Better Budgeting: Part 2
What exactly is money, why is it important to understand how money works, and why are most of us so bad at managing money? This week, we continue our series on budgeting with Part 2 where we focus on how to set financial goals and create a budget to achieve them.
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We hope you found this episode valuable and were able to take away a few helpful tips and a few new insights. We look forward to hearing about your experiences and wisdom on this topic.
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Here are some highlights from this episode:
- The 3 steps to budgeting: goal setting, planning and execution
- Do you want to ‘bounce your last check’ or pass on money to your kids?
- The culture of home ownership and how it relates to financial goals
- Methods for beginning to budget including “the envelope system” and the 50/20/30 budget rule.
- and lots more!
Show Notes
- 2:01 — March breaks down the topic of budgeting into three parts: setting your goals, making a plan, and executing your plan
- 2:39 — Ian, Darren, and March share where they are in terms of setting financial goals.
- 7:25 — March shares a pro-tip for how his relocation to Ireland has saved him a lot of money on his kid’s college tuition.
- 9:59 — Darren compares high-interest debt to running on a treadmill.
- 11:02 — We discuss how paying off high-interest debt (like credit card debt) is one of the first goals to set for yourself.
- 11: 28 — Darren shares a book recommendation: The Richest Man in Babylon by George S. Clason and introduces the concept of “pay yourself first.”
- 16:53 — Different ways to think about your retirement goals: the “bounce your last check” method or the lump sum method.
- 19:54 — Ian shares that one of his near-term goals is to buy a home and we discuss the different perspectives on home ownership versus renting.
- 25:14 — The cultural aspect of home ownership, the utilitarian aspect of home ownership, and the financial aspect of home ownership.
- 33:20 — Trading hours for dollars and how to define financial freedom.
- 37:09 — How to think about budgeting using some practical budgeting models.
- 40: 21 — The 50/20/30 budgeting rule.
- 43:19 — March offers a tip for making saving easier by using the “boil the frog” method.
- 50:50 — Different financial vehicles for saving money including Traditional and ROTH IRSs.
- 59:45 — How to use positive goal setting techniques to make it easier to save money.
- 1:06:10 — After realizing how rich this topic is (no pun intended) we decide that it deserves a part 3 where we can dedicate more time on tips for executing a budget plan.
- 1:07:00 — The role of debt in your financial picture and how to tell the difference between “good debt” and “bad debt.”
- 1:14:35 — The different types of insurance you can purchase and how insurance works.
- 1:17:40 — Why people buy insurance if the odds are against ever collecting it.
- 1:22:50 — Darren offers to sell Ian volcano insurance.
Mentions
- 📰 Book: Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence
- 💻 Blog: The Life Values Quiz
- 💻 Blog: ClarkHoward.com
- 💻 Blog: SmartAboutMoney.org
- 👍 Product: Kiva.org
- 📱 App: PocketGuard
Episode Transcript
Coming soon.
