Spending Habits: My Takes on Money
If you are living paycheck to paycheck, then you are not alone and it is very common. If you have a habit of budgeting your expenditure based on income wages, easily you will learn about ourselves. Are you a spender or a saver? I am a spender. I was spending my day to day expenses with a credit card, I still use the credit card if you get cashback why not? But I figured another way to earn those cashback with debit cards. I will talk about a way to earn cashback with a debit card later. If you are using a credit card or debit card, you cannot track your expenses, eventually, you will spend a lot or you broke at end of the month. According to Ramsey, we need to use money, real cash to buy your needs, then our brain does all calculations. I don’t think that it makes sense to this millennial. You will miss great discounts, cashback, and online purchase requires a plastic card, not paper. So I strongly rely on App to track my expenses. I used so far, more than 10 applications to record my expenses. Now I am becoming a human app who checks all my bank accounts and credit cards at least 12 times a day. I am using more debit cards than credit cards in recent days. I maintain one master debit card, one visa credit card, and cash reward credit cards.
When did I start changing my spending habits? Kudos to Dave Ramsey, I happened to watch his YouTube videos and read his book called Total Money Makeover. He provides the framework to the question, what should I do with money. I realized that I got the help I needed to achieve FIRE. He talks about seven steps (Baby Steps) to achieve financial peace. I don’t want to narrate his book here, please listen to his words in the audible app. https://www.audible.com/pd/The-Total-Money-Makeover-Audiobook/B002UUKIR8
I cleared my debt especially credit cards, personal loans, and start saving money in a savings account. Here in the USA, interest rates are very less. The national average was 2.18%, but now it is 0.6%. The money savings culture is not popular and it doesn’t make you rich here. You need to invest and invest more in stocks, funds, and bonds to grow your money. So term called Emergency fund is common. I want to talk about an emergency fund in the rest of the section more with a few investment options. I will write another blog about investment in detail.
According to some surveys, one-fifth of adults are not able to cover unexpected medical costs. Medical cost is very unpredictable if you don’t have good insurance. If you own a house, you will not know when your home appliances break. The foremost problem, what happens to your monthly expenses if you lose your job. While you can’t know when an emergency will hit your household, it’s highly likely that you’ll have to face an emergency at some point. Either you will pull out your investment money even you are losing money with a high margin or credit card usage will grow. Both are bad for FIRE. So you have to create a starter emergency fund of around 1000 bucks and it should be separate from a checking account. An emergency fund should be worthy of at least 3 to 9 months of salaries. It’s not easy if you don’t have a habit of budgeting. I am an immigrant to the USA and I cannot stay in the USA for more than 90 days if I lose my job. So I have to build an emergency fund for the survival of 3 months at least. I split the rest of my funds into other sources to protect my emergency funds from spending more during emergencies.
There are some options to save your money as an emergency fund with some risk but if you are lucky, you will end up making more money than your saving accounts. The first option, open a Stash banking account that provides two services with a subscription of $1/month. A personal account and checking account, if you use a checking account, then Stash provides a one-time $50 cash back with a debit card. You can invest in the stock market using a personal account with a recurring deposit of $0.1 at least and every time you use a debit card to purchase,then a portion of the money will be invested to stock. Learn more about Stash and if you like it. Use my Stash referral: https://get.stash.com/rampras_ddcp8.
Acorn is another investment tool to keep your fund based on the portfolio that you want to manage. You can invest your money with an aggressive portfolio with high risk or less conservative with low risk. Acorn subscription cost is the same as Stash which is $1/month. Learn more about Acorn, I shared my referral code below. We can both earn money when you add a $5 minimum account balance to your account. Acorn Referral: Start investing with Acorns today! Get $5 when you use my invite link: https://www.acorns.com/invite/?code=YEDJW7
