Stick To Your Resolutions — 5 Ways to Reach Financial Peace in 2019

Stick To Your Resolutions — 5 Ways to Reach Financial Peace in 2019

We all have heard about the reports of an impending recession and stock market crash. So… what can you do to protect yourself and even strive during a recession?

1 — Use A Budgeting Software to Help You Keep Track of Your Finances.

There are a ton of different budgeting software out there. In whatever country you are on, whatever bank you are with, whatever cryptoexchange you may use there is an app for you!

I will write a post in the future solely dedicated to the best mobile and desktop tools out there for your budgeting needs.

However, nowadays, more than ever, people have accounts with different banks, investments with different mutual / edge / ETF funds, mortgages with other credit institutions, and a few credit cards from a few different credit card companies. It is understandable that it has become harder than ever to keep track of your money.

  • Do you know how much is your net worth?
  • Do you know when is the next credit card bill due?
  • Do you know when you will be debited your Netflix, Spotify, and Amazon Prime subscriptions?
  • Do you know how much you spend on groceries / transport /eating out every month?
  • Do you know what is the different interest rates you are paying from your overdraft / credit cards?

This is where a decent budgeting tool would give you a massive advantage when it comes to keeping your finances on track, and your budget on the green every month!

Want a suggestion? Go to: https://orcaalliance.eu/ and register for the Beta! ORCA is launching an incredible budgeting tool where you can even integrate your Crypto Wallets and Exchanges. The cool thing about ORCA’s tool? They don’t see or access your financial data without your authorization. And, if you decide to give authorization, you will be rewarded with some tokens! Worth checking out! It is free! You have absolutely nothing to lose!

2 — Keep and maintain an emergency fund.

Another step to becoming financially safe is to build and maintain an emergency fund. This is vital for anyone to feel safe in their daily life.

This means, having a cash fund in a bank saving’s account that allows you to access the money whenever you want without fees. How much money in that savings account? Many personal finance ‘experts’ advise a 6-month income saving. Having the equivalent to your monthly salary times 6 (e.g. You receive 2000€ per month after tax, therefore your emergency fund should have 6 * 2000€ = 12,000€). Although, I often recommend people strive to have 12 months of income in that emergency fund. I understand this must be too much for having just ‘lying around’. However, if you find yourself unemployed in the midst of a recession, it may be harder to find another job quickly.

Anyway, let’s meet in the middle: You should strive to have the equivalent of between 6 and 12 months of your income stored in an emergency fund saving’s account.

3 — Invest For The Future.

Always invest the extra monthly income you do not need.

If you want, you can follow my strategy: ‘Pay Yourself First’

This means:

You receive your salary of 2000€ for your hard work in January, and then:

1 — Pay 500€ to your Savings Account (Emergency Fund)

2 — Invest 500€

2 — Pay Rent: 500€

3 — Leave 500€ for monthly needs (food, fuel, etc.)

(This is just a sample of what a budget may look like, of course, it changes depending on your situation — a city where you live, credit responsibilities, number of kids, etc.).

Now, how to invest the money? Being that 500€ per month or a larger amount you have gaining dust under your mattress.

You can use a small fee investment fund (e.g. Vanguard, Fidelity, etc.) and put your money in an index fund. In other words, a fund tracking a major exchange (e.g. S&P 500).

When investing, diversification is key. If we are in a bull market (as we were from 2010 until now), I would invest more into equity funds. If we are in a bear market (as we may be entering soon), I would invest more into bonds.

E.G. — An example of diversification might be:

Bull Market: 80% Equity — 20% Bond

Bear Market: 60% Bond — 40% Equity

The key takeaway, however, is that investing the money you don’t immediately need is the best way to beat inflation and grow, passively, your Net Worth.
Free Tip: Research the Power of Compounding. This is the strongest concept in finance — Thank me later.

However, ‘bear’ in mind that this is not financial advice and you should make your own research, and maybe contact a registered financial advisor.

4 — Keep mindful of debt.

This is a very obvious one, but needs to be said: DO NOT borrow money that you may not afford to pay back. Sometimes you may think: In 5 years I will be earning a lot more, so I will be able to afford this debt. If you are not sure of such an increase in income, do not bite more than you can chew!

5 — Use Credit Cards (Whaaat? YES! Use Credit Cards!)

Credit cards are great when used correctly!

For example, some credit cards allow you to receive cash back for every purchase you make. Normally, if you pay the balance you owe by when it is due (generally when your next paycheck arrives), you won’t pay any interest rates.

Quick example:

You spend 1000€ per month on things like groceries, fuel, etc. If you pay this with a credit card with a 2% cash back, you will end up getting back 20€ (Not a lot, I know, but it is still the price of Netflix + Spotify + Pizza). :)

Also, credit cards have credit protection. Which means, if you are involved in some fraud, or identity theft, you most likely will get your money back.

Note: Please be mindful. Don’t buy more than what you would normally buy with your debit card. Debt can quickly pile up, and you can soon find yourself paying more interest than what you can afford.

As always, please come chat with us about Crypto, Personal Finance, Privacy, whatever you want:

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