Investing 102

[Vegas69]

I don't know if it's been covered but I thought I'd post it either way.

Taking stock in your personal finances is key to investing. Where is the money going? I've had a spreadsheet with hard costs for quite some time but recently I broke it down and spend every penny before it comes through the door. The hardest part is the discretionary spending. Look at your bank statements over the last 6 months and it will make you sick. Allocate a specific monthly budget for misc. and blow money AFTER your hard cost including future expenditures like car maintenance, car replacement, home maintenance, etc.. I'm able to track my approximate monthly net worth gain from savings, retirement contributions, and principal reductions. This is a great way to keep yourself accountable and really dissect your finances. It's also a great way to lay out a path to financial freedom. You'll now know how much discretionary income you have left over. I'm increasing my retirement contributions and mortgage principal reductions with some of the excess. I'm commission so I use the average over a 6 month or 12 month period for my income. I've also combined Kelli and I's numbers so it's a WE deal.

Bottom line, a major key to investing is additional money to allocate to that avenue. Until you get a real grasp on your expenditures, you aren't maximizing your investments. I don't care if you have three nickels to rub together or if you are filthy rich. It's just as important.