Hard Work Pays Off

hard work pays off

There is an old fable of The Ant and the Grasshopper. The fable begins in the height of summer. Warm summer sun, long days and thoughts of winter non-existent. In this summer paradise, Mr. Grasshopper is living his life. He relaxes in the shade under plants, he sings long into the night, he is living each day as comfortably as possible.

One day, an ant passes Mr. Grasshopper while he is relaxing in the shade of some tall grasses. The ant is hustling, sweating and straining in the hot summer sun. Mr. Grasshopper nonchalantly asks, “Why do you work so hard in this time of good and plenty? Come ant-friend, be comfortable with me. Relax in the shade and we can sing into the night!”

The ant replies, “Sorry, Mr. Grasshopper, I am building something important, you may not understand, but you will soon see.” Mr. Grasshopper shakes his head in pity for the ant working so hard through these beautiful summer days. Well, the summer goes on, the days get shorter and the weather turns colder. Mr. Grasshopper continues singing and the ant continues working.

One day in late October, the frost comes. That frost kills nearly all Mr. Grasshopper’s food sources. Not only that but Mr. Grasshopper never built a house to live in because he was too busy singing and relaxing. After all, who needs a house in the summer when you can sleep under the stars? Mr. Grasshopper’s happiness and comfort has turned to hunger, cold and pain. He spends all day scavenging for food and shivers all night long trying to steal some warmth from a mammal’s den without getting eaten.

One morning, the cold, emaciated, haggard Mr. Grasshopper runs into the ant. This time the ant is no longer sweating. In fact, the ant looks quite comfortable, dressed in warm winter clothing, belly stuffed full, and smile from cheek-to-cheek. The ant sees Mr. Grasshopper and compassionately inquires what’s wrong. Mr. Grasshopper goes onto explaining how life is so unfair. He talks about how its the Earth’s fault that the weather is cold and his food disappeared and how the Government should take care of people like him with money taken from the wealthy because they are wicked.

Long story short, the ant invites Mr. Grasshopper to spend the winter with him. You see, while Mr. Grasshopper was relaxing all summer in comfort, the ant was working, building a veritable fortress underground to enjoy the winter. The ant built food stores piled high to the ceiling of many rooms. Mr. Grasshopper was grateful for the ant’s generosity and they became very good friends that winter while singing underground. More than that, the ant taught Mr. Grasshopper his methods in building wealth and preparing for the future so that Mr. Grasshopper can live the life of his dreams.

Even though that fable is ages old, it still holds true to exposing the difference between the rich and poor. The rich have spent all summer working, building businesses and developing systems so they may one day relax in comfort. The poor work for someone else, exchanging a 5 day workweek for a 2 day weekend, consuming all they can and never building for their future. Therein lies the difference between the rich and the poor. The rich are producers, the poor are consumers. To be rich, you must do now what others won’t, so later you can do what others can’t. Learn from Mr. Grasshopper’s mistake. Start building your future now.

Get Rich Quick – Become A Millionaire Now

get rich quick

I just read a most fascinating book called The Millionaire Fastlane by MJ DeMarco.  Its a well-written book explaining the way to build wealth within the next few years instead of waiting, hoping and praying for wealth at the end of life.  This book explained in detail exactly what I have been postulating for the past year and has given me some some laser-beam insights into the life of the quickly wealthy.  Its ironic that I have just read this book after writing my post of the top 10 personal finance books.  This book changes everything.  If there is only one book you can read about personal finance, The Millionaire Fastlane is undoubtably it.

The Millionaire Fastlane uses a road trip as an analogy for building wealth.  Inappropriately portrayed by television, great wealth is seen as an event.  Everyone buys into the Get Rich Quick myth that you can push a button and be a millionaire.  DeMarco explains that being a millionaire and having great wealth is much more of a process than an event.  There was a set of choices that put that event into place.  There is a mindset and one simple key to being a millionaire.

DeMarco explains why all the common wealth knowledge is wrong, it just sells books.  He explains, look at any “financial guru” out there selling books on Amazon or at the bookstore.  They all peddle the idea of save 10%, stay the course, live frugally, give up your daily latte.  All of this material sells, and they do a great job selling it.  But they don’t tell you how they got rich.  It is not through saving 10%, staying the course or giving up lattes.  Most authors of personal finance material got rich through producing great content for the masses.

It made me question the actions of one of my money mentors.  He made lots of money through real estate but when all his loans came due at the same time he filed bankruptcy.  Now he sells millions of books stating debt is evil, pay off debt, bankruptcy is not an option.  He leads people through baby steps to arrive at wealth for retirement.  But he doesn’t teach the road he took to accumulate great wealth.

I’ve been developing an idea over the past year of money for the massive debtors.  I belong to a generation that has mortgaged their future on student loan debt.  I’m no different, I made the mistake of taking on massive student loans and it has been one of the greatest blessings because it lit a fire underneath me.  Even though I don’t like making the loan payments or feeling suffocated by the percentage of my income I pay in loans, it makes me stronger.   Every financial success had that moment, when they hit rock bottom, when they drew the line in the sand.  I am no different.  This is my moment, this is my line in the sand.

I am so grateful to have come into contact with this book all thanks to the recommendation of Alex Becker of Source Wave.  It has changed my perception and changed my life.  Thanks to The Millionaire Fastlane, the formula for making millions has been spelled out – Impact millions to make millions.

The Brazilian Jiu-Jitsu of Money

brazilian jiu jitsu of money

Not long ago, I started training in Brazilian Jiu-Jitsu.  Aside from being one of the most effective fighting styles out there, it has been a good outlet for creative energy and physical fitness.  Each day, my teacher drops nuggets of wisdom for the attentive to pick up, “Watch your hand placement, keep your hips lower than your opponent, use effort only when needed.”  There was one tidbit that caught my attention because it applies not only to jiu-jitsu, but also to money.

The concept was “Survive, escape, recover”.  Basically, in any attack, you first need to survive, then you need to escape from the threat and finally recover.  While all these actions can be completed in the matter of seconds of wrestling on the ground in jiu-jitsu, they can happen over and over, dozens of times during a match.  As I was rolling on the ground wrestling that day, it occurred to me that survive, escape, recover describes exactly my financial predicament, recovering from $250,000 of student loan debt.

