Lizsfijourney https://lizsfijourney.com/ Documenting my journey from negative networth to financial independence Sat, 07 Oct 2023 18:00:12 +0000 en-US hourly 1 https://wordpress.org/?v=6.7 220451206 The Two Ways to Increase Your Money: Income and Spending https://lizsfijourney.com/how-to-increase-your-money/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-increase-your-money https://lizsfijourney.com/how-to-increase-your-money/#respond Wed, 04 Oct 2023 20:59:02 +0000 https://lizsfijourney.com/?p=257 Two Ways to Increase Your Money: Income and Spending When it comes to achieving financial freedom and building wealth, it all boils down to a simple equation: you need to increase your money faster than you spend it. In essence, there are two primary ways to make this happen – boosting your income and managing your spending. Let’s delve into these two crucial aspects of financial success. 1. Supercharge Your Income Increasing your income is like pouring fuel into your financial engine. It accelerates your journey toward your financial goals. Here are some strategies to consider: Diversify Your Income Streams: Relying solely on one source of income can be risky. Explore side hustles, freelancing, or investments to supplement your primary income. Diversification not only increases your earning potential but also provides financial security. Invest in Education: Investing in yourself through education can lead to higher-paying job opportunities or entrepreneurial success. Consider acquiring new skills or certifications that are in demand. However, here it’s important that you find a balance between the 3 F’s of business: Freedom, Fulfillment, and Finance which you can listen to more about in this interview by Ali Abdaal. Negotiate Your Salary: If you’re employed, don’t be afraid to negotiate your salary or seek raises. Research industry standards and be prepared to demonstrate your value to your employer. Explore Passive Income: Investigate ways to generate passive income, such as rental properties, investments, or creating digital products. These streams can generate money while you sleep. As a creator, I started Lizsfijourney with the intention of authentically sharing my personal finance journey – as well as help others on their personal finance journey through education and resources. This involved creating not only free resources, such as this blog or some digital products, but also paid products as well! You can find my products (free and for purchase) here on gumroad! 2. Master Your Spending Controlling your spending is like plugging the leaks in a financial boat. It helps you retain more of your hard-earned money. Here are some tips to manage your spending effectively: Create a Budget: Establish a clear budget that outlines your monthly income and expenses. This will help you identify areas where you can cut back and allocate more funds toward savings and investments. Prioritize Needs Over Wants: Distinguish between essential expenses (needs) and discretionary spending (wants). Focus on covering your needs first and allocate a portion of your income to wants. Typical advice is the 50/30/20 method of budgeting – which allocated 50% of your income to needs, 30% to wants, and 20% to savings. If you’re interested in reading more about this method of budgeting, check out this article here.  Track Your Expenses: Keep a detailed record of your expenditures to identify areas where you may be overspending. This can help you make informed decisions about where to cut back. However, it’s important to know that tracking your previous purchases only goes so far – it can’t get that money back as this is already a sunk cost (read more about the sunk cost fallacy here). However, tracking your previous spending can be a great place to start to see what your budget shows as your priorities. If there is a discrepancy between what your budget is showing as a priority, and what you actually feel is a priority – it’s time to make a change in your budget! Build an Emergency Fund: Having an emergency fund in place can prevent you from going into debt when unexpected expenses arise. An emergency fund is a financial lifeline that you create for yourself. It’s a smart move where you tuck away some cash specifically for those unexpected surprises life throws at you – like a flat tire, unexpected medical bills, or a sudden job loss. By having money set aside, you’re empowered to handle these challenges without losing sleep or relying on credit cards. It’s always a good idea to keep your emergency fund in a HYSA – you can use this link to get an EXTRA 1% APY on a Marcus HYSA for your first 3 months (that’s 5.4% APY!). Typical advice is to aim for at least three to six months’ worth of living expenses in your emergency fund. To find out what this looks like for your specific financial situation, download my FREE Emergency Fund Calculator here! Review and Adjust: Periodically review your financial plan and make adjustments as needed. This can help you stay on track and adapt to changes in your income or expenses. Conclusion Remember, financial success is a journey, and it requires a combination of increasing your income and managing your spending. By carefully balancing these two aspects, you can work toward your financial goals, whether it’s achieving financial independence, building wealth, or securing a comfortable retirement.

The post The Two Ways to Increase Your Money: Income and Spending appeared first on Lizsfijourney.

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Two Ways to Increase Your Money: Income and Spending

When it comes to achieving financial freedom and building wealth, it all boils down to a simple equation: you need to increase your money faster than you spend it. In essence, there are two primary ways to make this happen – boosting your income and managing your spending. Let’s delve into these two crucial aspects of financial success.

1. Supercharge Your Income

Increasing your income is like pouring fuel into your financial engine. It accelerates your journey toward your financial goals. Here are some strategies to consider:

  • Diversify Your Income Streams:
    • Relying solely on one source of income can be risky. Explore side hustles, freelancing, or investments to supplement your primary income. Diversification not only increases your earning potential but also provides financial security.
  • Invest in Education:
    • Investing in yourself through education can lead to higher-paying job opportunities or entrepreneurial success. Consider acquiring new skills or certifications that are in demand. However, here it’s important that you find a balance between the 3 F’s of business: Freedom, Fulfillment, and Finance which you can listen to more about in this interview by Ali Abdaal.
  • Negotiate Your Salary:
    • If you’re employed, don’t be afraid to negotiate your salary or seek raises. Research industry standards and be prepared to demonstrate your value to your employer.
  • Explore Passive Income:
    • Investigate ways to generate passive income, such as rental properties, investments, or creating digital products. These streams can generate money while you sleep. As a creator, I started Lizsfijourney with the intention of authentically sharing my personal finance journey – as well as help others on their personal finance journey through education and resources. This involved creating not only free resources, such as this blog or some digital products, but also paid products as well! You can find my products (free and for purchase) here on gumroad!

