financialeducation Archives - The Future Mindset

What’s It All About

The blog post today is The Importance Of Investing Your Cash For Returns which cannot be understated. After reading you will know what i did when it came to invested and who and where i learned this from. These Experts have helped me get my money right which is another part of having a future mindset.

What do you know about investing?

The question you have to ask yourself sometimes is what do I know about a subject. Are the beliefs I’ve had my whole life holding me back? I asked this same question when it came to my finances.

One question I asked was what do I know about investing in the stock market? My answer was it’s risky and complicated. It was proved right at first during brief research where new words like bear market, index funds or yield made it hard to understand at first. I could see why many people stay clear of investing their money in the stock market for this reason.

It came to me that It’s just the same as chess or any sport that people don’t understand. They stay way clear of it but when you understand how it works that’s when the enjoyment of it skyrockets. This is the same with finances when you know how to make it work in your favour. It’s an enjoyable experience.

Research Is Important

The first thing I needed to do which everyone reading this should do is to understand everything you possibly can about finances and how to invest your hard-earned money. I did this through books like The Intelligent Investor, I Will Teach You To Be Rich and Rich Dad Poor Dad. Podcasts where a great help as well and one, in particular, was the podcast I Am So Money by Farnoosh Torabi who had countless guests on about investing in the stock market and how it helped them retire and brought them great wealth.

All these platforms I used helped me to gain the information I need on investing. From everything, I researched there was one way that stud out and that was investing in an index fund. A low-cost way of investing your money not just into one company but a numerous amount is done by a computer system with the sole intention not to beat the market but to match it to get a return. For example, the S&P 500 which has the 500 biggest companies in America has averaged between 10% to 11% yearly return since it’s inception. This compared to banks who offer less than 1% on current accounts and less than 3% at best on savings accounts which is a lot effort to keep changing bank accounts every year if there is a good deal.

Why You Should Invest?

On paper, this is no brainer of where to put your money to gain the biggest returns. Unfortunately, we are not taught this in conventional education. The main reason why anyone should invest is that if you were to leave your money with the bank you will lose money through inflation. The banks themselves know investing is important as they will use your money to invest in the stock market without you knowing. So investing your money where you can receive a return is an important step to gain the biggest return and make your money work for you.

Compound Effect

The earlier you start the better as the compound effect is a major impact on how much you will have in the future.

For example

Oliver invests £6,000 per year beginning at age 20. At age 30, she stops. She has invested for 10 years and £60,000 in total
Harry invests the same £6,000 but begins where Oliver left off. He begins investing at age 30 and continues the annual £6,000 investment until he retires at age 60. Harry has invested for 30 years and £180,000 in total.
Amina is our most diligent saver. She invests £6,000 per year beginning at age 20 and continues investing until retirement at age 60. She has invested for 40 years and a total of £240,000.

When they all reach the age of 60. You have Oliver and Harry who have invested in an index fund with an average return of 8% per year and Amina who just left her money in the bank.

This is there final calculations of where their money would be with the actions they have taken.

Oliver who stopped investing at 30 would have £1,006,993

Harry who started 10 years later than Oliver but carried on investing until 60 would have £750,147

Amina who just saved in a normal bank account would still just have £240,000

This show how important saving and investing your money as early as possible can have big returns for your money.

Final Thoughts

Unfortunately, I am Harry in this who has started at 30 years of age but I’m still in a way better position than if I was just to save and leave my money to sit in the bank.

Hopefully, this is an eye-opener for someone reading this and I recommenced the books and podcast above to listen to first. The numbers don’t lie and when you get your money right, everything else in your life becomes that much easier.

Today I’m going to write about what’s better, budgeting, or creating a millionaire money blueprint.

How does it make you feel when you have to budget? How does it feel to plan a millionaire blueprint? From my experience not many people like budgeting as it makes them feel limited. There have been studies done by Gallop who found two-thirds of Americans don’t even create one. (maybe that’s a reason why there’s so much debt in America.) There’s a Forbes post who state that budgeting doesn’t work.

