Sticking to a budget can be quite hard the first time you try it, therefore before I show you how to develop a budget, let’s explore the budgeting habits that can make your adjustment to your budget a landslide.

Personal Budgeting Habits To Adopt

When a paycheck, birthday check, or any money at all arrives, that’s the moment it should be entered in your budget. Not before, and not too long after. Not only does this make paydays even more magical, this gets you in the right mindset to only budget the money you have.

Enter Money When It Arrives

Following up from the above, once money comes in, set up some automatic transfers or put some cash aside for YOU. Paying yourself first ensures that you have the financial security to make future-you very happy. Even small amounts will grow into something larger, which can eventually pay for that vacation, buy your dream car Or maybe it helps you buy a house one day? if anyone deserves your hard earned cash, it’s you.

Pay yourself first

Budgeting to zero means that when you create your budget, your income minus your expenses add up to zero. Income – expenses = $0Budgeting to zero gives you financial clarity, you give every dollar you earn a job, even if that job is savings or an extra loan payment. Budgeting to zero doesn’t mean you spend every dollar you earn. Neither does it mean that you’re stuck with your categories for the month. On the contrary, it is a great method to start a savings program by working your savings into your budget and to keep that budget flexible so it can change with whatever ball life throws at you.

Budget to zero

A common budget pitfall is when you use your budget as an expense tracker alone but you do not let it influence your spending habits.Check your budget before you pull out that debit card.On some days looking through your budget before you spend, you’ll get a resounding YES to spend that money, and other times you’ll get a NOT YET in response, and on others, you’ll realize that a new pair of jeans just wasn’t quite as important as your passing urge would have you believe. Think of your budget as an ever-present accountability partner.

Check the Budget Before Spending

These ideas state the money habits to develop that will help in creating and managing a budget.

The concept of a personal budget is most likely not new to you, however, not everyone has a positive attitude towards budgeting this is because a budget can sometimes be perceived as an instrument that limits financial freedom especially when it is aggressively created.  In reality, sticking to a properly prepared budget should improve the…

personaldevelopment

Personal Development

moneyandinvestments

Money & Investments

Exploring Personal Budgets as A tool for  Financial Freedom

<ul>
<li>Murphy’s law: Anything that can go wrong will go wrong.</li>
<li>Parkinson’s law: Work expands to fill the time available for its completion.</li>
<li>Paco’s law: Your spending will equal what you have available to spend.</li>
</ul>
Not true for all, but the amount of people who are struggling with getting a grip on their spending is so huge that there should be a law for it.

Murphy, Parkinson and Paco

Paco’s law is basically a way for you to pour a specific amount of something (money) into a container (a checking account) in order to ensure you only consume (spend) a certain amount.
Knowing about Paco’s law is the first step to not becoming a victim of it.

Spend Only What's In The Account

How do you know if you’re overspending?Look out for the signs:1. You save less than 5 percent of your income2. Your credit card balances aren’t going down3. Your credit score is below 6004. You have no emergency fund5. You’ve never made a budget6. You’ve paid an overdraft feeEven if you’re pretty good with your money, separating your spending can help you in two ways — boosting your savings and/or refocusing your spending in a way that’s more aligned with your values.

How To Tell If You Are Overspending

Set up two separate checking accounts — one checking account for all the bills and living expenses and one checking account for all the fun and bs expenses.• Fund each account with how much you need.• Separate your spending — only pay for bills and living expenses out of the bills and life account, and only use the fun account for the nonessentials in your life. This system only works if you make sure that you adopt this rule as a part of the operating process.

Set Up Two Different Checking Accounts

Once a week, give your bills and life account some attention to make sure that things look normal. For example, if you have a $1000 buffer, check in to make sure that you haven’t dipped below that buffer. And if you have, you can investigate further. You’ll also need to look at your fun account balance before you actually go out or spend money on non-essential purchases.Looking at your account balances is the bare minimum of getting your finances in order. In the health and fitness world, it’s the equivalent of not sitting on your couch all day.

Take A Look At Your Spendings

An ideal buffer is an entire month’s worth of expenses, but less can work too. You could slowly build up your buffer by adding a little bit more to your bills and life account until you have a month’s worth of expenses on hand.If you don’t have enough of a buffer, you might need to spend some time figuring out a schedule for paying your bills. Usually, you can call and have those due dates changed. Yes, you have to sit down and make phone calls and it’s annoying, but the effort is worth the confidence you’ll feel that your system is set up to work properly.