2. Master Your Spending

Controlling your spending is like plugging the leaks in a financial boat. It helps you retain more of your hard-earned money. Here are some tips to manage your spending effectively:

  • Create a Budget:
    • Establish a clear budget that outlines your monthly income and expenses. This will help you identify areas where you can cut back and allocate more funds toward savings and investments.
  • Prioritize Needs Over Wants:
    • Distinguish between essential expenses (needs) and discretionary spending (wants). Focus on covering your needs first and allocate a portion of your income to wants. Typical advice is the 50/30/20 method of budgeting – which allocated 50% of your income to needs, 30% to wants, and 20% to savings. If you’re interested in reading more about this method of budgeting, check out this article here. 
  • Track Your Expenses:
    • Keep a detailed record of your expenditures to identify areas where you may be overspending. This can help you make informed decisions about where to cut back. However, it’s important to know that tracking your previous purchases only goes so far – it can’t get that money back as this is already a sunk cost (read more about the sunk cost fallacy here). However, tracking your previous spending can be a great place to start to see what your budget shows as your priorities. If there is a discrepancy between what your budget is showing as a priority, and what you actually feel is a priority – it’s time to make a change in your budget!
  • Build an Emergency Fund:
    • Having an emergency fund in place can prevent you from going into debt when unexpected expenses arise. An emergency fund is a financial lifeline that you create for yourself. It’s a smart move where you tuck away some cash specifically for those unexpected surprises life throws at you – like a flat tire, unexpected medical bills, or a sudden job loss. By having money set aside, you’re empowered to handle these challenges without losing sleep or relying on credit cards. It’s always a good idea to keep your emergency fund in a HYSA – you can use this link to get an EXTRA 1% APY on a Marcus HYSA for your first 3 months (that’s 5.4% APY!). Typical advice is to aim for at least three to six months’ worth of living expenses in your emergency fund. To find out what this looks like for your specific financial situation, download my FREE Emergency Fund Calculator here!
  • Review and Adjust:
    • Periodically review your financial plan and make adjustments as needed. This can help you stay on track and adapt to changes in your income or expenses.

Conclusion

Remember, financial success is a journey, and it requires a combination of increasing your income and managing your spending. By carefully balancing these two aspects, you can work toward your financial goals, whether it’s achieving financial independence, building wealth, or securing a comfortable retirement.

The post The Two Ways to Increase Your Money: Income and Spending appeared first on Lizsfijourney.

]]> https://lizsfijourney.com/how-to-increase-your-money/feed/ 0 257 Why You Need an Emergency Savings Account https://lizsfijourney.com/why-you-need-an-emergency-savings-account/?utm_source=rss&utm_medium=rss&utm_campaign=why-you-need-an-emergency-savings-account https://lizsfijourney.com/why-you-need-an-emergency-savings-account/#respond Mon, 31 Jul 2023 22:31:28 +0000 https://lizsfijourney.com/?p=241 Why You Need an Emergency Savings Account In the journey towards financial freedom, one of the most critical steps is securing a solid foundation for your finances. While investing, building wealth, and paying off debt are essential, having a safety net in the form of an emergency savings account is equally vital. Life can be unpredictable, and unexpected expenses can arise at any moment. An emergency savings account can serve as a lifeline during tough times and can help you avoid falling into debt. Let’s dive in and explore why you need this financial cushion. 1. Unexpected Emergencies Can Happen to Anyone No one is immune to life’s surprises. Back in May, I experienced $2,774.09 in unexpected costs! Emergencies can come in various forms, such as sudden medical expenses, car repairs, job loss, or even unforeseen home repairs. Without an emergency savings account, these unexpected events can quickly derail your financial progress and cause you to go into debt to pay off these unexpected expenses. Having a dedicated fund for emergencies ensures you can navigate through these challenges without derailing your long-term financial goals. 2. Peace of Mind and Reduced Stress You wouldn’t jump out of an airplane without a parachute, and you shouldn’t risk your financial security without having an emergency savings account. Having a financial safety net to fall back on in case of a financial crisis can bring great peace of mind. An emergency savings account provides you with the reassurance that you can handle unforeseen circumstances without falling into debt or compromising your daily living expenses. This sense of security can reduce stress and anxiety related to finances, allowing you to focus on other aspects of your life with confidence. 3. Avoiding High-Interest Debt Relying on credit cards or loans to cover emergency expenses can lead to a cycle of high-interest debt that becomes challenging to escape. Interest charges can quickly accumulate and add significant financial burdens. By having an emergency savings account, you can avoid falling into debt traps and protect your financial well-being. 4. Building a Strong Financial Foundation Your emergency savings account serves as the cornerstone of your financial foundation. It’s the first line of defense against financial setbacks and acts as a buffer to protect your long-term investments and savings. By prioritizing and building this account, you are laying the groundwork for a more secure and stable financial future. And importantly, your emergency savings fund is something you only need to build once. After you build it, leave it in a high yield savings account to keep your money growing in the background while it sits in an account. You shouldn’t have to use this account, except in the case of emergencies and therefore should not have to worry about building it up constantly (hopefully)! 5. Tailoring Your Emergency Fund The size of your emergency savings account may vary based on individual circumstances. As a rule of thumb, aim to save at least three to six months’ worth of living expenses. However, factors such as job stability, health, and family responsibilities should be considered when determining the appropriate amount for your specific situation. If you need help in calculating how much you should be saving in your emergency fund – download my FREE emergency fund calculator here! My Personal Emergency Savings Account One of my goals for 2023 is to grow my emergency savings fund to 3 months worth of expenses – see my most recent progress on my 2023 financial goals here! Personally, I keep my Emergency Fund in a HYSA through Marcus by Goldman Sachs. They have an APY of 4.15%, but with a referral bonus you can get an additional 1.00% APY for your first three months (i.e., 5.15% APY for your first 3 months!). If you use my referral bonus link, I also get the 1% bonus for 3 months. I use this account because it has one of the most competitive offers on the market for APY and I enjoy the ability to share the 1% bonus with others! As I am trying to build my Emergency Fund to 3 months worth of expenses currently, having an additional amount of money come in through interest just by having my money that I’ve saved thus far sitting in a HYSA is reassuring! Conclusion An emergency savings account is not just a financial tool; it’s a lifeline during times of uncertainty. As we journey towards financial independence, let’s remember that preparing for the unexpected is as important as setting long-term financial goals. Building an emergency savings account is an essential step in achieving financial security and peace of mind. Remember, financial freedom is not just about reaching the end destination; it’s about embracing the journey and equipping ourselves with the knowledge and resources to navigate through life’s ups and downs. So, take the first step today and start building your emergency savings account – your future self will thank you!

