Understanding Your Financial Basics

Ever since I started on my journey to achieve financial freedom, I have been so surprised by the support and encouragement of so many of my friends and family. By going public with my struggles, I seemed to have managed to unite normally stoic family members and encouraged dialogue about something which is not critically discussed. That response has made me decided to bring my journey online.

That said, it did take me some time to go from ‘I should write about financial stuff’ to actually writing about it. The progress is sometimes… slow. And that can take the wind out of the most optimistic fellow. So what I have done is to take a step back and reevaluate some of my main priorities.

Grow my rainy day fund

We all have some money set aside just in case of emergencies. I’m not sure about you, but in the past this emergency fund is the difference between having a roof over our heads or not. It’s next to impossible to know when an emergency might occur that might completely knock us down, so an emergency fund is critical. Also, it’s important that we replenish this fund whenever we need to dive into it. For the next life-changing emergency.

Get all necessary insurance

The one major expense that can completely change your life is healthcare. If you’re the main provider, it’s absolutely critical that you have some sort of insurance coverage. You need to be covered not only for any healthcare / surgeries you might need, but preferable your insurance can compensate you for any of your lost income.

Make sure my family is comfortable

Family comes first. I need to make sure that all of our needs and wants are well-met in the next year. When it comes to my family, this usually means food. We eat, we eat a lot! And our bills reflect this.

However, food is our main indulgence and we tend not to splurge on any other purchases. Sure, we subscribe to things that make our lives much more bearable, such as Netflix and high speed Internet. But thankfully, we know how to be happy without having to spend a ton of money on ‘stuff we don’t need’.

Have enough set aside to grow new projects

I can’t stay still. Being stagnant has never been part of my character and I have always had the need to completely change things around. New projects for me are invariable those that can either help grow our income or to reduce our spending. I hardly have any other interests except for those two.

My projects take up cash, and there’s no guarantee of a return-on-investment (ROI) so I try my best to start a new project only when we have cash to spare. But then again, if I don’t continuously spend on new projects, then in the future the cash might dry up. So most of the time, this is a judgement call.

So, those are my priorities over the next year. Why don’t you share some of yours with me and let’s see how similar / different our financial goals are.