Pro Tip 1: Build a Buffer

If you’re going out for a night of fun, leave your responsible bills and life debit card at home. Do not tempt yourself with it. When you’ve had a few libations and you’re feeling full of emotion and want to buy drinks for everyone at the bar, it’s best not to have that temptation present.Remember: The quality of your financial decisions can be drastically improved by avoiding an environment where you will be tempted to make bad decisions.

Pro Tip 2: Don’t Bring Your Bills and Life Debit Card To a Fun Situation

The hedonic treadmill is a concept that says humans will keep relatively stable levels of happiness despite positive or negative events.There isn’t anything inherently wrong with growth and improvement or with setting goals, achieving them and then setting higher ones. But the constant drive for more can be damaging when you are not conscious of your motivation or of the fact that you’re even on the hedonic treadmill.

The Hedonic Treadmill

<ol><li>Step off the hedonic treadmill temporarily by choosing not to buy nonessentials for a period of time. Try 30 days, or if you’re feeling wacky, a few months or a whole year.</li><li>Create a list of all the things you want to buy. Feel free to go full nerd on it: Do research, make notes, make it a handsome list. Any time you want to buy something put it on that list. Then, make a rule for how long a thing needs to be on the list before you buy it — it could be 24 hours or a few months. Your mind will then get trained for delayed gratification.</li></ol>

Pro Tip 3: Two Approaches To Tackle The Hedonic Treadmill

This method of managing your finances doesn’t require technical skills. It’s not like dunking a basketball or dribbling one. It only takes your time and effort to get it up and running and then some more time and effort to maintain it. There is no reason to think you can’t do either of those things.it’s silly to fail at things that don’t require skill and only require effort.<ul><li>Effort is something you can control; you could even make it a habit. </li><li>Skill takes a lifetime of practice, patience and time — multiplied by effort. </li></ul>

Pro Tip 4: This System Only Requires Effort, not Skill

Want to save more and spend less? (Who doesn't?) Author and financial whiz Paco de Leon shares a quick, no-skill, low-effort system to start putting your financial life in order.

habits

Habits

6 signs you’re overspending, plus 4 tips to get back in control

Charlie explains how he applied this trick as a meteorologist, but this mental framework works all the same when investing. While it’s essential to ask why a stock will do well in the future, it is just as important to ask why a stock would go down because, after all, the goal is not to lose money.

Inverting the problems you have to solve 

In investing, you don’t have to know a little about a lot of things, you just need to know a few things very well. Then, you should know your limit of competency, to realize when you’re drifting into areas you don’t know particularly well. Also, don’t be afraid to dive even deeper into your areas of expertise.

Humility (knowing what you don't know)

Staying focused on the long term and not having a knee-jerk reaction to market swings is essential to gaining from the stock market. Even when his portfolio went down in value by 50% (three times) he was not worried. Panicking means losing, so staying composed is essential.

Stay rational (don't be swayed by short-term volatility)

“If it won’t stand a bit of mismanagement, it’s not a good business”, a friend of Munger said. It is good to invest in good people behind good ideas, but it is very important that the business itself is solid and straightforward, and that it has a competitive advantage.

Keep it simple (look for businesses that are simple, solid, and straightforward)

“When you’re reading you can just take it as you want it”. Making self-education and self-improvement a priority will help you out in life.

Read a lot

Charlie Munger (Vice Chairman of Berkshire Hathaway) has always attributed his stock market success to a series of mental models and tricks he learnt at a young age. In this video let’s dive into 5 of the psychological tricks that have helped both him and Warren Buffett achieve such resounding outperformance in the field of stock market investing. New Money Clips: https://www.youtube.com/channel/UC2SsZqmrOaiy-ZAnTjWdw4g f you'd like to try Sharesight, please use my referral link to support the channel! :D https://www.sharesight.com/newmoney/?utm_source=aff-newmoney&utm_medium=affiliates&utm_campaign=aff-newmoney (remember you get 4 months free if you sign up to an annual subscription!) ★ ★ SUPPORT NEW MONEY ON PATREON ★ ★ Check it out here ► https://www.patreon.com/newmoney ★ ★ PROFITFUL ★ ★ Learn to Invest with Brandon van der Kolk (BUNDLE OFFER) ► http://bit.ly/learntoinvestbundle Learn to Master Your Tax Return (SPECIAL OFFER) ► https://bit.ly/3127TdE #charliemunger #stockmarket

Charlie Munger (Vice Chairman of Berkshire Hathaway) has always attributed his stock market success to a series of mental models and tricks he learnt at a young age. In this video let’s dive into 5 of the psychological tricks that have helped both him and Warren Buffett achieve such resounding outperformance in the field of stock market investing.