The post Why You Need an Emergency Savings Account appeared first on Lizsfijourney.

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Why You Need an Emergency Savings Account

In the journey towards financial freedom, one of the most critical steps is securing a solid foundation for your finances. While investing, building wealth, and paying off debt are essential, having a safety net in the form of an emergency savings account is equally vital. Life can be unpredictable, and unexpected expenses can arise at any moment. An emergency savings account can serve as a lifeline during tough times and can help you avoid falling into debt. Let’s dive in and explore why you need this financial cushion.

1. Unexpected Emergencies Can Happen to Anyone

No one is immune to life’s surprises. Back in May, I experienced $2,774.09 in unexpected costs! Emergencies can come in various forms, such as sudden medical expenses, car repairs, job loss, or even unforeseen home repairs. Without an emergency savings account, these unexpected events can quickly derail your financial progress and cause you to go into debt to pay off these unexpected expenses. Having a dedicated fund for emergencies ensures you can navigate through these challenges without derailing your long-term financial goals.

2. Peace of Mind and Reduced Stress

You wouldn’t jump out of an airplane without a parachute, and you shouldn’t risk your financial security without having an emergency savings account. Having a financial safety net to fall back on in case of a financial crisis can bring great peace of mind. An emergency savings account provides you with the reassurance that you can handle unforeseen circumstances without falling into debt or compromising your daily living expenses. This sense of security can reduce stress and anxiety related to finances, allowing you to focus on other aspects of your life with confidence.

3. Avoiding High-Interest Debt

Relying on credit cards or loans to cover emergency expenses can lead to a cycle of high-interest debt that becomes challenging to escape. Interest charges can quickly accumulate and add significant financial burdens. By having an emergency savings account, you can avoid falling into debt traps and protect your financial well-being.

4. Building a Strong Financial Foundation

Your emergency savings account serves as the cornerstone of your financial foundation. It’s the first line of defense against financial setbacks and acts as a buffer to protect your long-term investments and savings. By prioritizing and building this account, you are laying the groundwork for a more secure and stable financial future. And importantly, your emergency savings fund is something you only need to build once. After you build it, leave it in a high yield savings account to keep your money growing in the background while it sits in an account. You shouldn’t have to use this account, except in the case of emergencies and therefore should not have to worry about building it up constantly (hopefully)!

5. Tailoring Your Emergency Fund

The size of your emergency savings account may vary based on individual circumstances. As a rule of thumb, aim to save at least three to six months’ worth of living expenses. However, factors such as job stability, health, and family responsibilities should be considered when determining the appropriate amount for your specific situation. If you need help in calculating how much you should be saving in your emergency fund – download my FREE emergency fund calculator here!

My Personal Emergency Savings Account

One of my goals for 2023 is to grow my emergency savings fund to 3 months worth of expenses – see my most recent progress on my 2023 financial goals here! Personally, I keep my Emergency Fund in a HYSA through Marcus by Goldman Sachs. They have an APY of 4.15%, but with a referral bonus you can get an additional 1.00% APY for your first three months (i.e., 5.15% APY for your first 3 months!). If you use my referral bonus link, I also get the 1% bonus for 3 months. 

I use this account because it has one of the most competitive offers on the market for APY and I enjoy the ability to share the 1% bonus with others! As I am trying to build my Emergency Fund to 3 months worth of expenses currently, having an additional amount of money come in through interest just by having my money that I’ve saved thus far sitting in a HYSA is reassuring!

