[HN Gopher] Ask HN: How do you manage your finances?
___________________________________________________________________
Ask HN: How do you manage your finances?
It's a complex topic - monthly cashflows, investing, retirement,
philanthropy, estate planning. How do you do it all?
Author : mbm
Score : 21 points
Date : 2024-01-10 20:31 UTC (2 hours ago)
| huijzer wrote:
| I've read a few dosen value investing books and would advise to
| read Richer, Wiser, Happier by William Green. It has a bit of a
| sketchy title but is actually a very good summary. The takeaway
| is: if you are as dedicated as these value investors and want to
| pick stocks then go and pick stocks, but for most people index
| funds are probably the way to go. The book also talks a bit about
| philanthropy.
|
| Most importantly it talks about the mindset that you need for
| good financial planning. A very long-term and patient mindset.
| People who prefer to spend more than they own, for example, will
| not be suited for investing since they typically can't wait long
| enough.
| more_corn wrote:
| Spend less than you make. Stack rank your expenses and optimize
| from the top down. Take advantage of 401k match. Volunteer your
| time and preferably your brain. Invest in index funds.
| mbm wrote:
| Love it.
| JohnFen wrote:
| This is almost exactly what I do, as well.
|
| There are only two other things that I do on top of that: I
| practice "pay yourself first" -- that is, I take 10% off the
| top of every dollar that comes my way and park it where it's
| really hard for me to get at it.
|
| Then, I practice "repay your neighbors" -- that is, I take 10%
| off of the remaining money and use it for philanthropic
| purposes primarily focused on my local community (in the form
| of monetary donations, or the equivalent in my time). The point
| of this is to recognize that none of the success I've had could
| have happened without the support of my community, and this is
| a way to repay the favor.
|
| Those two things happen before anything else -- before paying
| bills, investing, saving, etc.
|
| I don't micromanage my finances, primarily because I hate
| dealing with money and focusing too much on it makes me
| unhappy.
| mbm wrote:
| I like that, keeps it very simple and straightforward. Have
| you always done it this way, or was there a previous
| iteration?
| JohnFen wrote:
| I've been doing this for over 30 years. I've iterated to
| this. The first iteration was not managing my money at all.
|
| The watershed was when I had my first real success with my
| own business, combined with having my first child (both
| happened at about the same time). That forced me to face
| the reality that some sort of money management was
| essential, and through a couple of years of
| experimentation, I settled on this as a balance that worked
| well for me.
|
| "Pay yourself first" is something I stole from the classic
| book "The Incredible Secret Money Machine" by Don
| Lancaster. That, by the way, is the only business book I've
| read that I found real value in.
| mbm wrote:
| Indeed, that mantra is a key part of Rich Dad, Poor Dad
| as well.
| eetus wrote:
| I feel like every company I've worked at talks about
| "exploring" a 401k match every year, but never makes it happen.
| After a merger or acquisition, they'll bring it up again but it
| never happens.
| heartag wrote:
| I don't. I just wing it month-to-month and hate every second of
| it.
| mbm wrote:
| Ever caused any issues or all-good?
| TheCaptain4815 wrote:
| Utilizing Personal Capital and tracking every penny I spend.
| Gortal278 wrote:
| I Will Teach You to Be Rich Book by Ramit Sethi, is a good place
| to start. He has lots of great free content on YouTube you can
| check that out first and decide if you wanna give the book a try.
| pastacacioepepe wrote:
| Wait, you guys manage your finances?
| mbm wrote:
| The heresy!
| mikhael28 wrote:
| YNAB.
|
| ynab.com - for power users only. If you don't actually care about
| tracking your money, don't bother.
| lotsofpulp wrote:
| If you run all your spend through BoA credit cards for the
| Platinum Honors cash back, BoA does it too.
|
| https://www.bankofamerica.com/online-banking/mobile-and-onli...
| eclipticplane wrote:
| I replaced YNAB with TillerHQ. It dumps transactions into a
| Google Sheet/Excel and came with some standard templates. It's
| less opinionated than YNAB but way more flexibility.
|
| E.g., I have formula-driven sheets that:
|
| 1) Aggregate taxable transactions across accounts that I can
| send to my CPA to prepare my quarterly tax payments
|
| 2) Aggregate account balances and period-over-period changes
| for my living trust that I send to my lawyer every year to
| include in the trust's documents
|
| 3) Flow into calculations for FiRE
|
| 4) Flow into aggregated/filtered views that I can share with
| specific family members, like showing what's in 529s I have for
| some relatives
|
| and it's entirely in a spreadsheet in my account -- if they go
| out of business, all I have to replace is transactions import.
