Basics for Financial Strategy.

Basics for Financial Strategy.

Look for the Monster Under the Bed

"Finances suck, it is boring, and I don't really care". Now if you think like this, I've done this blog exactly for you. I've kept it simple and useful. This will give you great insight on how to improve your financial life. Now, I won't tell you what to do with whatever you discover, you will have to figure that out on your own.

Today I'm going to explain the fundamentals, something you can start doing today and get some clear result. And if you want to go deeper you can always do some more research.

Before we start let me tell you what this is not about. This is not about saving to the last penny and not having fun with your life, this is about you looking under the bed. You are going to understand what is going on under there. You might find a monster, or you might not, maybe you just find a broken part, and you need to fix it. But at least you will understand where your money is going.

Follow Along with this Excel

I've prepared an easy-to-use Excel. I know, 99% of you won't use it, but please reconsider, it's one of the most important steps, and really useful, it is the one I've been using. It’s basic, with just the necessary tools to start on budgeting, it has some example-data for you to understand it easily, feel free to use it while you read the post. Click here. Don't modify the left column because is automatically calculated.

Difference Between Spending, Investing and Saving.

First let's start by defining three significant and central terms. How good you understand these are going to determine how useful this guide will be. So feel free to research them on your own if there is something you don't understand.

Spending. Now first. Spending is NOT bad. Actually, the point of this post is that, eventually you'll end up with more money to spend than before.

Spending means using money to get anything that won't make money in the future. It might be paying rent. Buying food. Going out to eat. Going on a great trip. Ordering food, etc.

Investing is a bit more complex. Investing money means you are using money in a way that you might get more money back in the future.

I'm not going to go very deep into investing. You should research it on your own. I'm just going to say something that, I think, is always worth investing in.


Books, courses, tutorials, etc. Now, some people might think that paying for learning things is not an investment. And it's true that the ways of how you are going to make your money back are not clear. But learning makes you a better prepared individual. And better prepared individuals are worth more.

Saving is probably the easier one to understand. Saving is the money you are not going to spend or invest. Basically, the money you are not touching for anything.

The Three Essential Questions

For this, I HIGHLY recommend following along with the Excel. Unless you have all your finances sorted our, and you are just reading this for fun.

How Much Money are you Making Each Year? This is basic, but it is the most important step. You need to know how much money you will have available each month to plan ahead.

First you need to figure out how much gross (before taxes) income you will earn each year. And using a tax calculator online, estimated how much net (after taxes) income you will earn.

In the Excel under "Monthly Net Income" you will enter this amount divided by twelve months.

Monthly Expenses? You should decide of how much money you should be spending every month. Yeah, there are something like rent, car, food that will always be there. And other things that you can choose, for example you could stop ordering food.

In the Excel under "Monthly Expenses" or "Weekly Expenses" you will put all the expenses that you will have. Either because you have to or because you want to.

If you want to have 10 euros every day that you can spend on anything you feel like at the moment. You can budget this by adding 70 euros in the "Weekly Expenses" under a name such as Budged Free.

Monthly Investment and Savings? Here I would like to make a disclaimer. Even though, for me, things like buying a book, learning skills or for example, hosting this website, are considered as Investments (because it could help me make money in the future), when I'm budgeting I put all of this under expenses. That's because that money is gone.

Now the big difference is that I understand that hosting this website, or buying a book is not like going out to have dinner.

In the Excel under "Monthly Investments/Saving" I only put investments on stocks/crypto/real state/saving account. Or anything that has a value over time. It might go up or down, but it does have a value.

So because I don't want to go very deep on this topic of investment. I would recommend a video by Ali Abdaal on how to invest in Stocks

For now, if you don't want to invest, just dump all of it on a saving account.

Looking the Monster Eye to Eye.

If you've been using this Excel, and you've put some real data, you'll get some result you can now analyse.

The fields are very self-explanatory. And now you can decide if you like how they look, or you want to modify some expenses that seem useless to have more money left-over or invested.

With this, I've given you just a push to get all your finances in order. Now is your time to do some more research and really go deep into this if you liked it.

I've given you the tools to measure, but it's your job now to find a strategy for those numbers that suits you.

You've looked the monster eye to eye. Now it's your decision, do you want to be friends with him? Or do you want to ignore him for a couple more months?