Survive – The most vital of the three actions, because if you do not succeed in this action, you do not live to progress to the other two actions.  Survival is about protecting yourself and letting your opponent wear themselves out or make themselves open to a counterattack.  I had to survive when I first realized the financial mistakes I made.  When the $1,600/month in student loan came due, I had to survive.  I had to buckle down, weather the storm and create a plan to get out from this burden.  This was not an easy step.  I spent most of my salary paying student loans but I chose to organize my finances in such a way to give me freedom and start building massive wealth.  Once the plan came together and the student loans had opened themselves up to a counterattack, I escaped.

Escape – Of the three steps, escape is the most animated and lively.  This is where you expend energy, even just for a fraction of a second to disrupt your opponent and move to a dominant position.  I remember the day I escaped from student loan debt.  From the outside, many might argue that nothing changed.  But the change took place on the inside.  I replaced my victim mentality with a completely new mindset, that of a victor.  I drew a line in the sand and committed to do whatever it takes to overcome this beast of burden.    Then I took action and I still take action everyday to escape this wretched beast called student loan debt.  While this action goes unnoticed by many, it requires great effort and places me in a better position than my opponent.  This process that I am currently engaged in will soon lead to the event called “get out of debt”.  Once that occurs, I am ready to recover.

Recover – This is a great place to be.  You have survived your opponents attack, you have escaped from their domination and now you are in a controlling position ready to recover and then put the fight to an end by submitting them.  This isn’t the time to be cocky, in fact, this is the time to buckle down and give your best effort.  You are inches from ending the fight but you must first control your opponent and catch them in a submission without losing your control.  The recover phase in finances is one in which you can reassess your investments and your financial strategies to make them relevant to your current situation.  You take a breath, be grateful for your success and then, once you’ve recovered its time to go for the submission!

I am of the school of thought that the best way to overcome financial problems is through building massive wealth.  After all, the best revenge is massive success.  I will be going into building massive wealth in future articles but there is one must-read book that explains the subject in detail.  Check out MJ DeMarco’s The Millionaire Fastlane.  Surprisingly, it’s not a get rich quick book but one that discusses impacting millions to make millions.  Also, if you’re interested in getting started in Brazilian Jiu-Jitsu, check out Gracie University to find a local training center or even learn from home.  Remember, for all your mistakes – survive, escape and recover as often as necessary until you are able to submit your opponent!

Does This Debt Make My Butt Look Fat?

does this make my butt look fat

There was a great book that I read last summer called Does This Clutter Make My Butt Look Fat by Peter Walsh of TLC’s Clean Sweep.  I read it in the sense that my dad reads books, by listening to the audio version.  It was a timely book because I was on verge of the losing the battles with clutter and weight simultaneously.  Aside from the hilarious title, the book gave lots of no-nonsense advice on how to clean up my room and slim my waistline.  The most important thing I got from the book was learning to look at every choice with the question, “What do I want ___ to look like?”  Everything learned from Walsh’s book can be similarly applied to our finances.

No matter how different you think clutter, fat and finances are, the principles are shockingly the same.  Cleaning up my room or my waistline was not a one day ordeal and neither will be cleaning up your finances.  It is something that takes drive, focus and commitment.  We encounter problems with clutter, fat and finances when we are not paying attention to them.  Lack of awareness is the prime offender.  Not surprisingly, the first step to dealing with clutter, fat or finances is the bring awareness to the situation in the present.  That way, you can discover where you are.

Next, ask the all-important question, “What do I want ___ to look like?”  For example, what do I want my finances to look like?  What do I want my retirement account to look like?  What do I want my monthly income to look like?  These questions bring clarity to an otherwise unfocused area of your life.  Once you know the destination, getting there is a breeze.  Of course, the last statement depends on your definition of a breeze :)

Now that you know your starting point and destination, you can plot the route to get there.  I am a big fan of Baby Steps – that’s right, the great book by Dr. Leo Marvin in What About Bob?  I wish he did publish that book because it contains all anyone needs to be successful.  You see, consistent, persistent action always yields phenomenal results.  It is a common mistake of beginners to think that success is too hard or you need to know the right people or be born with innate talent.  That is all hogwash.  All successful people have gotten where they are through consistent, persistent action.  That’s all it takes.

Back to the story about my room and waistline.  I ended up fixing both with baby steps.  For my room, I just started cleaning out the stuff I didn’t use anymore.  If it was questionable, I put it in a box in the garage and if unused for 6 months it was donated.  For my waistline, I first started with some research about diets and found one that works for me.  I love Mexican food and I love simplicity.  Hence the Slow Carb Diet from Tim Ferriss’ The Four Hour Body.  I can eat Mexican food every day and its so simple, and I get a binge day once a week where I can eat whatever I want.  Believe me, I have.  Last week I ate so much that I threw up 6 times in the middle of the night – but I learned my lesson.  A little bit less next time.  Hah!

As for my finances, they are a work in progress.  I’ve got the basics down.  Budgeting, giving every dollar a name, using the envelope system and paying in cash.  I’m working the Debt Snowball to destroy my student loan debt, one loan at a time.  Finally, I’m building multiple businesses to skyrocket my income from what it is now, to over $100,000 per month.  It’s not a one day ordeal, but I’m taking consistent, persistent action.  Baby Steps.

How to Become A Millionaire

how to become a millionaire

Do you ever wonder How To Become A Millionaire?  Did you know that by investing only $1 per day, a 15 year old will be a millionaire by retirement age at 65 years old?  That’s only a dollar a day, $30 a month or $365 per year.  For just about the price of those Beats headphones your teenager just got, they can retire a millionaire simply by investing the money.  Here’s proof:

All these investment projections are using the handy Investment Projection Calculator from DaveRamsey.com.  They are based upon $0 initial investment with $30/month being invested at a 12% return.  Think a 12% return is absurd?  Read the Ultimate Beginner’s Guide to Investing for how I got 32.02% return on my investments this year.

10 Years

10 years

20 Years

20 years

30 Years

30 years

40 Years

40 years

50 Years

50 years

60 Years

60 years

70 Years

70 years

Can you see the effect that investing has over time?  Investment growth over time is not linear (line-like) but exponential (curved)!  And that is only $1 per day!  If that is not the easiest million you have seen made aside from the lottery, then please tell me what is!  Make sure you show this to every teenager you know so that they can get the headstart we wish we had!

To Your Success!

Best Personal Finance Books

best personal finance books

Here is a list of the 10 best personal finance books.  After reading hundreds of titles, these are by far the best, and I have even organized them for you in order of importance.  So, if you can only read one book, read #1.  If you can read more, then more power to you!