Conclusion

An emergency savings account is not just a financial tool; it’s a lifeline during times of uncertainty. As we journey towards financial independence, let’s remember that preparing for the unexpected is as important as setting long-term financial goals. Building an emergency savings account is an essential step in achieving financial security and peace of mind.

Remember, financial freedom is not just about reaching the end destination; it’s about embracing the journey and equipping ourselves with the knowledge and resources to navigate through life’s ups and downs. So, take the first step today and start building your emergency savings account – your future self will thank you!

The post Why You Need an Emergency Savings Account appeared first on Lizsfijourney.

]]> https://lizsfijourney.com/why-you-need-an-emergency-savings-account/feed/ 0 241 Gasoline Hacks: How I Keep More Money In My Pocket https://lizsfijourney.com/how-i-save-money-on-gas/?utm_source=rss&utm_medium=rss&utm_campaign=how-i-save-money-on-gas https://lizsfijourney.com/how-i-save-money-on-gas/#respond Sat, 08 Jul 2023 23:32:38 +0000 https://lizsfijourney.com/?p=236 Gasoline Hacks: How I Keep More Money In My Pocket The two ways to increase your money per month are to make more money or reduce your expenses. One common expense for individuals is gas prices, which have continued to remain expensive throughout the years. Therefore, when on the path to financial independence or striving to stretch your budget, saving money on gas can be a low effort way to increase the money you have to put towards your financial goals. In this article, I will share practical tips and strategies that have helped me cut down on fuel costs, allowing me to allocate more money towards achieving financial freedom. Regular Vehicle Maintenance One way to reduce your expenses on gas is to stretch the distance you can drive on a tank and fuel efficiency is something a lot of people don’t think about after purchasing a car, if ever. Proper vehicle maintenance is essential for optimal fuel efficiency. Neglecting regular upkeep can result in decreased gas mileage and increased expenses. Here’s a couple of things to check to increase your car’s fuel efficiency: Schedule regular tune-ups and oil changes as using the correct motor oil in your car plays a key role in the function of your engine. Check and maintain proper tire inflation regularly, as under-inflated tires can reduce your car’s gas mileage by 3%. Clean out your car. Did you know that an extra 100 pounds in your car can reduce your fuel efficiency by 2%? Getting rid of extra things in your car that you don’t need can help increase your fuel efficiency. Optimize your driving routes If you are going to be driving in an unfamiliar area, planning and optimizing your route beforehand can help to minimize unnecessary driving and save on gas. Personally, I enjoy using the Waze app, which knows real-time traffic alerts and can help avoid accidents or delays. Additionally, it helps to combine multiple errands into one trip. Find Alternative Transportation Finding alternative transportation whether through carpooling, ridesharing or walking and biking not only reduces your individual gas cots, but also benefits the environment and your health. Ridesharing platforms allow you to split costs with others traveling in the same direction. Biking or walking can save money on gas and can benefit your physical health. Public transportation, if in an area where buses or trains are common, can also be a cost-effective to reduce your reliance on your car. Personally, I take public transportation to work and social events within my city and drive minimally when I want to save my time or convenience. Fuel Rewards Programs Many gas stations offer loyalty or rewards programs to help you save money on fuel purchases. Take advantage of these programs to earn discounts, cashback, or points that can be redeemed for future gas purchases, enhancing your savings over time. Most individuals fuel their car at the same station the majority of the time and odds are they offer a loyalty program. Upside Lastly, I have been using the app Upside for a couple of years now. This is a small habit I’ve changed to save a bit of money on gas when I need to fill up my tank and has made the most noticeable impact on my personal gas savings! Upside is a great way to also compare real-time the cost of gas at local stations near you, as well as how much cashback you can earn through each one when using the Upside app. You simply choose which participating gas station you want to fuel up at, pay for your gas using a card that is connected to the Upside app as usual (there is also an option to upload a receipt), and get your cashback. This cashback can be redeemed for gift cards, be sent to your paypal, or sent directly to your bank account. There is also a feature on upside for cash back from local restaurants as well, but I haven’t personally used it yet. If you’re interested in Upside, you can use my referral code here, which will give you an extra $0.15 per gallon cashback the first time that you use the app! In Conclusion Saving money on gas is a practical and low effort way to reduce your expenses. By implementing these strategies and adopting fuel-efficient habits, you can effectively reduce your gas expenses and allocate those savings towards your financial goals. Remember, every dollar saved at the pump brings you closer to your goals and the small habits add up to large changes over time.

The post Gasoline Hacks: How I Keep More Money In My Pocket appeared first on Lizsfijourney.

]]>

Gasoline Hacks: How I Keep More Money In My Pocket

The two ways to increase your money per month are to make more money or reduce your expenses. One common expense for individuals is gas prices, which have continued to remain expensive throughout the years. Therefore, when on the path to financial independence or striving to stretch your budget, saving money on gas can be a low effort way to increase the money you have to put towards your financial goals. In this article, I will share practical tips and strategies that have helped me cut down on fuel costs, allowing me to allocate more money towards achieving financial freedom.

