Education 1: Saving - 50% rule

Well many say you must save 15% to retire but that is at the end of 65 or later and I don't know if that really work as I'm not retired yet.

My savings principle is simple. 

~Aim to save a minimum 50% of what you earn.~

The more you save and invest, the faster you become financially independent.

How do I find how much I'm saving?

It will take sometime if you are not a digital world person. But i highly recommend you do this on paper very first time before you use any online tool. I'm going to take share how do you get this with paper and digital. 

1. Paper - Take last 3 months account statements and sit together to write down your expenses (or simply add them all) and subtract from your salary.

2. Use any online tool to help you here. I personally used Mint and Personal Capital (it's main focus is different and we will get to that in few) and they do an amazing job by making our lives simple. 

Use the below calculation to get your savings percentage. 

Savings percentage = 3 month Salary / 3 months expenses × 100

Don't worry even if you are less 1%, you've started it and I'm sure you will get there quickly than you realize.

I'm really happy if you can save more than 80% but remember "be frugal but not stingy".

Education 1: Saving - Be frugal but not stingy

There are hundreds of blogs/books that help save more. Of course, I'll cover some of those later as I find it interesting. It's my first number game which led me to think "how do I become financially independent?"

But today our education is, be frugal but not stingy. 

* Don't waste 1 gallon gas to save/discount of $1. 

* Don't spend $100s for medical by skipping meals.

You get the point. Save to invest and give charity. Charity helps grow your wealth and happiness (will cover later). If you follow Islam or any other major faiths, charity is an important aspect of life. After all it is the 3rd pillar of Islam and you celebrate "Eid Al Fitr" (mandates the giving).

 Even if you are an atheist, you should do it as it help the fellow human being.

Where are you now?

I'm actually asking the following:

1. How much are you earning before tax and after tax?

2. How much are you saving? Importantly percentage of your salary

3. How much you have invested so far?

4. How much do you need if you are planning to retire? (25 * Annual expense plus one time expenses like vacations/schooling/kids marriage)

5. What things excite you and want to do more?

Write these down immediately, please don't worry about making a mistake, you can correct it later as we go forward. But this piece of paper is what you must see everyday.

Why do you need Financial Education?

Think honestly for a second or minute, why you don't like handling personal finance or not doing it better?

It's not because it's complex rocket science or boring. It's because we never got the right education for personal finance in the first place. I'm not saying you will be able to create the budget for the country but certainly it is easy to create one for you/your family. 

Personal finance is fun and thrilling just like games, movies, books, etc. 

* Certainly anyone who is in stock market will tell you it's the greatest roller coaster that you can enjoy. Of course without guardrails/safety measures it is bound to crash.

* You will be that detective who finds the loopholes in your budget and save the family as an unsung hero.

* It's an art of how you leverage brain power to achieve the freedom of doing things that matters to you.

For me it's just a number game with less emotions attached. Forget that you are going for school or anything that you dislike, Personal finance is that movie/game that you like the most.

Ready for the movie/game? Grab that popcorn and beverage before you start this ride...

Best forever Investment

Vast majority of us think that some stock market broker or that neighborhood guy in nice suit will solve all the financial issues that you have. And importantly we can't do any/much anything about it. Is that really true?

Yes, it's true until you start investing in you which is the Best investment you can make in the entire world. Time is your capital which you should never waste. Take a minute now & paper and write down the things you like to do most? What if you can do that for the rest of your entire life?

I'm not going to tell you, buy a course from me/others for $1 or $100000 to make you successful. I'm here to share knowledge on how you can excel with your knowledge.

All Investments are risky

Yes, you heard it right! All investments are risky without proper education on your end.

Investment is daunting when you start but it will be simple once you take consistent action. 

Be ready to spend 15 minutes (beginners)/5 minutes (after few weeks) daily and I promise you be a will pro in handling your finance. Let's jump into education & action without any further ado.

Congratulations on your first lesson.