  1. The Richest Man in Babylon by George S. Clason
  2. The Total Money Makeover by Dave Ramsey
  3. The Wealthy Barber by David Chilton
  4. The Millionaire Next Door by Thomas J. Stanley
  5. Think and Grow Rich by Napoleon Hill
  6. The Millionaire Messenger by Brendon Burchard
  7. I Will Teach You To Be Rich by Ramit Sethi
  8. Your Money or Your Life by Vicki Robin
  9. How To Get Out of Debt, Stay Out of Debt and Live Prosperously by Jerrold Mundis
  10. Rich Dad, Poor Dad by Robert T. Kiyosaki

How to Retire Without Savings

retire without savings

If I was planning on retiring in the next 10 years and didn’t have money saved for retirement, I would be in between a rock and a hard place.  That being said, it is not entirely impossible to accumulate millions for retirement within ten years.  In fact, its not even unlikely if you get started saving and building your wealth.  The catch is, you need to work hard, and you need to hustle.  These next ten years before retirement may be the busiest years of your life, but when you’re relaxing on the white sand beach in Tahiti, you’ll find the struggle was worth it.

Before getting into the step-by-step plan of How to Retire Without Savings, I just want to discuss a few important points that may occur to you.   Understandably, being older, you may not have a great grasp on technology.  That’s okay.  Skills can be learned, passion is priceless!  To build a business online, the only skills you need are internet, word processing and HTML, which can all be obtained for free online.  Everything else can be learned as needed and all of it can even be outsourced.

Some of you are saying “I only have 10 years!  Lament!  Woe is me!”  It may not seem like it but 10 years is an eternity to build wealth.  In fact, according to The Millionaire Next Door, most millionaires make their first million dollars within 15 years.  So if you get going now and stick to it, a healthy retirement fund is well within your grasp.  But I imagine if you build your own business in an area you love, you’re going to be hard pressed in 10 years to want to retire.

Now for the Key To Retiring Sans Savings:

 1 Calculate How Much You Need to Retire

The first step is always to figure out where you want to be.  If you haven’t done this yet, check out the post Nest Egg Demystified – How Much You Need to Retire.  Once you’ve figured that out we can plot a course.  And don’t be so overwhelmed.  Take that large Nest Egg number and divide it to see how much you need to save per year, month, week and day to retire.  It’s probably less than you think.

Example: $1 Million Nest Egg
$1,000,000 / 10 years = $100,000/year
$1,000,000 / 10 years / 12 months = $8,334/month
$1,000,000 / 10 years / 52 weeks = $1,923/week
$1,000,000 / 10 years / 52 weeks / 7 days = $275/day

That’s only $275 per day that you need to save and invest.  If you have 15 years, it’s only $183 per day.  Really, that can be achieved!  Also, check out the How to Manage Money Better Academy where I explain Real Estate Wholesaling, which is a very attainable way for beginners to make over $10,000/month.

2 Start Saving and Investing

Once you know your savings goal, put the pedal to the metal cause you’ve got no time to waste.  You’re in this situation today because of bad or no savings skills used previously.  This is your opportunity to change that.  As you are nearing retirement, you’ll want to consider placing your investments in safer vehicles like bonds and money market accounts.  The problem with these investment vehicles is that they rarely outpace inflation.  While it could be risky (i.e. showing a loss at the time of your retirement) I would recommend still investing in index mutual funds with about 2/3 of your money and the other third in bonds or money market accounts.  For more in investment advice check out the Ultimate Beginner’s Guide to Investing.

3 Find Your Passion

Don’t worry, this isn’t some esoteric article where you find your passion and magically all your worries are erased and you live happily ever after.  I want you to find your passion because you are going to build a business and ultimately a life around it.  Surprisingly enough, after all the complaining, most people still don’t know what they want out of life.

Here’s some questions to help you find your passion:

What do I love enough to do for free?
What do I do that causes time to feel different?
What do I enjoy doing regardless of the opinions of other people?

4 Build a Business around that Passion

To the average person, the mention of building a business is enough to make them run in fear as they think of competing with McDonald’s and Coca-Cola.  Truth be told, a business is nothing to be scared of.  As Josh Kaufman puts in The Personal MBA, “a business is a repeatable process that: (1) Creates and delivers something of value (2) That other people want or need (3) At a price they are willing to pay (4) In a way that satisfies the customer’s needs and expectations (5) So that the business brings in enough profit to make it worthwhile for the owners to continue operation.

The reason you need to build a business is because you will make so much more money when you start working for yourself.  You cut out the middleman (aka Your Boss) and YOU get to keep all the profits (minus what the government takes).  To teach you how to start a business would take a book or a blog by itself so instead I’ll refer you to a couple excellent resources that have already explained it for you.

First off, for the why of building a business, I refer you to The Millionaire Messenger.  This is a great book explaining exactly why you should start a business and how easy it is in modern times.

Next for the how, I would like to suggest Chris Ducker’s The New Business Podcast.  Chris interviews all the top names in business and shares their secrets and methods to help you build a successful business.  He leaves nothing out and the show is nothing short of amusing.

Last, for a through and through business primer, I would recommend The Personal MBA which will teach you everything you need to know about business and in my opinion is more valuable than a $150,000 MBA degree from Harvard.

5 Cash In on your Passion

Stolen from Gary Vaynerchuk, I know.  Check out his book, Crush It, which is all about how to cash in on your passion.  Once you’re done reading that, start monetizing your business.  You have to find a way to sell your product.  I recommend learning copywriting to help your selling and you can find here a great free Definitive Guide to Copywriting.  Make your leads funnel as large as possible and make it so effortless and easy for people to buy from you.  You will be making boatloads before you know it.  Definitely in time to retire.

Get Started Now

If you got nothing else from this article, here is an idea that will make you millions for what you already know.  If you are close to retiring, you may have a very profitable product inside you.  No, not selling your organs on the black market, but that was a good job keeping your eyes open for opportunity. You have been working for a long time and probably have some valuable advice to share.  You see, you’re further along than some people in the world and chances are they would pay you to have the knowledge to get them where you are.  So create a product that teaches them what you know and market it.

Get Started Now should be the title of my blog as I say it often enough.  As with all things financial, getting started now is the most important thing you can do because time is a huge factor.  If you know what to do, I encourage you to start doing it today.  If you don’t know what to do, read this post again, listen to the Millionaire Messenger, and just get started because at this point any action is better than standing still.  If I can help you out, please contact me.

To Your Success!

Easy Money – Turn $50 Into $5,000

Easy money for those who want to multiply money without hard work.

