Making $$$ Dollars out of Common Sense!

In today's world, most people are living paycheck to paycheck. It's not a matter of if it's more of a matter of when a financial crisis will hit if you are not prepared.

Although I will admit, it can be challenging with all the tempting choices we are faced with but being disciplined in weighing and measuring your financials on a regular basis is essential. If you are not watching carefully, the ins and the outs of your own personal balance sheet, you might find yourself upside down and in a rut hard to dig out of.

This week I attended a great presentation where Erin Fredrickson with Brigham Young University Hawaii shared 4 essential steps to financial freedom.

Step #1 - EMERGENCY FUND

Putting away $1000 dollars in a separate account in a separate bank will help you to keep this for true emergencies. Be committed to saving money. Having an emergency fund helps alleviate the stress of always feeling like you are running on empty.

Step #2 - Pay off Debt

If you carry debt, use some kind of debt eliminator to help with reducing your debt quickly. There are many different opinions on how to do this but the easiest is to make a list of all your debts, take the debt with the lowest amount due and put as much money as you can towards that until it is paid off. Then take that same amount and pay it to the next lowest amount. I know this is contrary sometimes to what most people think which is to go after the highest interest rate debt but when you find success, although it might be small, it gets the ball rolling.

Step #3 - Building Emergency Fund (3-6 months of expenses)

When a true emergency hits, it's good to know that you have your essentials covered and that will support you as you get your feet back on the ground. Remember, an emergency fund is NOT an investment. It needs to be liquid money which means you can access it at any time but not too accessible that you will be tempted to take money out of it for none emergency items.

Step #4 - Save 15% of our Income for investing

Most people when they first read this may think, what the heck. A good practice is as soon as you get your check, pay yourself first before all the other bills are paid and I promise you, you will feel very different about your finances. This is money you can use to invest in different products or projects that will help you grow your money.

Thanks to the Brigham Young University Hawaii Management Society for a great presentation tonight.

https://www.youtube.com/watch?v=QzE76nUSjL8