Personal Finance Basics

During these covid times, we've all saved a lot of money, albeit unintentionally. Because we've been under lockdown, we've been forced to stay at home and cook more healthy foods, spend less money ordering out, and we haven't been going out. For better or for worse, we're all saving a lot of money! Not to mention world economies tanking and we're heading into a recession that will last for an uncertain period of time. Businesses have gone bankrupt and many people have lost their jobs. The future has never been so uncertain.

Unfortunately, in the past, probably for most of my life, I've been guilty of not doing my due diligence when it comes to personal finance. I have no idea how much I'm saving every month, and how much I've saved over the last couple years. I've never had financial goals - before now. So now - I think this is a great time to plan for the future and plan for financial sustainability.

Especially as an entrepreneur, finances are a lot more uncertain and less stable. I think every entrepreneur should have a sold understanding of personal finances so that they can stretch every bit they have as long as possible. So what are the basics?

Before providing any financial tips, it's important to note that none of the following information is financial advice and none of the information should be relied on. The following information include ideas of how you might save money, but you are ultimately responsible for your own outcomes and any decisions you make with your money and your life are your own choices. Be accountable for your own wealth and happiness.

Don't Spend Money on that Coffee

I forgot where I heard it recently. But I may have read it or heard it on a podcst recently, that whether you're thinking of making a non essential purchase. Don't make it right away but wait and reflect the next day or a week later whether you really need to make that purchase still.

Pay Off Debt Quicker

Whether it's a mortgage or student debt, Nothing is more daunting than seeing a huge lump sum that you're slowly chipping away at month after month. If there is a bit more money you can stow away to pay off a debt, it'll pay off in the long run by decreasing payable interest.

Save for Retirement (or save longterm)

Don't just think about how much money you need right now, this year, or next month. But think about your financial goals and how you plan to meet them. If you're planning to buy a house, get married, have kids, and send them off to school - think about how much that be will be down the line. Instead of spending so much money today on restaurants, going out, if you save most of that money today, the value of that money invested would be significantly larger in 10 years with the right investing. For example, $20,000 invested today can be $40,000 to send your kids to school in 20 years.

If you want to buy a house down the road and say it cost $500k (at least!), how will you save for $100K down payment? But if you saved $50k today for 10 years, the value of that could be $100K in 10 years with proper investment. I'm no financial expert, so don't quote me on this, but time value of money is very important considering how expensive everything is these days especially if you live in an urban centre.

Have Multiple Streams of Income

I'm assuming all great entrepreneurs know how to hustle, and at times, hustling means doing anything possible (within reason) to sustain your business. There are more ways today more than ever to make money on the side. Some ideas: have an e-commerce site, do online marketing , content marketing, event planning, be an influencer, have a part-time job, be an uber driver, make youtube videos - the options are truly endless these days.

Invest in the Stock Market

One of the positives right now in COVID times, if there can be a positive, is investing in the stock market. Although I have never really invested in stock markets before, I can assume that stocks have never been so volatile, and I imagine that day traders are making a killing on stock investments right now.

The returns you can make in the stock market are more than typical bank savings accounts of 2% (according to ratehub.ca), whereas you could (at times, on average, in a good year) make 10% annually on the stock market (according to wealthsimple). Although optimising your return in the stock market takes either a lot of practice (be prepared to lose money at the beginning) or fees to a financial institution to manage your funds in exchange for worry free investing.

Write down your Financial Goals and Track them

You can't achieve financial freedom without clear goal setting and tracking. What are you saving for? What's your plan to reach it? If you're not the greatest architect of planning, even high level goals are better than no goals at all. How much do you want to save each month this year? How much do you want to save each year?

Just start saving and investing today. Save and invest as much as you can from now on, you'll be thankful you did when you look back years from now. See where your financial growth can take you.