Hi I’m Randall Trzaska from the How To Manage Money Better blog.  Today I’m going to show you how to turn $50 into $5,000.  It’s not as hard as you think to turn $50 into $5,000.  The only thing you need to do is invest the money wisely.  Historically, index mutual funds have returned between 8% and 12% each year, some years it’s been worse, some years it’s been better.  As an example, this year, one of the index funds I have invested my money in has returned nearly 32%.

Heres Proof:

TRowePrice Index Fund

If you look in the bottom right corner you will find the juicy details:

TRowe Price Index 2

If you’re looking to turn $50 into $5,000, all you need to do is start investing.

Now you may be a bit older than me and you say, “Well I can’t really do that because times not on my side.”  Well guess what, if you don’t invest anything, you’re not going to get anything.  So you better start investing today.  If someone my age starts investing, by the time we retire at 65 or 70, every $50 becomes $5,000.  If you invest $5,000 today, that means you’re going to have $500,000 when you retire.  How simple is that?

Now if you’d like to learn some more about how to invest, where to invest, how to get started, how to save – subscribe to our blog.  Additionally stop back at our site, howtomanagemoneybetter.com, from time to time to learn a bit more.  If you found this information valuable, please share it with your friends, family, anyone who you think would find this information of use.

To Your Success!

Money Management for Noobs*

money for noobs

*Noobs = Newbies/Beginners.  A quick word of advice: For those of you who needed the translation of Noobs, I highly recommend skipping to the Retire Wealthy post as you may be nearing this period in your life sooner than others.  Once you’ve gotten started building your Nest Egg, hop back to this post for more money management info.

When I was new to managing money, what was the first thing I wanted to know?  I suppose everyone’s goal is different, but I wanted to know: How do I get rich (and pay off a mountain of debt in doing so)?

There are a few stages to becoming rich and the How to Manage Money Better blog focuses on all of them, namely: saving, investing, living rich and retiring wealthy.  This guide is going to take you at a bird’s eye view through the four stages of becoming rich, so that you too may live prosperously.

You may be thinking, “What about striking the lottery or receiving a huge inheritance?”  Aside from being highly unlikely, the lottery is a tax on people who can’t do math and furthermore, most lottery winners end up in 3 years, unhappier than they were before winning the lottery.  Why?  Mostly because they, like celebrities, don’t know how to manage money – think of Mike Tyson who was once worth over $300 million and is now lucky if he has a million to his name.

Save - The beginning of wealth creation is saving.  It is often both the easiest and the hardest step.  Saving money is easy because all you have to do is spend less than you earn.  Boom – Money saved!  Saving is hard because there are so many shiny “doodads” that we all want to have.  You know: Beats headphones, iPads, new cars and the like.  The key is learning to be content with what you have.  If you can then make saving a game or a competition, you will be much more likely to succeed.  Additionally, if you make it something temporary (only to trick yourself into starting), by the time you have money saved, you will most likely find it hard to stop.

Invest - Once you have saving under your belt.  You must do something with that saved money.  For money left on its own will at the very least lose value to the 4% yearly inflation in the US.  The goal is to outpace inflation and make your money increase in value.  There are many ways to invest, many of which are explained in The Ultimate Beginner’s Guide to Investing.  When investing, just remember the Rule of 72, which is a formula for determining how quickly your money will double.  Just divide 72 by the interest rate you are getting on your account.  For example an average index fund (12% interest) will take 6 years (72/12) to double whereas an average statement savings account (1% interest) will take 72 (72/1) years to double.  I don’t know about you, but I’m putting my money in an index fund.

Live Rich - The number of zeros in your bank account is only one aspect of your wealth and often a less valuable aspect than we give it credit for.  I’m sure you can think of many wealthy individuals who are miserable, have poor health or no friends or family.  What’s the point of having money if you don’t have your health, happiness and good relationships?  There are many wealth experts that profess that true wealth begins within and I agree wholeheartedly.  Without wealth consciousness, how can you find opportunity and manifest riches.  As the saying goes, “If you don’t go within, you will go without.”

I’m saving the last section, Retire Wealthy, for a different post found here as it is a complex topic in itself and deserves some time and calculations to explain.  Money management begins when you do, so keep reading and once you’ve learned something – put it to action!

Four Frugal Valentine’s Day Ideas

valentines day ideas

Valentine’s Day is a great day for those of us in relationships to celebrate the love we have and reinforce the bond between us.  As with most holidays, the impulse to spend, fueled by the constant advertising of clever marketers can cause us to spend way more than we budgeted for.  After all, you did budget for Valentine’s Day, didn’t you?

If you didn’t have Valentine’s Day costs in your budget or if you haven’t made a budget yet, fret not.  We have put together four inexpensive yet romantic Valentine’s Day ideas just for you.  As with all things, there is an inverse relationship between the money you spend and the effort you must put into something.  While all these experiences can be had for less than $20, you may need to work harder and step out of your comfort zone for a night.  Best of luck!

Note:  This is a guide intended primarily for men, as I assume (and I may get myself into trouble here) that women are much better at preparing for and celebrating Valentine’s Day.

1. The Romantic Fireplace Evening

  • Supplies: Fireplace, Firewood, Bottle of Wine, Comfy Blanket
  • Idea: There is nothing more romantic than a night spent curled up beside the fireplace sharing a bottle of red wine.  While stimulating the senses, this experience is light on the wallet as the only expenses are the firewood and red wine.  Don’t feel pressured to buy an expensive bottle of wine.  It has been researched time and again that both wine and vodka while often sold at a premium, show no difference from the inexpensive options.  Here is a  list of 12 great wines under $12 from Gary Vaynerchuk of Wine Library TV.

2. The Naked Chef

  • Supplies: Kitchen, Cooking Supplies, Pasta, Sauce, Wine
  • Idea:  What is more attractive then coming home from a hard day of work and having a fragrant, perfectly cooked  meal waiting for you.  Pasta is both satisfying and super easy to cook.  Surprise your sweetie with a delicious pasta dinner and if you’re bold, try cooking with an apron and nothing else.  See where the night takes you…

3. The Bundled Walk Through Town

  • Supplies: Transportation to get to Town Center
  • Idea:  When was the last time you took a stroll through the town you live in?  An often undervalued asset, you town’s Main Street can be a captivating evening adventure.  Although cold and blustery in February, your sweetheart will enjoy the stroll through scenic downtown wrapped in her warmest winter attire.  Hold her tight and see if you can produce some warmth of your own.