Regular Vehicle Maintenance

One way to reduce your expenses on gas is to stretch the distance you can drive on a tank and fuel efficiency is something a lot of people don’t think about after purchasing a car, if ever. Proper vehicle maintenance is essential for optimal fuel efficiency. Neglecting regular upkeep can result in decreased gas mileage and increased expenses. Here’s a couple of things to check to increase your car’s fuel efficiency: 

  1. Schedule regular tune-ups and oil changes as using the correct motor oil in your car plays a key role in the function of your engine.
  2. Check and maintain proper tire inflation regularly, as under-inflated tires can reduce your car’s gas mileage by 3%.
  3. Clean out your car. Did you know that an extra 100 pounds in your car can reduce your fuel efficiency by 2%? Getting rid of extra things in your car that you don’t need can help increase your fuel efficiency.

Optimize your driving routes

If you are going to be driving in an unfamiliar area, planning and optimizing your route beforehand can help to minimize unnecessary driving and save on gas. Personally, I enjoy using the Waze app, which knows real-time traffic alerts and can help avoid accidents or delays. Additionally, it helps to combine multiple errands into one trip.

Find Alternative Transportation

Finding alternative transportation whether through carpooling, ridesharing or walking and biking not only reduces your individual gas cots, but also benefits the environment and your health. Ridesharing platforms allow you to split costs with others traveling in the same direction. Biking or walking can save money on gas and can benefit your physical health. Public transportation, if in an area where buses or trains are common, can also be a cost-effective to reduce your reliance on your car. Personally, I take public transportation to work and social events within my city and drive minimally when I want to save my time or convenience. 

Fuel Rewards Programs

Many gas stations offer loyalty or rewards programs to help you save money on fuel purchases. Take advantage of these programs to earn discounts, cashback, or points that can be redeemed for future gas purchases, enhancing your savings over time. Most individuals fuel their car at the same station the majority of the time and odds are they offer a loyalty program. 

Upside

Lastly, I have been using the app Upside for a couple of years now. This is a small habit I’ve changed to save a bit of money on gas when I need to fill up my tank and has made the most noticeable impact on my personal gas savings! Upside is a great way to also compare real-time the cost of gas at local stations near you, as well as how much cashback you can earn through each one when using the Upside app. You simply choose which participating gas station you want to fuel up at, pay for your gas using a card that is connected to the Upside app as usual (there is also an option to upload a receipt), and get your cashback. This cashback can be redeemed for gift cards, be sent to your paypal, or sent directly to your bank account. There is also a feature on upside for cash back from local restaurants as well, but I haven’t personally used it yet. 

If you’re interested in Upside, you can use my referral code here, which will give you an extra $0.15 per gallon cashback the first time that you use the app!

In Conclusion

Saving money on gas is a practical and low effort way to reduce your expenses. By implementing these strategies and adopting fuel-efficient habits, you can effectively reduce your gas expenses and allocate those savings towards your financial goals. Remember, every dollar saved at the pump brings you closer to your goals and the small habits add up to large changes over time.

The post Gasoline Hacks: How I Keep More Money In My Pocket appeared first on Lizsfijourney.

]]> https://lizsfijourney.com/how-i-save-money-on-gas/feed/ 0 236 Cutting Losses: How to Overcome the Sunk Cost Fallacy and Save Money https://lizsfijourney.com/how-to-overcome-the-sunk-cost-fallacy/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-overcome-the-sunk-cost-fallacy https://lizsfijourney.com/how-to-overcome-the-sunk-cost-fallacy/#respond Mon, 03 Jul 2023 14:40:53 +0000 https://lizsfijourney.com/?p=209 Cutting Losses: How to Overcome the Sunk Cost Fallacy and Save Money As an individual with a degree in Psychology, I have learned how cognitive biases can impact your life in many ways – including your personal finances. One of these cognitive biases is called the sunk cost fallacy, and it can have a detrimental effect on your financial decisions. This article covers the sunk cost fallacy, it’s impact on your financial decisions, and most importantly, how to avoid falling into its trap and the hidden costs that comes with it. Understanding and overcoming this cognitive bias can significantly contribute to your journey towards financial freedom.  What is the Sunk Cost Fallacy? The sunk cost fallacy, rooted in psychology, is a cognitive bias that leads us to follow through on something that we have invested time, money, or effort into – even when it doesn’t make sense to keep going! It occurs when we consider the resources we have already expended and factor them into our decision-making process, even when they are no longer recoverable or relevant. This can be problematic because the decision to continue is based off of emotional thinking, without taking into account if current costs outweigh the benefits, which leads to suboptimal outcomes. How it Relates to Personal Finance In the realm of personal finance, the sunk cost fallacy can be a significant roadblock to achieving financial independence – especially when it comes to investing. Here are a few common scenarios where this fallacy comes into play: Holding onto Underperforming Investments: You might find yourself reluctant to sell an investment that has consistently underperformed. The reason? You’ve already put a substantial amount of money into it, and parting ways feels like admitting failure. However, holding onto such investments could prevent you from reallocating your funds to better opportunities, ultimately hindering your long-term financial growth. Simply, holding onto an investment that you know is a bad one – will not guarantee that it will appreciate over time and even if it does, the money that was waiting to appreciate could have earned more if invested in a wiser fund/stock. Continuing Education for Career Advancement: Imagine investing time and money in pursuing a degree or professional certification, only to realize that it no longer aligns with your career goals. Despite this realization, many individuals are hesitant to change course because they feel obligated to stick with their initial choice because of all of the time they have spent working towards it thus far. As a result, they miss out on exploring other potentially more rewarding paths that align with their future goals. Sticking with Costly Subscriptions or Memberships: Have you ever found yourself holding onto a gym membership or subscription service you rarely use, simply because you’ve already paid for it? This is a classic example of the sunk cost fallacy. Continuing to pay for something you don’t fully utilize is a drain on your finances and an opportunity cost for investing in more meaningful areas of your life. How to Avoid the Sunk Cost Fallacy Recognize the Fallacy: Awareness is the first step towards avoiding the sunk cost fallacy. Understand that the resources you’ve already invested are gone and cannot be gained back in most cases. The only relevant factors for decision-making should be the current and future benefits and costs. Reframe Your Perspective: Instead of dwelling on past investments, focus on the potential future outcomes. Consider the opportunity costs associated with holding onto an underperforming investment or sticking with an unfulfilling situation. Evaluate Objectively: Take a step back and assess your options without emotional attachment. Consider the current value of the investment or decision and compare it with alternative opportunities. Make decisions based on the potential for future returns rather than past investments. It helps to think of your situation as if you were giving advice to a friend. Seek External Input: Consulting with unbiased individuals, such as financial advisors, mentors, or friends can provide valuable perspectives. They can help you evaluate your options objectively and avoid falling into the sunk cost fallacy. In Conclusion The sunk cost fallacy can have a significant impact on your journey to financial independence. By understanding its influence and learning how to overcome it, you can make more rational decisions aligned with your long-term financial goals. Investments of time, money and effort from the past can be mistakes that no longer align with your future goals; Remember, what matters most is the future value and potential returns, not the ‘sunk costs’ that cannot be recovered. Embracing the current costs and benefits and seeing how they align with your financial aspirations is essential in taking steps to avoid the sunk cost fallacy.

