December is one of my favorite times of year for personal finances. As a big data analysis nerd, I like to review my spending habits and saving achievements from the past year. I then look for opportunities to refine my budget and seek out bigger investments. If you want to advance in life you need to continuously develop challenging goals for yourself. Goals help us focus our attention and provide direction for long term success. When we challenge ourselves, we learn to push our limits far beyond what we previously believed to be impossible and help us take control of our life’s journey. [Read more…]
It is never too early to begin your financial education and that of your children. By the time I was 26, I had an $80,000 credit limit with an 803 credit score, and I had never made more than $14,000 a year up to that point in time. I am proof that anyone can achieve the trust of financial lenders without having a high paying job or a fat savings account. Financial responsibility is all that is needed.
I try to utilize as many strategies as possible to hide money from myself and save up large sums for big investment opportunities which will make a significant amount of passive income. As an employee, one tool that has worked wonders for my aggressive savings strategy is the Employee Withholding Allowance Certificate, known as the W-4. I have been successful in putting away thousands of dollars each year into savings, which played a huge role in paying off $30,000 of student loans in three years.
I had a friend in college whose parents rented a luxury two bedroom apartment by the beach for over $4,000 a month, they had pools, movie theaters, weekly whisky and wine tastings, a gym, concierge, etc. However, they only stayed there two to three weeks out of the year as they spent 80% of their time traveling around the globe or staying at one of their three homes. We were allowed to come over and use the apartment whenever we liked. My friend and I tried to convince them that they were wasting their money on such high rent and that they should purchase a mansion by the beach, and of course, they should let us live there in the extra rooms. In return we would take care of the property, keeping it in tip-top shape, because you know we’re great like that. Eventually, his parents became annoyed at our pestering and sat us down to explain that they didn’t pay a dime for the luxury apartment and that they were not interested in owning another piece of property. “What do you mean you don’t pay for this place!” we said, “The rent is over $4k and you’re telling us you don’t pay a dime!” [Read more…]
In the manufacturing industry, the finance and project management teams utilize an earned value management methodology to track the workload by individual subcomponents called work breakdown structures (WBS) If you were manufacturing a chair composed of 4 legs, supports, and backing made of wood, and the seat made from metal and upholstery you might break down the project into two separate WBS’s to track the production and cost of the chair legs and associated components as one project and the seat as a separate project because the components are made of different materials, require different manufacturing methods, have different lead times, and costs. Apply this principle to manufacturing a car, boat or commercial aircraft and you can easily have a few hundred WBS’s set up to track the progress and costs associated with different integrated systems.
From a finance perspective, the team monitors the forecasted monthly cost for each WBS to identify if costs are running above or below the anticipated run rate. By tracking different WBS’s it’s possible to identify exactly which cost elements are out of line and put protocols in place to fix the problem without affecting the production and costs of other areas. Applying a similar strategy towards your own finances can help you create a budget, track your expenses, and identify overspending. [Read more…]