Random thoughts about money.

This is a random commentary post…

My mind has been focused on money and how we think about it in a few different contexts.

I think we should all do an audit at least yearly to figure out where our money is being spent. At least in broad categories: groceries, eating out, travel, mortgage, entertainment, etc. If you use a credit or debit card, it’s easy to go back and at least get a sense. Then review – are you surprised? Happy with your spending?

From there you can make a plan about where you want it to go.

I think this should be empowering. If your basic expenses are met, then money shouldn’t be about ‘more, more, more.’

What’s your ideal standard of living? How much do you need per month for that lifestyle?

If it’s more than you currently make – what’s your long-term plan to get there and then how can you break that into shorter steps?

How much do you need in savings for you to feel secure? What’s your plan to get there? [The 4-Hour Workweek by Tim Ferriss offers some perspective on this; though my favorite basic money book is All Your Worth.]

If you have your own business or a side business (or multiple) you can then do backwards math to figure out how much business you need to bring in to meet your goals. I cannot speak from long-term experience, but I imagine this will be really powerful once you hit that goal because it means that you wont constantly just be attempting to bring in more and more business until you run yourself off your own hamster wheel and implode.

Here is a blog post I was just reading about thinking through health insurance if not provided by your employer. (Kind of random but came up in a conversation earlier today – there is a movement called FIRE – people who make their money early and then retire super early – but we were wondering what they do about health insurance which keeps so many of us tied to our jobs in the US). Even if you don’t face that decision, it’s an interesting perspective and way to possibly shift your own thinking about finances. Additionally, the link will bring you to the Mr. Money Mustache blog which has a lot of other information about finances you may find interesting. At the very least I’m pretty sure it will challenge your views about money.

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