The post Cutting Losses: How to Overcome the Sunk Cost Fallacy and Save Money appeared first on Lizsfijourney.

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Cutting Losses: How to Overcome the Sunk Cost Fallacy and Save Money

As an individual with a degree in Psychology, I have learned how cognitive biases can impact your life in many ways – including your personal finances. One of these cognitive biases is called the sunk cost fallacy, and it can have a detrimental effect on your financial decisions. This article covers the sunk cost fallacy, it’s impact on your financial decisions, and most importantly, how to avoid falling into its trap and the hidden costs that comes with it. Understanding and overcoming this cognitive bias can significantly contribute to your journey towards financial freedom. 

What is the Sunk Cost Fallacy?

The sunk cost fallacy, rooted in psychology, is a cognitive bias that leads us to follow through on something that we have invested time, money, or effort into – even when it doesn’t make sense to keep going! It occurs when we consider the resources we have already expended and factor them into our decision-making process, even when they are no longer recoverable or relevant. This can be problematic because the decision to continue is based off of emotional thinking, without taking into account if current costs outweigh the benefits, which leads to suboptimal outcomes. 

How it Relates to Personal Finance

In the realm of personal finance, the sunk cost fallacy can be a significant roadblock to achieving financial independence – especially when it comes to investing. Here are a few common scenarios where this fallacy comes into play:

  1. Holding onto Underperforming Investments: You might find yourself reluctant to sell an investment that has consistently underperformed. The reason? You’ve already put a substantial amount of money into it, and parting ways feels like admitting failure. However, holding onto such investments could prevent you from reallocating your funds to better opportunities, ultimately hindering your long-term financial growth. Simply, holding onto an investment that you know is a bad one – will not guarantee that it will appreciate over time and even if it does, the money that was waiting to appreciate could have earned more if invested in a wiser fund/stock.

  2. Continuing Education for Career Advancement: Imagine investing time and money in pursuing a degree or professional certification, only to realize that it no longer aligns with your career goals. Despite this realization, many individuals are hesitant to change course because they feel obligated to stick with their initial choice because of all of the time they have spent working towards it thus far. As a result, they miss out on exploring other potentially more rewarding paths that align with their future goals.

  3. Sticking with Costly Subscriptions or Memberships: Have you ever found yourself holding onto a gym membership or subscription service you rarely use, simply because you’ve already paid for it? This is a classic example of the sunk cost fallacy. Continuing to pay for something you don’t fully utilize is a drain on your finances and an opportunity cost for investing in more meaningful areas of your life.

How to Avoid the Sunk Cost Fallacy

  1. Recognize the Fallacy: Awareness is the first step towards avoiding the sunk cost fallacy. Understand that the resources you’ve already invested are gone and cannot be gained back in most cases. The only relevant factors for decision-making should be the current and future benefits and costs.

  2. Reframe Your Perspective: Instead of dwelling on past investments, focus on the potential future outcomes. Consider the opportunity costs associated with holding onto an underperforming investment or sticking with an unfulfilling situation.

  3. Evaluate Objectively: Take a step back and assess your options without emotional attachment. Consider the current value of the investment or decision and compare it with alternative opportunities. Make decisions based on the potential for future returns rather than past investments. It helps to think of your situation as if you were giving advice to a friend.

  4. Seek External Input: Consulting with unbiased individuals, such as financial advisors, mentors, or friends can provide valuable perspectives. They can help you evaluate your options objectively and avoid falling into the sunk cost fallacy.

