MidReal Story
Financial Freedom: Emily's Journey to Wealth
Scenario: Établir un budget : La première étape pour bien gérer vos finances est de créer un budget. Listez toutes vos sources de revenus et toutes vos dépenses mensuelles. Cela vous aidera à voir où va votre argent et à identifier les domaines où vous pouvez économiser.
Suivre ses dépenses : Utilisez des applications ou des feuilles de calcul pour suivre vos dépenses quotidiennes. Cela vous permet de rester conscient de vos habitudes de dépenses et d'ajuster votre budget en conséquence.
Réduire les dépenses inutiles : Identifiez les dépenses qui ne sont pas nécessaires et cherchez des moyens de les réduire. Cela peut inclure la réduction des sorties au restaurant, l'abonnement à des services que vous n'utilisez pas ou l'achat de marques génériques.
Épargner régulièrement : Mettez en place un plan d'épargne automatique. Essayez de mettre de côté un pourcentage de vos revenus chaque mois pour constituer une épargne de secours, investir ou préparer des projets futurs.
Éviter les dettes : Essayez de ne pas accumuler de dettes inutiles. Si vous avez des dettes, établissez un plan pour les rembourser le plus rapidement possible. Priorisez les dettes à taux d'intérêt élevé.
Investir pour l'avenir : Une fois que vous avez une épargne de secours, commencez à investir pour l'avenir. Cela peut inclure des placements dans des comptes de retraite, des actions, des obligations ou d'autres instruments financiers.
Se former en finance personnelle : Lisez des livres, suivez des cours en ligne ou consultez des ressources fiables pour améliorer vos connaissances en matière de finances personnelles.
Consulter un conseiller financier : Si vous avez des questions ou des préoccupations spécifiques, il peut être utile de consulter un conseiller financier professionnel.
En suivant ces étapes, vous serez en mesure de mieux gérer vos finances et de travailler vers une sécurité financière à long terme.
Create my version of this story
Mark Thompson
financial advisor, mentor to Emily, professional attire, knowledgeable and patient.
Emily Carter
young adult seeking financial literacy, no direct relationships, casual attire, determined and curious.
Sarah Jennings
Emily's supportive friend, casual relationship with Emily, stylish appearance, encouraging and skeptical.
I never had any financial knowledge growing up.
My parents never talked about money and I never learned about it in school.
I was always told that I should go to college, get a good job, and save for retirement, but no one ever told me how to do that.
So I went to college, got a good job, and started saving for retirement in my company’s 401(k) plan.
But I didn’t know what else to do with my money.
I didn’t know how much I should be saving or how much I should be spending.
I didn’t know what a budget was or why it was important.
I didn’t know what an emergency fund was or why I needed one.
I didn’t know what a credit score was or how it affected me.
I didn’t know what a mutual fund was or how it worked.
I didn’t know what an index fund was or how it differed from a mutual fund.
I didn’t know what a stock was or how it differed from a bond.
I didn’t know what an IRA was or how it differed from a 401(k).
As I sat at my desk entering my expenses into the app on my phone, a colleague of mine walked by and noticed what I was doing.
He stopped to chat with me and asked me why I was keeping track of all my expenses.
I explained to him that I was trying to create a budget so that I could better manage my money.
He told me that was a good idea and asked me how I currently managed my money.
I told him that I had a 401(k) through work and that a certain amount was automatically deducted from my paycheck each month and invested in a target date fund.
He asked me if I had an emergency fund or a savings account.
I told him that I had a savings account, but that I didn’t really do anything with it.
He asked me if I contributed to my 401(k) and savings account each month.
I said yes, my contributions to my 401(k) were automatically deducted from my paycheck each month, and I manually transferred money into my savings account each month.
He nodded and said that it sounded like I was doing everything right.
He asked me if I ever thought about investing in anything else, like mutual funds or stocks.
I told him no, I never really thought about it, but I wasn’t sure how to get started or what I should be investing in.
That’s when he stopped me.
He looked at me with a serious expression on his face and proceeded to tell me that saving money wasn’t enough.
If I wanted to achieve financial freedom and security, I needed to learn how to manage and invest my money properly.
He explained that the average annual return on the stock market is around 10%.
There are other investments that have higher returns than that, but they also come with more risks.
The most important thing is to have your money working for you so that you can grow your wealth over time.
He told me that he had been investing for over twenty years, and he had made a lot of money by doing so.
