In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners. Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.
1. How do I get started on managing money? [1:00]
Put a financial plan, what we refer to as a budget.
The most important piece to this puzzle is to set some goals and place them where you’ll see them every day. It’s got to keep you motivated & fired up.
Start by tracking all your income and expenses by categories.
Use the first 30 days of tacking to determine your income and spending.
Add in expenses that don’t occur every month such as, medical expenses, car repairs, vacation expenses.
Set your monthly budget based on your values and priorities.
If you have revolving debt, you should use a debt repayment plan like a debt snowball to help you accelerate your debt pay off and free up more money for your budget. Make sure the payment is something your budget can manage.
Most important, set some goals and keep those goals in front of you, so you can be motivated to stay committed to the plan.
Continue to track income and expenses to make sure you’re sticking to your plan. A budget does no good if it’s not being managed often, daily is preferred.
If you need help with managing your money better you can access the debt and budget tools on leosabo.com. There are step-by-step videos that will show you how to get your plan in place.
2. How do I budget with an irregular income? [6:32]
Budgeting with irregular income is similar to budgeting with a regular income.
The difference is in how your income is brought into your budget.
If your income is irregular you need to make it regular. You can do this by first setting your budget based on your family’s needs. Make sure it’s the average amount you know you can earn no matter what.
Once you have a monthly amount, you allocate that amount into the budget every month, no more, no less.
When you earn more than your budget amount place it into a future income saving account, which you can draw from when you earn less income than your monthly budget.
This way of budgeting may be hard to get started, but if you start as soon as possible, in a few months you’ll have enough saved in your future income account to allow for a stable and manageable budget.
In the meantime, if you have an income month that’s less than what you budgeted, prioritize your expenses to spend on the “must haves” and once you run out of money stop spending.
3. Is gambling wrong? [10:48]
Many people say gambling is entertainment. However, I’ve yet to see someone lose a boat load of money and say it was entertaining!
The truth is gambling is just not a good idea. The payout rate is like 2% or less. That means for every 2 people that win 98 lose.
You have to ask the question, why gamble? What’s the real reason behind it? I think if we’re honest we can all agree that it’s greed. It’s the desire to getting rich quick, to get something for nothing.
We have to deal with our selfish desires and deal with any greed.
Gambling is not a good strategy for long term financial health.
Unfortunately, the people who can afford it the least are the ones that are influenced the most to gamble and play the lottery, and that’s not something we want to financially support.
4. Avoiding “Get Rich Quick” schemes? [21:06]
“Solomon, one of the wisest and richest persons that’s ever lived said, “If you plan and work hard, you will have plenty; if you get in a hurry, you will end up poor.” So, don’t get in a hurry. Becoming wealthy takes time, and that’s ok because with time you'll gain the financial wisdom to manage wealth.”
The best way to avoid “get rich quick: schemes is by doing the following:
Never invest in anything you don’t understand fully.
Never believe in an investment that has no downside, there’s no such thing - risk is part of every investment because no one knows the future.
Never trust someone solely based on their word. Too many people have been duped into get rich quick schemes because they trusted without verifying the information they were given.
Stay away from Ponzi schemes and multi-level marketing situations. The motivation behind it leads to manipulations. Refuse to get involved into any situation that involved manipulation.
Know your motive for investing. If your motive is greed, having an unhealthy desire to get rich, you’re probably going to reason away any potential risk, and most likely pay dearly for it.