In Conclusion

The sunk cost fallacy can have a significant impact on your journey to financial independence. By understanding its influence and learning how to overcome it, you can make more rational decisions aligned with your long-term financial goals. Investments of time, money and effort from the past can be mistakes that no longer align with your future goals; Remember, what matters most is the future value and potential returns, not the ‘sunk costs’ that cannot be recovered. Embracing the current costs and benefits and seeing how they align with your financial aspirations is essential in taking steps to avoid the sunk cost fallacy.

The post Cutting Losses: How to Overcome the Sunk Cost Fallacy and Save Money appeared first on Lizsfijourney.

]]> https://lizsfijourney.com/how-to-overcome-the-sunk-cost-fallacy/feed/ 0 209 HYSA Explained: How to Make the Most of Your Savings https://lizsfijourney.com/everything-you-need-to-know-about-a-high-yield-savings-account-hysa/?utm_source=rss&utm_medium=rss&utm_campaign=everything-you-need-to-know-about-a-high-yield-savings-account-hysa https://lizsfijourney.com/everything-you-need-to-know-about-a-high-yield-savings-account-hysa/#respond Mon, 26 Jun 2023 20:31:35 +0000 https://lizsfijourney.com/?p=177 HYSA Explained: How to Make the Most of Your Savings Many people want to find ways in which they can ‘set it and forget it’ and have their money passively make more money for them. However, some people still are confused as to what a high yield savings account (HYSA) is, how it works, and why they should have one. In the pursuit of financial independence and early retirement, one of the key strategies to optimize your savings is by utilizing a HYSA. In this article, we’ll answer the three most common questions about high-yield savings accounts and explain why having one can be beneficial for your financial journey. What is a high-yield savings account (HYSA)? A high-yield savings account, also called a HYSA, is an online savings account which offers competitive APY (annual percentage yield), as much as 20 to 25 times higher than a traditional savings account. In short, the amount of interest you can earn on a HYSA as compared to a traditional savings account is huge! These accounts are typically offered by online banks or credit unions and are designed to help you grow your savings more effectively, by reducing the upfront costs that a traditional bank might have (like having a physical location for example!). Because the interest rates for HYSAs are several times higher than those offered by brick-and-mortar banks, your money is working harder for you while sitting in an account. How is it different from a normal savings account HYSAs work very similarly to traditional savings accounts. You deposit money into the account, and the bank pays you interest on the balance. The main difference is in the interest rates. While some traditional savings accounts have interest rates as low as 0.01% APY, high-yield accounts earn around 4% APY currently! What are the pros of having a HYSA? Having a high-yield savings account can bring several advantages on your path to financial freedom: Increased earning potential: The higher interest rates offered by high-yield savings accounts mean that your money will grow faster compared to a traditional savings account. This accelerated growth can provide a significant boost to your savings over time, helping you achieve your financial goals sooner. Safety and security: High-yield savings accounts are typically offered by reputable online banks or credit unions that are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Flexibility and accessibility: Despite the higher interest rates, high-yield savings accounts still offer the flexibility and accessibility you need. You can access your funds online, transfer money easily, and make withdrawals without any hassle. This ensures that your money remains readily available for emergencies or other financial needs. How I personally use my HYSA: Personally, I keep my Emergency Fund in a HYSA through Marcus by Goldman Sachs. They have an APY of 4.15%, but with a referral bonus you can get an additional 1.00% APY for your first three months (i.e., 5.15% APY for your first 3 months!). If you use my referral bonus link, I also get the 1% bonus for 3 months. I use this account because it has one of the most competitive offers on the market for APY and I enjoy the ability to share the 1% bonus with others! As I am trying to build my Emergency Fund to 3 months worth of expenses currently, having an additional amount of money come in through interest just by having my money that I’ve saved thus far sitting in a HYSA is reassuring! In Conclusion Opening a HYSA is a smart financial move. With higher interest rates, safety, and accessibility, these accounts allow your savings to grow at an accelerated pace while providing the flexibility you need. Consider opening a high-yield savings account and make your money work harder for you on the journey to financial freedom.

The post HYSA Explained: How to Make the Most of Your Savings appeared first on Lizsfijourney.

]]>

HYSA Explained: How to Make the Most of Your Savings

Many people want to find ways in which they can ‘set it and forget it’ and have their money passively make more money for them. However, some people still are confused as to what a high yield savings account (HYSA) is, how it works, and why they should have one.

In the pursuit of financial independence and early retirement, one of the key strategies to optimize your savings is by utilizing a HYSA. In this article, we’ll answer the three most common questions about high-yield savings accounts and explain why having one can be beneficial for your financial journey.

What is a high-yield savings account (HYSA)?

A high-yield savings account, also called a HYSA, is an online savings account which offers competitive APY (annual percentage yield), as much as 20 to 25 times higher than a traditional savings account. In short, the amount of interest you can earn on a HYSA as compared to a traditional savings account is huge!

These accounts are typically offered by online banks or credit unions and are designed to help you grow your savings more effectively, by reducing the upfront costs that a traditional bank might have (like having a physical location for example!). Because the interest rates for HYSAs are several times higher than those offered by brick-and-mortar banks, your money is working harder for you while sitting in an account.

How is it different from a normal savings account

HYSAs work very similarly to traditional savings accounts. You deposit money into the account, and the bank pays you interest on the balance. The main difference is in the interest rates. While some traditional savings accounts have interest rates as low as 0.01% APY, high-yield accounts earn around 4% APY currently!

