I’m not a financial genius, not a millionaire (not even close) and probably what I have here you already know — but I’ll write it anyway 
Wanted to share some thoughts/strategies on what so far works for us (the wife and I) when it comes to finances and becoming financially independent. I’ve tried to make it concise as possible with just three main items.
First, make sure you save regularly (paying yourself first) and make it automatic. Money you don’t see, should be money you won’t spend. Start with like 5% of your gross paycheck every month and try to increase this as your paycheck grows. Shoot for at least 10%. Make sure you separate retirement savings with your liquid savings. Liquid savings should be at least 6 months of your living expenses, while retirement savings should be something that should not be touched.
Second, live below your means. If you can’t pay for your stuffs, can’t pay your credit card in full every month, then it means you can’t afford it and you’re leaving above your means. If you pay for your stuffs, pay your credit card in full every month, but can’t save anything, then it means you’re living paycheck to paycheck and you’re just living within your means. If you pay for your stuffs, pay your credit card in full every month, and still manage to save (see first point) then it means you’re living below your means. How would you know if you could afford things? Proceed with the third point below and read on.
Third, work on a budget. Going through life just spending money as you see it is like working without knowing how much your salary is. Your expenses should be dictated by how much you can afford. Allocate for your rent, food, car and some dining/entertainment. Write it down and stick to it, life will be easier knowing your financial limits.
There it is, three points that I think should be central to anyone trying to become financial independent. Now here are two books I think everyone interested in knowing more about finances should read. These two books have greatly influenced me.
- Richest Man in Babylon – Real easy reading
- Millionaire Next Door – Surprising and revealing
Now, there are a lot (gazillions) of other books out there, so once you get rolling, knock yourself out and read them. Find out what works for you, but bottom line is you need to shoot for financial independence — releasing yourself from worrying everyday about the next paycheck.
Stay cool.