| The rest of the tool is forever mine.
| meiraleal wrote:
| I spend much much less what I make (maximum 35%). So every month
| I save at least 2 more months of living. Over the past 3 years
| doing it regularly I have enough saved for some 10 years.
| mbm wrote:
| Nice! Do you expect constant expenses for those 10 years?
| nitwit005 wrote:
| Poorly.
| Mappleton wrote:
| Lunch Money is a beautiful little independent app for personal
| finances: https://lunchmoney.app/
|
| Won't do lots of complex stuff like investment strategy and
| estate planning, but covers all the essentials for a personal /
| family budget.
|
| Gives you a good overview of your spending, net worth over time,
| and lots of charts and querying functionality. Made a big
| difference for me. Before I was spread across a bunch of Google
| sheets that I rarely updated.
| Desafinado wrote:
| - Adaptive Asset Allocation and The Intelligent Asset Allocator
|
| - Define what your long term goal is then work backward, doing
| the math
|
| - Risk isn't the risk that you lose money, it's the risk that you
| won't reach your long-term goal. Everything you do should aim at
| the goal
|
| - Prioritize your retirement fund over house and car expenses.
| Make monthly deposits into a high interest savings account for
| house and car maintenance. Withdraw when you use the balance.
| Always, always contribute to your retirement fund.
|
| - Save for insurance payments through the year in a high interest
| savings account, pay a lump sum at the end of the year. This way
| you earn, and don't pay interest.
|
| - With investing you probably want a robo investor, and adaptive
| asset allocation is the way to go
| aynyc wrote:
| Assuming your income and assets are reasonably well funded, hire
| a hourly rate personal financial planner. Many finance books I've
| read failed to mention INSURANCE (life, disability, umbrella,
| etc.). In my view, insurance is paramount to secure your long
| term future.
|
| If you are still starting out, here is the general guideline:
|
| 1. pay yourself (emergency fund first, then retirement funds
| (401K, IRA), after that, special funds such as wedding, down
| payment, etc.)
|
| 2. protect yourself (term life if you have kids, medical, rental
| or home owner insurance, etc.)
|
| 3. pay your debts (pay off debts with the highest interest rate
| first, that's usually credit cards, student loans, etc.)
|
| 4. pay it forward (sponsor some worthy causes. I do children
| international for 20 years now. Open source, etc.)
|
| 5. be frugal, but enjoy life (frugal is good, but sometimes, it's
| good to enjoy finer things every now and then)
|
| 6. the remaining money goes to portfolio focus on growth
| tatrajim wrote:
| Read widely online and find a financially-oriented community that
| matches your level of expertise and situation. Serendipity can
| play a major role. Stumbling across early on LEAP (i.e. long-term
| option) trading and later learning to navigate the complex world
| of closed end funds, helped me -- after many twists and turns --
| realize a very comfortable existence. Ruthless self-awareness of
| one's limitations is useful. Expect to make many mistakes.
| dt3ft wrote:
| Never heard of LEAPs, will read in-depth about it! Thanks.
| p915 wrote:
| I am using firefly iii but recently testing actual budget. -
| https://www.firefly-iii.org/ - https://actualbudget.org/
|
| Quite interesting self-hosted tools with overlapping features.
| Actual can also periodically sync with your bank to have your
| most recent transactions on the app. it works with read-only
| tokens.
| Obscurity4340 wrote:
| MoneyStats
| xur17 wrote:
| Everything flows into a spreadsheet I created that has a row for
| each month, and tracks my spending, income, and net worth. The
| data for each new row comes from a few different places.
|
| Lunchmoney aggregates and categorizes my spending data.
|
| My net worth is tracked in another spreadsheet that updates as
| asset prices change. This spreadsheet also tracks my asset
| allocation across my accounts, which is roughly based on the 3
| fund portfolio from bogleheads (with a bit allocated to crypto as
| well) [0].
|
| In terms of cashflow, I use Fidelity's cash management account,
| where I keep a buffer in a money market account. Income flows
| into this account, and bills flow out. They automatically
| liquidate the money market if I need more cash, which is nice.
