You already know that you need to spend less than you earn, but what should you do with the difference? Something smart! Doing something smart with the difference is the second foundation of financial fitness.
In this episode of Money Mile, you’ll learn about some intelligent and not-so-intelligent things that you can do with the money that you have left over at the end of the month. There are myriad ways that you can use your money, so listen in to think about the best option for you and your financial situation.
If you are looking forward to an active and phased financial independence, you’ll want to press play to make sure that you are armed with the knowledge that will help you use your money wisely.
You will want to hear this episode if you are interested in…
- Doing something smart with the difference [1:22]
- Intelligent options [2:44]
- Less intelligent ideas [5:32]
- An additional thought [6:35]
- The homework [9:07]
Do something smart with the difference
Should I pay off debt or invest? Should I save money in a typical savings account? What should I invest in? These are all smart ways to use the difference that is left after creating your spending plan.
However, choosing the best way to use your money varies from person to person. To understand what is right for you, you first need to get clear about what you are trying to accomplish financially. Once you are clear on your financial goals, then you can make better decisions with more confidence.
It can still be challenging to go it alone when there are so many financial decisions to make. If you are looking for a fee-only financial planner, send me an email to see if I can help you achieve your financial goals.
Smart ways to use the difference
Save money – It’s always a good idea to have a healthy cash reserve in a savings or money market account at your local bank.
Pay off debt – The sooner you pay off your debts the better off you’ll be. Some debts are worse than others and understanding which to pay off first is important. Even so, there are wise ways to use debt which we’ll discuss in a later episode.
Invest and build wealth – Investing is an important tool to build your wealth over time, however, it’s important to understand and be respectful of your own risk tolerance. Make sure that you have a clear understanding of what you are investing in and steer clear of investments that you don’t understand. Listen in to hear some great ways to invest and build your wealth.
Not-so-smart ways to use your money
While there are many smart ways to use your money to achieve financial independence, there are many more not-so-smart ways to spend your money. It’s easy to get caught up in the idea of spending money on the newest gadget, gizmo, or gear, but if it isn’t in your spending plan, don’t buy it. If you really want the latest and greatest thing then review it in your Monthly Money Meeting and save up for the purchase rather than impulsively buying it.
Buying something that rapidly decreases in value generally leaves you wanting the next best thing 6 months later.
Taking an extra, unplanned trip seems fun and spontaneous, but if you haven’t planned for it and aren’t saving appropriately to reach your goals, then it isn’t the smartest way to spend your money.
Don’t miss out on the homework! Make sure to put your knowledge into action, and listen all the way until the end to hear what you can do to implement the second foundation of financial fitness.
Resources & People Mentioned
- Spending Plan Template
- Episode 7 – A Triathlete’s View of Investing
- Episode 8 – 5 Foundations of Financial Fitness
- Episode 9 – The First Foundation of Financial Fitness
Connect With Justin Waller
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Audio Production and Show Notes by – PODCAST FAST TRACK