4. The Home Spa Package

  • Supplies: Scented Candles, Bath Salts, iPod, Hands (for massage)
  • Idea: With the speed that most of us live life these days, it leaves little time for relaxation.  Indulge your partner in an evening of relaxation and rejuvenation.  For mere peanuts, you can buy scented candles, bath salts and get the bathroom and master bedroom ready for a night of calm indulgence.  Prepare the bathroom with candles and draw up a warm bath.  Then put some relaxing music on your iPod and let your sweetheart know that after she has released all tension in the bath, you have a sensual massage waiting for her.

I hope these ideas help you have a memorable Valentine’s Day 2014.  Remember, if you haven’t already done so, add your Valentine’s Day expenses to your yearly recurring expenses calculation so you can be prepared for next year.  To your success!

How Much Do I Need to Retire? – Your Nest Egg Demystified

how much do i need to retire

A comfortable and wealthy retirement is the culmination of saving, investing, and living rich. Retiring comfortably is a dream that many of us have, but do you ever find yourself asking, “How Much Do I Need to Retire?”  I know I have.  To prepare for a wealthy retirement, you must know how much money you need in your “nest egg” to provide a sustainable income for you.

Here’s the formula I use. Lets suppose you want to maintain your current standard of living, and at retirement you are making $60,000/year. That means the interest from your investments must be at least $60,000/year for your nest egg to continue producing that interest each year. Divide your desired income ($60,000) by the interest rate of return of your investments (12%) and you will get the total nest egg needed to maintain your standard of living.

Two safety features I like to add in my calculations are for inflation and for unforeseen expenses. For inflation just subtract 4% inflation from your interest rate. Similar to what is done in construction budgets, multiply your total nest egg by 1.3x for unforeseen expenses. That way, you won’t be caught when interest rates go down or inflation goes up.

Here’s an example of Robert, who wants to have an income of $60,000/year. Robert gets a ROI of 12% and will account for inflation and unforeseen expenses.

Total Nest Egg = $60,000 / 12% = $500,000

Accounting for Inflation = $60,000 / 8% (12% – 4%) = $750,000

With Unforeseen Expenses = $750,000 x 1.3 = $975,000

To put it simply, Robert will need roughly $1 Million invested wisely in his nest egg to be able to maintain his current standard of living of $60,000/year.

If Robert were only able to invest 10% of his salary ($6,000/year) to build his nest egg, it would take him roughly 26 years to build $1 Million.

10 percent

If Robert can invest 20% of his salary ($12,000/year) it would take him 20 years.

20 percent

If Robert can invest 40% of his salary ($24,000/year) it would take him 15 years.

40 percent

The moral of this story is to start investing early. So if you haven’t started investing yet, check out our Ultimate Beginner’s Guide to Investing.  Also, all the investing projections are from Dave Ramsey’s website and I strongly encourage you to visit his site and plug some numbers into the calculators for your benefit.

The Ultimate Beginner’s Guide to Investing

beginners guide to investing

For someone new to investing, the topic of investing can seem really complex.  I remember before I knew what I was doing, I wanted to invest but I didn’t know how and where.  This is The Ultimate Beginner’s Guide to Investing that will take you from knowing little or nothing to knowing all you need to jump in to investing with both feet.

The commonly publicized form of investing that most people are familiar with is buying stocks.  At first, that’s all that I knew and I real lots of books trying to figure out how to buy the right stocks.  After all, some stocks like Google and Amazon increase in value whereas others like K-Mart and Pets.com will lose you money faster than you can say “blue light special”.  Buying individual stocks is risky and is not recommended, as it is similar to gambling.  That’s the reason day trading is so popular – it’s a publicly validated form of gambling.  Also there is an aura of awe surrounding day traders but this is misguided, as very few investors are able to beat the return of an average index fund.

gambling addiction

Next, I learned about mutual funds.   A mutual fund is a collection of stocks and each share you own of the mutual fund represents a portion of all the stocks owned.  I thought, maybe if a single stock is too risky, I can have someone else manage a group of stocks to help diversify my investment.  Diversification is simply spreading your eggs among many baskets instead of keeping them in one single basket.  So I looked into mutual funds.  While better than buying individual stocks, many mutual funds are managed by fund managers that don’t know their head from a hole in the ground and on top of that will charge you up to $23 for every $1,000 you invest.  Still no good.

Finally, after reading Dave Ramsey’s Total Money Makeover, I learned about index mutual funds.  An index mutual fund is a specific type of mutual fund that tracks the top producing stocks in the stock market, often the S&P 500 (think: Google, Amazon, Coca-Cola, Walmart, Facebook, etc.).  The best part of index mutual funds is that they are managed by computers and often have the lowest fees among all mutual funds.  If that isn’t enough to convince you, I recommend listening to the wise words of investor Warren Buffett, whose estimated net worth at the time of this writing in 2014 is $59 Billion.  He says, “Most investors are better off putting their money in low cost index funds.  A low-cost index is going to beat a majority of the professionally managed money.”  And just to show you my money is where my mouth is, since learning of index funds, I have been investing in T. Rowe Price’s Equity Index 500 Fund.  Over the past year, my index fund has returned 32.02%, over the past five years 17.65% and over its inception in 1990 it has returned on average 9.38% per year.  That blows the pants off any savings account at a bank earning just shy of 0.25%.

My best recommendation for the average investor is to put your money in index mutual funds.  You can additionally diversify your index holdings across a few different types of index funds such as a large cap (big companies – think: conglomerates), small cap (small companies – think: startups) and international (developing countries: Brazil, China, India, etc.).  The key is to only invest in what you know.  Don’t put your money in something unless you understand it because ultimately it is your money to gain or lose.

stock market volatility

To invest in an index mutual fund, open an account with T. Rowe Price, Vanguard, Charles Schwab or any investment house.  Then select a recurring monthly payment to be contributed (T. Rowe Price will open an account with $0 down and as little as $50/month invested).  The reason for choosing a recurring monthly payment is that it takes advantage of the fancy term dollar cost averaging.  This means that you buy less shares when the stocks are expensive and more shares when the stocks are cheap.  Basically it’s a cheap easy way of buying low.

It should be mentioned that investing is a long-term (at least 5 years) approach to handling money.  If you do not plan on investing for that length of time, retain your money in ordinary savings accounts as fees or swings of the market could affect your investment negatively if you want to withdrawal it quickly.