|
| And in terms of investing, historically I kept a 6 month
| emergency fund, then invested the extra every few months based on
| my desired asset allocation. More recently I have been increasing
| my cash cushion with the intent of paying off my recently
| purchased house in several years (since the interest rate makes
| it less attractive).
|
| [0] https://www.bogleheads.org/wiki/Three-fund_portfolio
| mbm wrote:
| Thanks for sharing. What was it like purchasing a home in this
| market?
| xur17 wrote:
| It was a mixed bag. Interest rates were higher, but I also
| had a lot more negotiating leverage than I normally would
| have had. The house I bought had been sitting for a few
| monthd, which allowed me to get it for what I found to be a
| fair price.
|
| And interest rate wise, I figure I plan to pay it off early,
| so I'm less concerned a out the rate.
| mbm wrote:
| Good deal. Yeah, we recently did a small search and had a
| similar impression, but prices simply hadn't fallen enough
| in our market to justify moving forward.
| skydhash wrote:
| After a few years managing my finance after learning that I
| should do it (review of my first year of full time work), what I
| retain is two things: Envelope budgeting, Every dollar is used,
| and don't sweat the small stuff. I have an envelope for each
| category of spending, each goal and one for saving. My income is
| split between these everytime I get it. I don't bother tracking
| small expenses (less than 10$) if it's not done automatically
| (credit card). I used Ynab first, then banktivity, now I use
| Ledger.
|
| My goal is only to track If I'm not spending more than necessary
| and my runway if I have no income.
| mbm wrote:
| Just to clarify, you primarily use cash for day-to-day
| spending? And does that extend to bill pay as well?
| tombert wrote:
| Obviously there's an infinite rabbit hole you can go down, but
| what I do is pretty straightforward.
|
| Short term money: stored in a relatively normal checking account.
|
| Mid term money: United States Treasury Bills. They typically beat
| bank interest, are just as safe (if not safer) as an FDIC bank
| account, and depending on where you live have a lower tax burden
| than regular bank interest.
|
| Long term: Vanguard ETFs. I don't have a ton of interest in
| spending hours every day trying to beat the market. I figure that
| as long as I can wait out bad economies, it's better to invest in
| the total market than basically anything else. If you're willing
| to hold onto the ETF longer than a year, typically the capital
| gains tax burden is lower than the income tax you'd pay in bank
| interest. Something like VOO or VTI are fairly low risk and since
| they're not human-managed they have really low fees.
|
| I am unemployed right now, but typically when I get a paycheck I
| immediately put 10%-15% of it into some form of the above
| savings, before I pay any bills. For psychological reasons I
| don't really understand, if I pay my bills right away I never
| have any money left, but if I put 10%-15% aside immediately I
| still manage to pay my bills while also having savings.
| mbm wrote:
| Awesome feedback, thanks for sharing. I like the Vanguard ETFs
| as well, keeps the long-term investing very simple.
| fjd wrote:
| This is not financial advice but here's what I do:
|
| High level - "Earn, Save, Invest"
|
| In order for your money to make more money you need to execute
| all three steps: Figure out how to make money, manage not to
| spend it, and produce a return from that money.
|
| Try to optimize each step. Make more money if you can / are
| comfortable (deserve a raise? change companies/jobs? start a side
| hustle?). Spend less (make and live by a budget, cook your own
| food, buy used, get cheap hobbies, stop keeping up with the
| Joneses). Understand the tax efficiency, risks, potential
| returns, and effort required from different types of investments.
|
| I take credit for none of the ideas above, they are cobbled
| together from various online sources. Some things to search /
| places to start: Reddit personal finance flowchart, The
| Millionaire Next Door, Index / Boglehead investing.
| rubberband wrote:
| I check my bank account every week or so. If it's above 0, I
| consider it a win.
|
| Wish I was kidding :/
|
| I tried YNAB and it was too cumbersome. If I were to try again,
| I'd go for some low-tech Exel option.
| AdilZtn wrote:
| I use finary, I can monitor in one app my finances
| vehemenz wrote:
| It's as conplex as you want it to be.
|
| My household has a high savings rate, around 50-60%, so I don't
| actively monitor anything monthly. A few times a year I will dump
| excess savings into retirement, college funds, etc.
___________________________________________________________________
(page generated 2024-01-10 23:01 UTC)