Full Interview: https://www.youtube.com/watch?v=Rh1WCzfCP24
New Money Clips: https://www.youtube.com/channel/UC2SsZqmrOaiy-ZAnTjWdw4g

If you'd like to try Sharesight, please use my referral link to support the channel! :D
https://www.sharesight.com/newmoney/?utm_source=aff-newmoney&utm_medium=affiliates&utm_campaign=aff-newmoney
(remember you get 4 months free if you sign up to an annual subscription!)

★ ★  SUPPORT NEW MONEY ON PATREON  ★ ★

Check it out here ► https://www.patreon.com/newmoney

★ ★  PROFITFUL  ★ ★

Learn to Invest with Brandon van der Kolk (BUNDLE OFFER) ► http://bit.ly/learntoinvestbundle

Learn to Master Your Tax Return (SPECIAL OFFER) ► https://bit.ly/3127TdE

★ ★  CONTENTS  ★ ★

0:00 Intro
1:08 Invert!
4:24 Know What You Don't Know
7:56 Rational Thinking
10:23 Keep It Simple!
12:23 Read a lot!

#charliemunger #stockmarket

DISCLAIMER:
Neither New Money or Brandon van der Kolk are financial advisers. The information provided in this video is for general information only and should not be taken as professional advice. There are risks involved with stock market investing and consumers should not act upon the content or information found here without first seeking advice from an accountant, financial planner, lawyer or other professional. Consumers should always research companies individually and define a strategy before making decisions. Brandon van der Kolk and New Money are not liable for any loss incurred, arising from the use of, or reliance on, the information provided by this video.

Videos about stock market investing, personal finance, money saving, and building wealth. 
Content designed to help you achieve financial freedom sooner!

New Money

Charlie Munger: The 5 Investing Tricks That Made Him a Billionaire

“All your dreams await just on the other side of your fears.”

He has been ranked by Forbes as one of the top 10 motivational speakers in the world. Here is a compilation of Grant Cardone Quotes.

motivationandinspiration

Motivation & Inspiration

Motivational Grant Cardone Quotes on Success

In 1996, McDonald's believed that the Arch Deluxe hamburger was the solution to their growth that had flatlined. The burger appealed to a new, older demographic. Extensive focus groups showed adults liked the burger, so the company invested a lot of money in rolling the burger out nationwide. But the burger proved to be unsuccessful. It cost more than the Big Mac and Quarter Pounder and failed to lure more adults. Within a year, the company started phasing it out.

The (actual) Museum of Failure

According to economist John List, the focus groups that teed up McDonald's decision to spend a fortune on launching the burger were flawed. The people who participated were McDonald's diehards and not representative of customers at large. Instead, the company should have vetted whether the burger would actually be popular with their adult demographic on a smaller scale. The launch of the Arch Deluxe is a good example of scaling. Scaling is the process of rolling out something on a large scale.

Why the Arch Deluxe failed

There are five vital signs to consider when thinking about whether an idea, policy or product can scale. <ol><li>Watch out for false positives.</li><li>Consider if you're misjudging the representativeness of the demographic.</li><li>Understand the constraints you will have at scale before you scale it.</li><li>Watch for unintended consequences.</li><li>Consider the business side and costs of scaling.</li></ol>

Five signs to look out for when scaling

An idea may look promising at first, but when it is rigorously tested, the results may fail to replicate. If you find a good result in one area, it doesn't mean you should roll it out everywhere. First replicate it in that area to ensure it's a true result, then try it out in other markets. It means you should constantly prod at your idea to ensure it's a valid result.

False positives

McDonald's erroneously used a focus group to convince themselves to roll out the Arch Deluxe. It was indeed popular with a small group of loyal customers, but that was not the future target of the company.

Misjudging the representativeness

It is vital to evaluate if your initial success depends on unscalable ingredients. For example, it would be a mistake to use ample resources to hire the best preschool teachers, then expect that their positive results would be replicated when the curricula they use was scaled nationwide. Understand the constraints you're going to have at scale before you scale it.