Hopefully this guide has given you a good beginning to understanding investments.  I sure wish I had found something like this when I wanted to start investing because there was a good 10 years between when I started researching and when I started investing, and you’ll see that 10 years in investing time is huge!  Start investing today.   Open up a recurring monthly payment account with T.Rowe Price, Vanguard, Charles Schwab or the investment firm of your choice and get your ball in the court.  Continue to research investing, I will continue to share what I know, and we will all soon be exponentially richer than we are today.  To your success!

FYI: This guide is meant for educational purposes only.  Do not put your money in anything you do not understand.  Ultimately, you are responsible for what happens to your money.

Handling Money Like A Loaded Gun With Your Finger On The Trigger

gun money

Most of us would be terrible firearm safety enthusiasts if we treated a gun the same way we do money. How can I say this? Based on statistics from CreditCard.com and NerdWallet, the 391 million credit card holders in the United States carry those loaded weapons (credit cards) with reckless abandon to the tune of $15,270 average US household credit card debt in 2013.  That is handling money like a loaded gun with your finger on the trigger!

In learning how to fire a gun, there are 3 rules that go before all else. Keep the firearm pointed in a safe direction, keep the firearm unloaded until ready to use, and keep your finger off the trigger until ready to shoot. These three rules help keep the roughly 4 million registered firearms users in the United States safe each year.

Contrast this with how the untrained person will use a credit card. The average American cardholder has at least 3 credit cards (read: firearm) on them at all times. There is no safety on the credit card and the credit card is often unconsciously shot off with utter disregard of the financial consequences.

So what can we do about this breach in financial safety? Best solution: stop using the credit cards. I can feel my ears melting with the cries of all you diehard debtors. Not my precious credit cards! How will I survive an emergency – like a 50% off sale at Victoria’s Secret?  To answer those important questions I would like to refer you to one of the best financial geniuses, Dave Ramsey, discussing credit cards:

Go figure, just paying cash helps you pay 12-18% less!  I hope those credit card tips have helped you take your finger off the trigger. To your success!

New Years Resolutions – Money

new years money resolutions

The New Year is a time to be grateful for what you have and to restart anew to create, accomplish and conquer new goals.  Each New Years Day, I sit down for as long as it takes and write of my successes of the previous year and my goals for the upcoming year.  I don’t have “New Years Resolutions” per se, as these “resolutions” are largely expected to be broken.  Think of how many diet or exercise resolutions you have broken.  Instead I set new goals, plot a new course and plan for success, all of which happens to occur on New Years Day.

In the light of New Years resolutions, goal setting or whatever you may call it, here are some common money resolutions that can help you get traction in your finances this year.

This Year I Will Save Money:  A very common goal, everyone wants to save money.  The questions following are: how much, how, where and when?  To save, you must have a quantifiable goal such as “I want to save $5,000 this year in my Roth IRA”.  That gives you a how much and where.  Now we just need to find the how and when.  The easiest way to make money goals achievable is to break them down by week or month.  $5,000 in a year is $416.67/month or $96.16/week.  These goals seem more achievable and more actionable.  That means that each paycheck (2-weeks) I would need to save $192.32 in my Roth IRA.  If you don’t know where to save, aim to save in decreasing preference, first in a employer matched IRA, then a Roth IRA, then a non-IRA index fund, and finally in a standard savings account.

This Year I Will Pay Off Debt: This has got to be on many of your resolution lists as Americans as a whole are a nation of debtors.  According to NerdWallet, in 2013, the average US household owes $15,270 in credit card debt, $149,925 in mortgage debt and $32,258 in student loan debt.  How do you pay off debt?  The same way you eat an elephant – one bite at a time.  I recommend using Dave Ramsey’s Debt Snowball to pay off debt as it is very effective and I have used it myself to much success.  For an explanation of the Debt Snowball, click here.  Once you have your debt snowball figured out, put as much as you can to debt repayment, track your progress, and before long you will be DEBT-FREE!!!!!!

This Year I Will Give To Charity:  Giving to charities  helps me to be grateful for all that I have.  We are all blessed to be alive, to have food, clothing, shelter, health and safety.  Not all of God’s children are blessed with these gifts.  By giving some of our earnings to those in need, it is a way of honoring God for the quality of life he has bestowed upon us.  To be truly wealthy, you must appreciate the gifts in life you have aside from money.  You can find a charitable organization through Charity Navigator or search for local charities.  Some examples are religious institutions, homeless shelters and animal shelters.  Whatever you chose, do your best to make regular contributions.  I, for example, contribute to my synagogue and Operation Homefront (a military veteran charity).  To make it routine, I send each of them a check, which is a portion of my earnings, as soon as I get paid.

This Year I Will Make More Money: The key to monetary wealth is to earn more than you spend and save/invest the difference (gap).  Often the easier way to increase the gap is to decrease expenses by budgeting, couponing of the like, but there is a limit to the expenses that you can cut.  On the other hand, there is no limit to the amount that you can increase your earnings.  Some options for increasing your earnings include getting an additional job, freelancing, selling junk that’s cluttering up your house, or my favorite, building a business.  With building a business, you can create an unlimited stream of income and get some great tax benefits.  You don’t need a MBA or prior business experience to start a successful business.  I have started 3 profitable businesses in the past year, all without prior business experience.  One of the best ways to learn in on the internet, for example, there is a great site and book called the Personal MBA.  Two other great resources I have found are the Millionaire Messenger and Seth Godin’s The Icarus Deception.  To simplify starting a business – find work in what you love, discover an audience in that field, fill your audience’s needs and monetize your business.

These four suggestions will help you to reach your New Years resolutions.  Now you should be able to make this your best year financially because you have a better understanding of how to save money, pay off debt, give to charity and make more money.  Remember that you can do more than you give yourself credit for.  To your success!

“Ever Tried.  Ever Failed.  No Matter.  Try Again.  Fail Again.  Fail Better.”  -Samuel Beckett

Money Management for the Holidays

manage money for the holidays

The holiday season is a great time of year.  People are uncommonly cheerful and there is a silent energy in the air with the everlasting hope of snow.  The world is alive with new products – every company wants to sell you their new “doodad” that will make your life incredible!  How could you have lived without it?

Unfortunately for many, the holiday season is a time when your pockets spring a massive leak.  All thought of money management goes out the window into the cool winter air.  It’s not uncommon to spend much more than you have and wind up paying off holiday gifts for many months to come.  This guide will help you prepare so this holiday season is your last “moneypit”.