Budgeting does work logically but humans are not always logical and emotional feelings get in the way of budgeting, dieting and new years resolution that fall away hours, days and weeks later. The reason why this happens is our approach and the words we use. This makes us dread the day we have to do it. But if you tell a person who wants to lose weight what they have to do instead of what they can’t do their mental approach towards burning calories changes.

This is the same for budgeting. For example, a couple wants to buy their dream home via mortgage but they need to raise x amount first. If you told them you have to budget for the next 5 years., how would that make you feel? Compared to if you said this is x amount you need save each month to be on track.

For me, one makes me feel I have to give up stuff to reach my dream and the latter makes you feel like what do I have to do to reach my goal. Instead of feeling down and a burden to save, you can feel uplifted and maybe find a way to speed up the process.

There are two different feelings towards it. That’s why the word budget has to go away when we set our self goals to save and increase our income. So I have personally changed the word budget to my Millionaire Money Blueprint.

Below are my strategies that helped me change my mentality towards increasing my savings. So you can decide whether Budgeting Or A having Millionaire Money Blueprint is beneficial.

Review Your Numbers Monthly

Reviewing your in-going and outgoings is super important for financial growth. When I was trying to grow my savings I was wondering why it wasn’t growing very fast. I was making good money at the time. Then I looked at my outgoings and I found so much money was being spent on eating out and many impulse buys. This was a shock at the time, as I never noticed the effect of my spending habits was having on my savings. From there I created a financial plan where I can track my money each month, i saw i was spending a lot on restaurants each week. I then asked myself the question, is this helping me or stopping me from achieving my saving goals.

This helped so much and from there the savings started to rise at a faster rate. So make sure you’re reviewing your numbers each month to further develop your millionaire money blueprint.

Enjoy The Process

When it comes to talking about money. Based on their past experiences people can become very defensive of the mention of budgeting or any speak of finances. 50 per cent of UK adults believe that talking about personal money matters is taboo – higher than sex (42 per cent), religion (26 per cent) or politics (14 per cent).

What you have to realise is, that your finances are not your enemy. Your enemy is your lack of understanding or when you put off looking at your bank statement. When you make money work for you and not the other way around – that’s when you can start enjoying the process of making, saving and investing your money. For me, one of the main aspects of a Millionaire Money Blue Print is to make money my best friend and put it work in the right areas.

Have A Clear Goal

When dealing with your finances it’s important to have a clear goal of what you want to invest in or save for. Without this, your spending habits will be wild and the hard work you put in to making it will be spent. This was me during university and a year into my first job. Money never stayed with me or worked for me, it was just spent. That’s when I decided I want to be a Millionaire. When I made this decision I decided to pick away the things I didn’t need and started increasing what I did need to help me with my goal. Of course, you need to have some fun in your life. Now instead of spending wastefully, I spend it on amazing moments, that create a lasting memory, not a fleeting one.

The main goal should be to make a clear goal on how much you want to earn. An amount you can say I’m happy with that. Then set a date and go for it.

Educate And Develop

For you to make sure you’re increasing your wealth you have to educate and develop yourself on everything to do with finances. I knew nothing about investing. So I read The Intelligent Investor, I read blogs about it and listened to Warren Buffet. Since then I now have an index fund with Vanguard. Now it’s making my money work for me. I didn’t know how to do a finance reports, so I researched it and found out how to do it myself.

My finances wouldn’t be what they are today if I didn’t educate myself. This is the same for anything you want to get better at in life. Finances are no exception. It’s not scary or something only smart people know. It’s very simple, you just have to find the right people who explain it the right way and you will be flying in developing your Millionaire Money Blueprint.

Final Thoughts

Well, I hope this helps you to understand that dealing with your finances shouldn’t have to be an ordeal. I hope you can develop your own clear goal and understanding of how to get there. To achieve your desires. I would love to know your feedback on this and what your money blueprint is.

So, are you budgeting or creating a millionaire money blueprint?