Unscalable ingredients

When Uber attempted to raise the incomes of its drivers by increasing its base fares, it worked at first, but within six weeks, earnings fell back down to what they were. The reason is that the opportunity of making more money on the app drew more people to drive for Uber, resulting in each driver getting fewer trips overall. At scale, the well-intended policy didn't work as intended.

Spillovers and unintended consequences

Identify if your product has economies of scale. When you scale your operation, does it get cheaper to produce it? For example, building a factory costs money up front, and the first couple of devices will reflect that. But, over time, it will become cheaper to produce because the cost of the building is spread out more.

The costs of scaling

A new book develops a science of scaling.

business

Business

startup

Startups

product

Product & Design

How to roll out big ideas and avoid the Museum of Failure

Accelerated resolution therapy (ART) can be an important treatment component for people with <a href="https://thehumancondition.com/what-is-major-depressive-disorder/">severe depression</a>, <a href="https://thehumancondition.com/posttraumatic-stress-disorder-ptsd/">posttraumatic stress disorder</a>, and other psychological conditions. This recently developed treatment method seeks to help people who have experienced <a href="https://thehumancondition.com/mental-health-and-conditions/trauma/">trauma</a>. Therapists who use this approach believe that it helps clients by desensitizing them to their traumatic memories and making it easier to cope with the memories.

Accelerated Resolution Therapy (ART): Description, Benefits, Effectiveness

Accelerated resolution therapy (ART) shows promise as a brief intervention for people with trauma-related conditions. ART draws on EMDR, CBT, experiential therapies, Gestalt therapy, and exposure therapy.

health

Health

mentalhealth

Mental Health

Accelerated Resolution Therapy (ART): Description, Benefits, Effectiveness - The Human Condition

<ul><li class="ql-align-center">This is the thing about resistance: If you’re doing what you think you should be doing rather than what you want to do with your whole heart, you are not persisting, you are resisting the truth about who and what you are.</li></ul>

Quit if the cost is too high, if you’re doing it because you feel you owe it to someone, or quit if you don’t love it.

It has helped me on my thought process behind a decision I'm thinking of

career

Career

education

Learning & Education

When To Quit – Tim Ferriss • Podcast Notes

Financial Intelligence is awareness. Knowing the basics before trying to control them. Do you know what’s your Net Worth? Do you know what’s your Cash Flow? Your Incomes? Your detailed Spending? Do you know what are the interest rates of your liabilities? Do you know your actual hourly wage?
It seems it’s the simplest step one can do, but actually, very few financially-in-trouble people do it. It takes willpower and/or desperation to make the first step. It also requires some knowledge.

Financial Intelligence

Financial Integrity means taking actions. Once you have a good picture of your situation, it’s usually easy to find and grab low hanging fruits. So, strategies like cutting superfluous expenses come natural and they are easily implemented.
What will happen when you start taking action is that you better define your values. You understand easily that you need to spend less than you earn if you want to get back in financial shape. To do that, you either earn more or spend less (or, better, both).

Financial Integrity

You may be enjoying the freedom not having to think about next paycheck brings to your life and start saving, building an Emergency Fund. Eventually, when you have enough cash to survive a year (people recommend 3-6 months) without working, you’ll stop hoarding cash and start investing and/or paying back your debts, sending your money to work for you thanks to the immense power of compounding.

Emergency Fund: Savings 101

You may also work on the earning side of the equation: once you ‘stash a year of salary you may consider working part time and take some classes or learn a new skill or start a side gig to boost your earnings. You may realize your commute takes too much time and it’s costing you a lot of life energies (opportunity cost) and living far from your office is not worth the few bucks you’re saving.

Boost Your Earnings

Financial Independence means tasting freedom. You no long have to work to maintain your lifestyle, since your money are working for you instead. Your passive incomes (like stocks appreciation, dividends, rental properties income,…) cover your living expenses and you’re free to choose what to do.
You may keep your current job, try a different career, go back to school, take entrepreneurial steps, work less, work none. You may have dreams you want to follow, people you want to take care of. It’s really up to you. You’ve got freedom.

Financial Independence

Freedom here stands for freedom from selling your time for money. You no longer need it. You’ll rely on your passive incomes robustness, like betting on average market returns of 7% per year (inflation adjusted) on the long run or a combination of good tenants, rent/house appreciations and low vacation rate for your rental properties.