Prepare To Buy Presents:  The holidays come the same time every year and yet they seem to catch everyone off guard.  Just as you are finally getting on track with your finances, the holidays roll around and before you know it, every credit card you own is maxed out.  Wealthy individuals plan for the holidays.  Here’s how they do it.  Calculate how much you spent on presents this year.  Divide that sum by 12 and you have the amount you need to save each month so the holidays are no longer a financial surprise.  For example, if you spend $1200 on presents this year, $1200/12 is $100 per month that you must save next year to be prepared for the holidays.

Give Meaningful Gifts:  It seems that everyone is spending money they don’t have, to buy presents for people they don’t like, to impress people they don’t know.  Silly, I know.  For a few years now, I no longer buy unnecessary presents.  Really evaluate if you know the gift recipient, and if you are giving a gift because you know what they like and want to fulfill that need, or if you are just giving a “gift” (read: junk).  I want to get someone a present that they will undeniably use.  For example, if someone were to buy me artisanal coffee, handmade soaps or a gift certificate to a bookstore, I would be elated because these are all things I love and will undeniably use.  If that can’t be done, then it’s a cash gift – that way there is less unwanted junk in the world.  Like the old saying, “If you can’t give something meaningful, don’t give anything at all”.

Give To The Needy:  The holidays are the second best time to give to charities.  The best time is to give a portion of your earnings each time you get paid.  If you haven’t yet given to charities, start now.  There are millions of charitable organizations and you can find the perfect one for you at www.charitynavigator.org.  For those who think they don’t have enough money to donate, my recommendation is to cut out your Starbucks lattes for the week or stop eating out so you can give to others.  Be grateful that you have a roof over your head, food in your belly, clothes on your back and live in a safe country.  Others are not so lucky.

There are many more things you can do to manage your money better during the holidays like regift/recycle, make your own gifts, gift shop at thrift stores, or do some extreme couponing.  The most important tip is to prepare for holiday expenses.  Once you’ve done that, make sure you give meaningful gifts and please give what you can to those that need it.  Happy Holidays!

Manage Money Better for Retirement

retirement beach

Most older adults begin to stress about wanting to retire comfortably only a couple of years before their actual retirement. This is where the unfortunate problem of procrastinating can get people in trouble because it takes a well thought-out plan to overcome this dilemma that millions of Americans face each year. The question HOW TO MANAGE MONEY BETTER FOR RETIREMENT suffocates their every thought until it actually takes over their thinking. However there are many tips to avoid this complication.

The main factor that most people don’t know or understand when looking into this problem is that they don’t have an estimated amount of money that they think they would need for retirement. Always try to think of a set number inside your mind and stick to it. It’s important to always remember that number and never try to downgrade it no matter the tough circumstances that you might have to deal with in order to achieve it.

Also, if you’re going to have an Individual Retirement Arrangement (IRA) or 401(k) supply your future retirement make sure that it is substantial enough to take care of you for the rest of your life without working. With an IRA you actually invest in your retirement yourself so make sure during your entire working career that you’re properly supplying it with more than is actually needed. If it’s too late to do this there are many ways to correctly combat this situation.

You should always keep track of every dollar that you earn each month. By not knowing how much money comes into your account, it doesn’t help you with knowing how much you should actually save and still pay all of your bills and debts on time. You should also try to save at least 10 percent of the money you earn. This is a key factor just in case you’ve started putting money in your 401(k) to late in your career and you’ll have some extra cash in your savings.

retirement next stop

Some people lives are too busy to actual keep an account for every single transaction that they make over the years so I would suggest that you get a personal accountant to look over your expenses. Hire someone that you can trust with your finances that can personally tell you if you’re making the correct purchases for your future and to keep you aligned with your retirement goals.  Make sure to shop around, as in every profession there are experts as well as incompetents.

Another great tip that you can use is to start to look for cheaper alternatives when purchasing anything. For instance, instead of getting the brightest light bulb to put extra shine in your house get a cheaper one. This way you save at the register and on your next electric bill. By developing this habit early, you’ll eventually stick with it for when you’re retired.

However for whatever plan that you use always stick to it. A lot of people that are trying to retreat into retirement end up having to work extra years that they shouldn’t of because they kept switching their plans and confusing themselves.

Start Small

start small

The journey of a thousand miles begins with a single step. – Lao-Tzu

When most people begin a new undertaking, they try to complete it all in one day.   Then when they have not accomplished it they feel like a failure because there are all these other “successes” who have done it and they haven’t yet.  There is no “magic juice” to being a success.  Success belongs to the person who puts in work day after day; focused, disciplined work that eventually captures the goal they are after.

I can tell you from personal experience that I often times get overwhelmed with the enormity of the task at hand.  From the beginning it seems too large to achieve.  Don’t give up.  The beginning is always the hardest.  Start by taking a step, any step.  Just get going.  Action is the cure for difficulty.

“If you hear a voice within you say ‘you cannot paint,’ then by all means paint, and that voice will be silenced.” -van Gogh

Oftentimes, it our internal dialogue that tells us we cannot do it.  Once you take that first step, another step will appear, then another and another.  Before long you will be well beyond where you thought you could go.  It is the accumulation of steps that builds a journey and it is consistent action that gets you to your goal.

Therefore, if you cannot get out of debt today, create a plan to get you out of debt.  If you cannot create a plan today, start working on a budget.  If you cannot create a budget, get an idea of where you stand financially.  If you cannot get an idea of where you stand financially, read an article about how to manage money better.  If you cannot read an article, stop spending money for the day.  Do something.  Just taking an action will put you further along the path to success than inaction.

Budget – Tell Your Money Where To Go

dollar wad

Failing to plan is planning to fail.

Plan your work and work your plan.

One of the most integral parts of how to manage money better is to build a budget.  Now I know that most of you considered leaving this page when you read the ‘B’ word – budget, but take heart, it’s not as hard as it sounds.

Budgeting is simply telling your money where to go instead of wondering where it went.  It can take many forms from simple to complex and is something that will evolve the longer you work at it.

The most fail-proof method to start a budget is to track your expenses for a month and then use that as a guide for designing your new budget.  When you track your expenses, you will at the end of the month, categorize expenses and the amount spent per category – for example: food, clothing, rent, entertainment, etc.  Each of these categories will serve as a rough estimate for how much is spent per month in that particular area.

Once you have your main categories with their assigned amount, it’s time for the fun part.  This is where you can design your life by increasing or decreasing budgeted amounts for certain categories. When I first started tracking my expenses, I found that I was spending way too much money on fast food.  This was completely contrary the vision I had for my life so I immediately cut my fast food budget in half.  Your budget cuts need not be so drastic but the goal is to spend equal to or less than your income.

