friend of mine knows where every dollar he spends goes.  I’d rather divide my money into 2 different accounts, business and pleasure.  I give myself an “allowance” to do whatever I want with monthly, and the rest stays in my “business” account for bills and other living expenses.  Need a crash course on building a budget?  Check this out.

    3. The time value of money

    The time value of money is a simple principal to understand:  basically it states that any amount of money is worth more today than the same amount of money in the future due to it’s earning potential.  This means that if you have $100 to invest today, it’s worth more than $100 a year from now, because it could be gaining value through investments for a year.  Let’s assume you average 9% on your investments… Your $100 today will be worth $109 in a year, whereas getting $100 a year from now is only worth about $91, due to the value of money lost in the year.

    This is very important when you consider the next point…

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    4. Start investing early

    Take a look at this chart.  Basically what it states is that when Saver B starts investing earlier on in life, the time value of his money allows for gaining potential so much greater that even though Saver A invested more than 4 times the amount of Saver B, Saver B has gained more than $400k more than Saver A by retirement.

    Moral of the story?  If you start investing now, you’ll have much more than if you wait till you make more money, even if you invested more in the years to come.

    5. Let your money work for you

    We were all taught that it is important to gain a good education and to learn valuable skills to enter the job force and start a good career.  But here’s what few of us have learned:  more important than having a good job is learning how to make your money work for you.  Consider this: if you can save $500k, and you average 10% on your investment portfolio, you will gain $50k annually without doing anything other than having the money.  $2 million will earn you $200k per year (earning 10%).  $10 million will earn $1 million per year.  The more you invest, the more you’ll make, without lifting a finger (well, other than managing your money, of course).

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    Sure it’s important to have a good job.  But it’s even more important to be investing your money, no matter how much you’re making.  If the goal is financial security and freedom, it doesn’t take rocket science; just a little discipline and sacrifice early on.  And what you’ll gain is so much more than what you could buy today.

    One last note:  $1 at age 18 can’t get you more than a coke, or maybe a dollar menu burger.  But $1 at age 18 is worth $54 at age 60 (assuming 10% again).  Keep that in mind the next time you stop at Starbucks.  Your cup of joe is actually taking more than $150 out of your retirement fund.

    Spend wisely.

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    Photo Credit: aresauburn

    More by this author

    Ibrahim Husain

    Ibrahim is a management analyst who writes about communication tips on Lifehack.

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    Last Updated on September 18, 2020

    7 Simple Rules to Live by to Get in Shape in Two Weeks

    7 Simple Rules to Live by to Get in Shape in Two Weeks

    Learning how to get in shape and set goals is important if you’re looking to live a healthier lifestyle and get closer to your goal weight. While this does require changes to your daily routine, you’ll find that you are able to look and feel better in only two weeks.

    Over the years, I’ve learned a lot about what it takes to get in shape. Although anyone can cover the basics (eat right and exercise), there are some things that I could only learn through trial and error. Let’s cover some of the most important points for how to get in shape in two weeks.

    1. Exercise Daily

    It is far easier to make exercise a habit if it is a daily one. If you aren’t exercising at all, I recommend starting by exercising a half hour every day. When you only exercise a couple times per week, it is much easier to turn one day off into three days off, a week off, or a month off.

    If you are already used to exercising, switching to three or four times a week to fit your schedule may be preferable, but it is a lot harder to maintain a workout program you don’t do every day.

    Be careful to not repeat the same exercise routine each day. If you do an intense ab workout one day, try switching it up to general cardio the next. You can also squeeze in a day of light walking to break up the intensity.

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    If you’re a morning person, check out these morning exercises that will start your day off right.

    2. Duration Doesn’t Substitute for Intensity

    Once you get into the habit of regular exercise, where do you go if you still aren’t reaching your goals? Most people will solve the problem by exercising for longer periods of time, turning forty-minute workouts into two hour stretches. Not only does this drain your time, but it doesn’t work particularly well.

    One study shows that “exercising for a whole hour instead of a half does not provide any additional loss in either body weight or fat”[1].

    This is great news for both your schedule and your levels of motivation. You’ll likely find it much easier to exercise for 30 minutes a day instead of an hour. In those 30 minutes, do your best to up the intensity to your appropriate edge to get the most out of the time.

    3. Acknowledge Your Limits

    Many people get frustrated when they plateau in their weight loss or muscle gaining goals as they’re learning how to get in shape. Everyone has an equilibrium and genetic set point where their body wants to remain. This doesn’t mean that you can’t achieve your fitness goals, but don’t be too hard on yourself if you are struggling to lose weight or put on muscle.

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    Acknowledging a set point doesn’t mean giving up, but it does mean realizing the obstacles you face.

    Expect to hit a plateau in your own fitness results[2]. When you expect a plateau, you can manage around it so you can continue your progress at a more realistic rate. When expectations meet reality, you can avoid dietary crashes.

    4. Eat Healthy, Not Just Food That Looks Healthy

    Know what you eat. Don’t fuss over minutia like whether you’re getting enough Omega 3’s or tryptophan, but be aware of the big things. Look at the foods you eat regularly and figure out whether they are healthy or not. Don’t get fooled by the deceptively healthy snacks just pretending to be good for you.

    The basic nutritional advice includes:

    • Eat unprocessed foods
    • Eat more veggies
    • Use meat as a side dish, not a main course
    • Eat whole grains, not refined grains[3]

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    Eat whole grains when you want to learn how to get in shape.

      5. Watch Out for Travel

      Don’t let a four-day holiday interfere with your attempts when you’re learning how to get in shape. I don’t mean that you need to follow your diet and exercise plan without any excursion, but when you are in the first few weeks, still forming habits, be careful that a week long break doesn’t terminate your progress.

      This is also true of schedule changes that leave you suddenly busy or make it difficult to exercise. Have a backup plan so you can be consistent, at least for the first month when you are forming habits.

      If travel is on your schedule and can’t be avoided, make an exercise plan before you go[4], and make sure to pack exercise clothes and an exercise mat as motivation to keep you on track.

      6. Start Slow

      Ever start an exercise plan by running ten miles and then puking your guts out? Maybe you aren’t that extreme, but burnout is common early on when learning how to get in shape. You have a lifetime to be healthy, so don’t try to go from couch potato to athletic superstar in a week.

      If you are starting a running regime, for example, run less than you can to start. Starting strength training? Work with less weight than you could theoretically lift. Increasing intensity and pushing yourself can come later when your body becomes comfortable with regular exercise.

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      7. Be Careful When Choosing a Workout Partner

      Should you have a workout partner? That depends. Workout partners can help you stay motivated and make exercising more fun. But they can also stop you from reaching your goals.

      My suggestion would be to have a workout partner, but when you start to plateau (either in physical ability, weight loss/gain, or overall health) and you haven’t reached your goals, consider mixing things up a bit.

      If you plateau, you may need to make changes to continue improving. In this case it’s important to talk to your workout partner about the changes you want to make, and if they don’t seem motivated to continue, offer a thirty day break where you both try different activities.

      I notice that guys working out together tend to match strength after a brief adjustment phase. Even if both are trying to improve, something seems to stall improvement once they reach a certain point. I found that I was able to lift as much as 30-50% more after taking a short break from my regular workout partner.

      Final Thoughts

      Learning how to get in shape in as little as two weeks sounds daunting, but if you’re motivated and have the time and energy to devote to it, it’s certainly possible.

      Find an exercise routine that works for you, eat healthy, drink lots of water, and watch as the transformation begins.

      More Tips on Getting in Shape

      Featured photo credit: Alexander Redl via unsplash.com

      Reference

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