He said that he had also made some mistakes along the way, but that without his knowledge of the markets and investments, he could have lost a lot more.
He warned me that if I didn’t learn how to manage my money properly, I could be making critical mistakes with my investments that could cost me a significant amount of money in the long run.
That’s when he left me with something that made me think long and hard about what he had just said, “Money is power. The more you know about your money, the more powerful you are.”
I was embarrassed to tell him that I had no idea what I was invested in, so I lied and said yes.
The truth is, I didn’t know what a target date fund was or how it worked.
I didn’t know what the funds within the target date fund were invested in.
I didn’t know what the expense ratio of the fund was.
I didn’t know what the performance of the fund was.
I didn’t know what my balance was.
I didn’t know if I was contributing enough to receive the full company match.
I didn’t know if I was contributing too much or too little.
I didn’t know if I had other investment options through work, like a Roth 401(k).
I didn’t know if I should be contributing to a traditional 401(k) or Roth 401(k).
I didn’t know if I should open an IRA or regular brokerage account.
The list goes on and on.
It made me realize just how financially illiterate I was.
I thought back to when I was in college.
I paid for everything with student loans and credit cards, and never thought twice about how I would pay them back.
When I got a job after college, I started saving money, but I never really thought about why or what I was saving for.
If I had learned about personal finance when I was younger or even during college, I might have accumulated more wealth than I have today.
Unfortunately, that wasn’t the case, and now that I am getting older, I am starting to realize how important it is to take control of my finances and get on the right track.
I can no longer afford to be financially illiterate.
So when he asked me if I knew anything about money management and investing, I told him the truth, which was not much.
I told him that it was something that was never taught to me, and it was not something that I ever really thought about until recently.
He said he understood and asked me what I wanted to know.
I told him that I was not sure, but that I wanted to start learning how to manage my money properly so that I could grow my wealth over time.
He said that was great, and asked me if I had any financial goals in mind, or if I knew what my current financial situation was.
I told him no, not really, and he said that was a good place to start, as it would give me a better idea of where to go from there.
He recommended setting some goals for myself, like saving for retirement, buying a house, or going on a vacation, and figuring out how much money it would cost to achieve those goals, and how much money I would need to save each month to reach them.
He also recommended figuring out what my current income and expenses were, as well as my net worth, so that I could see how much money was coming in and going out each month, and how much money I had saved up so far.
After he left, I started researching these topics online, and realized there was a lot more to learn than I thought.
Not only did I need to learn about budgeting and setting financial goals, but also emergency funds, credit scores, debt management, insurance needs, retirement planning, taxes, estate planning, and investing basics.
I learned that saving for retirement was not enough, and if I wanted to grow my wealth over time, I had to invest it properly.
There are many different investment options to choose from, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), real estate, and commodities, each with their own risks and potential returns.
In addition to learning about these topics, there were some basic financial concepts that I needed to understand before getting started:
The time value of money: The idea that a dollar today is worth more than a dollar in the future because it can be invested to earn interest or dividends.
Inflation: The rate at which prices for goods and services are rising in an economy.
Compound interest: The interest or dividends earned on the initial investment as well as on any interest or dividends previously earned.
Diversification: The practice of spreading out investments among different asset classes to reduce risk.
I also learned some common financial terms like 401(k), IRA, 403(b), 529 plan, HSA, FICO score, 529 plan, ETFs, REITs, term life insurance, whole life insurance, variable life insurance, Roth IRA, traditional IRA, SEP IRA, SIMPLE IRA, tax-deferred accounts, taxable accounts, growth stocks, value stocks, dividend stocks, penny stocks, investment-grade bonds, high-yield bonds, junk bonds, corporate bonds, municipal bonds, US Treasury securities (T-bills, T-notes, T-bonds), inflation-protected securities (TIPS), Series EE savings bonds.
These terms were all foreign to me at first but they were starting to make more sense as I read more about them.
I was a late bloomer when it came to learning about personal finance and investing basics.
I wish I had started earlier when I had more time to grow my money.
But it is never too late to start learning.
In fact, the best time to start is now.
The sooner I get started managing my money properly the better off I will be in the long run.
I am not going to pretend like I know everything there is to know about personal finance after reading some articles online or a few books on the subject.
There are still many things I need to learn about this topic if I want to be successful in growing my wealth over time.
But I have made it a priority to educate myself so that I can make informed decisions about my money in the future.
It is going to take some time for me to learn everything I need to know.
But I am determined to do so because I know it will pay off in the long run.