Invest in Yourself

$20,000 Salary Budget

$40,000 Salary Budget

$60,000+ Salary Budget

50-30-20 Budgeting Rule

Realistically, no more than 30% of your monthly income should go towards your rent. 

Any more that that then, you ma be leveraging yourself too much right now, which puts you at a greater risk during a rainy day. You want to be able to use additional income to save in an emergency fund, and to invest so that you can continue to multiple your income. 

Ideally, this would be no more than 30% of your gross income. Your gross income, is how much your paycheck is before taxes and benefits get taken out. 

Most people's monthly pay check if they work for a company that gives them a W-2 at the end of the year, looks something like this. 

Sample Annual Salary: $22,000 (50 work weeks a year; 2 weeks unpaid vacation)

Hourly Rate: $11

Hours worked per week: 40 hours

Weeks worked this month: 4

$11/hour X 40 hours X 4 weeks = $1,760 monthly Gross Income

Gross Income vs. Net Income

The $1,760 from the sample above is your gross income. But in reality, when you get a check from your job, it's normally going to be much lesser than that. Why? It's because they have to take out taxes and other deductions. 

Gross Pay - minus deductions/taxes = Net Pay

Gross Pay = $1,760

• Minus Taxes and other deductions: $260 (just an example).

  • Taxes

    • Federal Withholding

    • State Withholding

    • Federal MED/EE - Medicare/Employer-Employee

  • Benefits

    • Health Insurance

    • Dental Insurance

    • Vision Insurance

    • Long Tern Disability

    • Short Term Disability

    • Life Insurance

    • Retirement Contribution

• Net income = $1500

Rule: No more than 30% of your net monthly income should be spent on rent.

30% of $1500 = $450 (that's how much you should spend on rent.) 

• This is often hard to do considering how expensive rent can be in some cities. So here are some options:

  • Live with a Friend, Partner, or Roommate to reduce rent costs.

  • Move outside of expensive neighborhoods.

  • Seek governmental assistance programs.

  • Figure out if you can realistically spend more of your paycheck on higher rent, and research what that will do to your future potential growth. 

  • Bring in more income by working a second job, or applying to new jobs. Don't be afraid to further your education if it helps you increase your pay.

Using Life Insurance to build generational wealth

How to Plan for Retirement

Early Retirement Planning

Creating a Financial Plan

Goal Setting Worksheet

People spend money on the craziest things. However, there's this saying that if you can't buy it twice, you shouldn't by it at all. Whenever you make a frivolous purchase, put the same amount into your squirrel away fund. Or better yet, instead of the frivolous purchase, invest that money instead. For example, if you are about to spend $400 on shoes, ask yourself, if instead of buying those shoes, can you spend $400 paying your future self. 

"Squirrel away" is an idiom that means to save or hide money for future use. For example, "I squirrel away some money away so I won't be tempted to spend it".  

Create a list of frivolous things that you don't need but you want. Whenever you treat yourself to this, invest that same amount of money as well. 

Pay your future self whenever you splurge on your current self. 

Ideas

• If you like to go out to eat and different restaurants every weekend (ME!!!), whatever you spend on a night out, invest that same amount. 

• If you choose to stay in one night, for that money that you saved, that you were going to spend anyway, invest it. 

Creating a Financial Plan

Goal Setting Worksheet