Evaluate how much you are spending each month in relation to your income.  If you are spending more than your income its time to make some adjustments, however if you are spending less than your income you are well on your way to riches.  For those spending more than their income, take a look at your expenses and see how much value you are gaining from the money given.

Poor: Income < Expenses
Broke: Income = Expenses
Rich: Income > Expenses

Once you have a gap between your income and expenses, you can determine how to spend that money.  Before splurging on a new car or some other grown-up toy, consider your long-term goals.  Do you want a comfortable retirement?  Do you want your children to go to college?  Are you planning on getting married or buying a house in the future?  These are all long-term goals that can be saved for and it is a great way to put that extra money to work.

One last thing to consider in your budget is recurring expenses that do not come every month.  Holiday presents, car insurance, birthday gifts, college tuition and certain memberships may invoice annually, semi-annually or quarterly.  For these categories it is best to determine the monthly amount owed and add that in your monthly budget.  You can open a separate savings account for this money to accumulate and then you wont need to scrounge for money when the bill comes.

Budgeting is about making a plan to have your money work for you.  It is one of the best methods for how to manage money better.  Once you make the plan it is imperative to stick to it.  To help, it is worthwhile to have an accountability partner – someone with which you can review your monthly expenses and compare with your monthly budget.  In that way, you are more inclined to stick to your budget.  Start budgeting today and in little time you will be a budget master.

7 Tips for How to Manage Your Money Better

cut credit cards

How to Manage Your Money Better is one of the most important topics you can learn.  Many of us will earn over $2 million in our lifetime.  Where does that money go?  Learn 7 tips to help manage your money better below:

1. Track your expenses – This is the necessary first step for how to manage your money better.  What gets measured gets managed and without knowing where your money is going it will disappear before your eyes.  Once you pay attention to where your money is going, you can direct it.  Then you can tell your money where to go instead of wondering where it went at the end of the month.

2. Cut up credit cards – Stop coming up with excuses and just do it.  Credit cards make it too easy to spend money we don’t have… and worse to spend money mindlessly.  Cut up all your credit cards and only pay for things with cold, hard cash.  When we spend money, there is a psychological bond that makes it difficult to let go of that brand new $100 bill.  Compare that with handing a piece of plastic and worrying about making the minimum payment later.  There is no competition.  When you use money, you will feel the ‘pain’ associated with purchases and contemplate if the shiny new object you are about to purchase is worth it.

3. List your goals – Before deciding where to spend your money, it is important to find out where you want to be.  For it doesn’t matter how fast you get there if you’re headed in the wrong direction.  Sit down and figure out where you want to be financially.  Is it a new car, a new house, being debt free or saving for an exotic vacation?  This question is important and should not be underestimated.

4. Make a budget – To accomplish your goals you must create a budget.  Oh no!  Not the “B” word.  Yes, a budget is what you must use to plan your work and then work your plan.  Now a budget is simply telling your money where to go.  For it is said that to find a man’s interests, one must simply consult his checkbook.  Likewise, by examining a budget, you will find money spent towards areas of interest.  The budget should begin by listing the necessities like food, clothing and shelter.  Then to add on top of that there are savings goals, charitable contributions, entertainment, transportation, etc.  Just get started, realize that you will make mistakes the first few times and adjust as necessary.

5. Track your progress – Success leaves clues.  Track your progress vs. time and you will be able to improve on your successes and reduce your mistakes.  How do you track your progress?  The simplest way I have found it monitoring four categories each month: income, expenses, savings, and debt.  Tracking these categories shows me where my money is coming and going.  I also like to watch my savings increase while my debt decreases.  What a great feeling!

6. Get support from others – There’s a reason that organizations like Jenny Craig and Alcoholics Anonymous are so successful.  It’s because there is a support network in place.  You no longer have to brave it alone.  When you have someone to support you in your financial goals you are less likely to give up in times of trouble.  Plus if you are lucky enough to have a partner to work with towards financial goals you will see your success increase exponentially.

7. Celebrate victories – It is all to easy to take victories in stride, like you have earned them and start working immediately on the next goal.  Take the time to celebrate your accomplishments!  It may feel easy at the end, but there was most likely some struggle in the beginning and you should reward yourself for persisting through it.  I’m not talking about a $5,000 vacation after paying off your first small debt, but do something that is appropriate for that size victory.  Then you can go on the $5,000 vacation when you finally have paid off all debts including the house, college for the kids, and have 6 months of expenses in savings.

One Simple Step to Manage Money Better

One Simple Step

What gets measured gets managed. – Peter Drucker

I’m often asked how to manage money better.  Fortunately, there is a very simple way to better manage your money.  It doesn’t require expensive tools or memberships.  It does not require large investments of time, a higher education, or a financial advisor.  It is the simple act of measuring your finances, for as a great business management mogul once said, “What gets measured gets managed.”

What does measuring your finances mean?  It simply means to track every dollar entering or leaving your hand.  This includes non-cash exchanges like credit card transactions as well.  This way, there is no more “lost” money.  Every dollar that comes or goes is accounted for and therefore we are mindful of where our money is going.

This phenomenon works similarly for other areas besides managing money.  There have been studies that just by measuring ones weight daily, a person is more likely to lose weight or stay within a target range than someone who doesn’t.  I have even taken this a bit further and use a bodyfat monitor to help reduce my bodyfat percentage by just monitoring it.

The easiest way I have found to measure my money is to get a receipt any time I purchase something.  Then at the end of the day I enter the receipts into a spreadsheet.  Once a month, I tally all the columns in the spreadsheet and find where my money goes.  The gift of this method is that when you finally see where your money is going, you get to choose where your money goes instead of wondering where it went at the month.

Just because I enjoy trying to do things as cost-effective as possible, I started with an Excel spreadsheet that lists the date, a description of the transaction and the amount exchanged.  This has worked very effectively for me for multiple years and I have found no need to invest in a different program to track my finances.

For those who are interested in a program, there are two top contenders.  Mint is a free service on the internet that securely links to your bank account and will track your transactions.  Quicken is another program that you can purchase to monitor your finances.  Both of these options make the tracking of your finances a bit less involved.

Regardless of the system you choose, the critical point is to start tracking your finances today.  The key for how to manage money better is to measure it.  So choose your tracking system, keep your receipts and manage your money!