There are plenty of great resources out there to learn about personal finance, but it’s rare to find examples of good personal financial management in practice.
Start with a budget
Step one is to start with a budget. There are a ton of great apps out there for this, but for me a good ‘ol Excel spreadsheet does the job. The goal of the budget is to figure out how much money I need for each of the following categories each month:
- Monthly expenses: i.e. mortgage, rent, food, car payment, cell service, insurance, etc.
- Emergency fund: money for emergencies, job loss, medical, etc.
- The goal is to save up 6 months of cash in a separate account that you don’t touch unless there’s an emergency (more below).
- Discretionary expenses: i.e. vacations, clothing, gadgets, guitars, etc.
Expense | Amount / month (2022) |
Mortgage | $4,500 |
Car Payment | $555 |
Food | $750 |
Cell | $100 |
Discretionary | $1000 |
Emergency | $1000 |
ㅤ | ㅤ |
Total | $7905 |
Note: I picked a random salary of $225,000. This can be adjusted
Figure out how much you can save
Now that you know your monthly expenses,
ㅤ | Amount / month (2022) |
Take Home (pre-tax) | $18,750 |
ㅤ | ㅤ |
Expenses | $7905 |
ㅤ | ㅤ |
ㅤ | ㅤ |
ㅤ | ㅤ |
ㅤ | ㅤ |
ㅤ | ㅤ |
ㅤ | ㅤ |
Pay myself first
Every 2 weeks when I get a paycheck,