Freedom From Exchanging Time For Money

Financial Freedom means removing money from the equation.
True financial freedom is when you have almost military grade security measures against unplanned events. Rock solid financial integrity with a monthly budget well beyond your most desirable spending regime at your safe withdrawal rate. Or, equivalently, a withdrawal rate of 1% or less at your current spending regime.
No economic event in the foreseeable future (excluding catastrophes, world war or a sudden depletion of earth resources) can put your plan at risk.

Financial Freedom

<ul><li>Make all spending decisions as if the price were $0.00</li><li>Make all work and income decisions as if the wage were $0.00</li></ul>

True Financial Freedom: The Rule Of Free

Understanding the level of financial Independence.

Here I'm going to write my first post on a new series on Principles. I'm going to introduce concepts that are widely know to the Personal Finance community that you, my dear reader, may not be very familiar with. I'm going to talk about higher values and my philosophical and ethical approach to personal finance. In this series I'm…

Each of us, through experience or study, has built up useful knowledge in certain areas of the world. Some areas are understood by most of us, while some areas require a lot more specialty to evaluate.The bits you understand well is your circle of competence.For eg: Most of us understand the economics of a restaurant. That basic knowledge, along with some understanding of accounting would enable one to evaluate and invest in any number of restaurants. However, can most of us say we understand the workings of a microchip company or a biotech drug company at the same level? Perhaps not.

What is the Circle Of Competence?

Buffet says we do not necessarily need to understand these more esoteric areas to invest capital. Far more important is to honestly define what we do know and stick to those areas. Our circle of competence can be widened, but only slowly and over time. Mistakes are most often made when straying from this discipline.Circle of Competence applies outside of investing.

Stick to your spots

I’m no genius. I’m smart in spots—but I stay around those spots.

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. You have to figure out where you’ve got an edge.  If you want to be the best tennis player in the world, you may start out trying and soon find out that it’s hopeless. However, if you want to become the best plumbing contractor in Bemidji, that is probably doable by two-thirds of you. It takes a will. It takes intelligence. But after a while, you’d gradually know all about the plumbing business in Bemidji and master the art. That is attainable.

Charlie Munger on the circle of competence

If you want to improve your odds of success in life and business, then define the perimeter of your circle of competence, and operate inside.

Understanding your circle of competence allows you avoid problems. As we can learn from Warren Buffett, avoiding problems is easier than solving them.

problemsolving

Problem Solving

Understanding your Circle of Competence: How Warren Buffett Avoids Problems

Interviewing for a new job can be exciting — every conversation is a chance to say exactly what you want in a new role or company, and to make the case for why you deserve it. But one thing that can trip up even the most enthusiastic candidate is figuring out how to discuss money in job interviews.It’s natural to want to be paid fairly for your work. And yet discussing pay plainly with someone you hope to have a long working relationship with, not to mention with a hiring manager who has way more inside information than you, can feel unnerving.

Discussing Money In A Job Interview

Experts say you should go into every first interview with your salary expectations in mind. You ca check industry salary reports, use online databases and tap your network to figure out where you stand in the market.As for timing, there are a few different schools of thought as to when to bring up salary in a job interview.More companies are beginning to state their pay upfront, in which case you might discuss salary in first or second rounds. If you’re confident in what you want your salary to be, you might bring it up on the early side to make the most of your time.

When To Bring Salary Discussion

Avoid stating your salary expectations first. State a number too low and you could shortchange yourself in the future. State one too high and HR might move on to another candidate expecting lower pay.Instead, you can respond to the question by kicking it back to HR. Be kind and curious: “I appreciate that compensation is an important aspect to the job, and it has to work for the both of us. Given you’re the hiring manager in this role, and the expert on what the company can offer, I’d like to hear what you have in mind for the salary range of this position.”

What To Do If The HR Asks For Salary Expectations

Be clear about your absolute minimum and put that number at the bottom of your range. Your target number should be on the lower end of your range, too. Identify a high enough ceiling to give yourself room to negotiate upward later on.How wide should your range be? That’ll depend on how much you want the job, how much the pay matters to you and how much leverage you have at that point in the hiring process.

What To Say If Pushed For A Salary Range

Here's how to discuss pay during the hiring process.

How to answer ‘What are your salary expectations?’ and other tips for talking pay in interviews

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Exploring Personal Budgets as A tool for Financial Freedom