What are the pros of having a HYSA?

Having a high-yield savings account can bring several advantages on your path to financial freedom:

  1. Increased earning potential: The higher interest rates offered by high-yield savings accounts mean that your money will grow faster compared to a traditional savings account. This accelerated growth can provide a significant boost to your savings over time, helping you achieve your financial goals sooner.

  2. Safety and security: High-yield savings accounts are typically offered by reputable online banks or credit unions that are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). 

  3. Flexibility and accessibility: Despite the higher interest rates, high-yield savings accounts still offer the flexibility and accessibility you need. You can access your funds online, transfer money easily, and make withdrawals without any hassle. This ensures that your money remains readily available for emergencies or other financial needs.

How I personally use my HYSA:

Personally, I keep my Emergency Fund in a HYSA through Marcus by Goldman Sachs. They have an APY of 4.15%, but with a referral bonus you can get an additional 1.00% APY for your first three months (i.e., 5.15% APY for your first 3 months!). If you use my referral bonus link, I also get the 1% bonus for 3 months. 

I use this account because it has one of the most competitive offers on the market for APY and I enjoy the ability to share the 1% bonus with others! As I am trying to build my Emergency Fund to 3 months worth of expenses currently, having an additional amount of money come in through interest just by having my money that I’ve saved thus far sitting in a HYSA is reassuring!

In Conclusion

Opening a HYSA is a smart financial move. With higher interest rates, safety, and accessibility, these accounts allow your savings to grow at an accelerated pace while providing the flexibility you need. Consider opening a high-yield savings account and make your money work harder for you on the journey to financial freedom.

The post HYSA Explained: How to Make the Most of Your Savings appeared first on Lizsfijourney.

]]> https://lizsfijourney.com/everything-you-need-to-know-about-a-high-yield-savings-account-hysa/feed/ 0 177 About Lizsfijourney https://lizsfijourney.com/about-lizsfijourney/?utm_source=rss&utm_medium=rss&utm_campaign=about-lizsfijourney https://lizsfijourney.com/about-lizsfijourney/#respond Sat, 24 Jun 2023 18:45:48 +0000 https://lizsfijourney.com/?p=100 Welcome to Lizsfijourney: An Introduction I started Lizsfijourney on Instagram in January of 2023. Six months later, I decided to start writing long-form content in the form of this blog. Fitting for my first post, I’d like to introduce who I am! The Fundamentals If you follow me on Instagram, you might already know the basics about me. I recently turned 24 I have a dual degree in Psychology and Cognitive Sciences I currently have a negative net worth from student loans I live in Massachusetts I make about $50,000 a year While these insights give you a broad look at who I am, I want to share a more personal look into my life. A More Personal Look Why I seek financial independence: I seek financial independence so that I can live life work-optional in the future. I have experienced and currently am in debt from higher education loans. I enjoy the feeling of having money set aside for my future self and have become fascinated by the financial independence retire early (FIRE) movement. After joining Instagram in January 2023, I have found a community of like-minded individuals who support each other on their financial independence journey. As someone with a background in psychology, I truly enjoy delving further into money habits and why individuals make the choices they do regarding finances. I believe a lot of someone’s financial future is changeable depending on the habits someone adopts and the information they have access to. I want to continually learn more about and grow in my own personal finance journey, and share the resources I gather along the way to help others grow alongside me. My financial privileges I grew up in a financially stable position and would consider my family finances as upper middle class. Because of this, I had access to a quality education and opportunities that others may not have had. I had opportunities for private music lessons, and went to a public school with access to advanced placement (AP) classes that gave me a step up when it came to applying to a quality college program. I’m open to continually learning about my own privilege and understanding the ways in which my typical has been atypical to those with less opportunities. My money memories as a kid I was ‘taught’ implicitly at a young age that money is not to be wasted and that living frugally is necessary. Because of this, I grew up in a home that would not heat our home in the winter past 62 degrees Fahrenheit (16 degrees Celsius). Instead, we would wear layers and hats and sometimes even gloves inside in the winter months. Living in this extreme environment due to a parent’s stingy-ness and frugality impacted my views on finances. This led to me as a young twenty-something fighting against a scarcity mindset that even when I have money, I typically don’t spend it even if it would improve my current quality of life. Learning to work against this is a constant battle and now I work towards living a life in which money is a tool for improving and balancing my future and my current happiness. What you can expect from me Authentic personal financial lessons, goals, and habits Simplified and accessible language and info Resources for your own FI journey Thank you for being here! I have really enjoyed the creativity and challenge of putting my time and effort into growing the community that I have thus far on the Instagram debt free and financial independence community. I never imagined the support I would encounter from strangers, but the community and willingness to help each other and support each other as we grow is something I’m passionate about contributing to. Thank you for being here, and welcome to the community!

The post About Lizsfijourney appeared first on Lizsfijourney.

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Welcome to Lizsfijourney: An Introduction

I started Lizsfijourney on Instagram in January of 2023. Six months later, I decided to start writing long-form content in the form of this blog. Fitting for my first post, I’d like to introduce who I am!

The Fundamentals

If you follow me on Instagram, you might already know the basics about me.

 

  • I recently turned 24
  • I have a dual degree in Psychology and Cognitive Sciences
  • I currently have a negative net worth from student loans
  • I live in Massachusetts
  • I make about $50,000 a year

 

While these insights give you a broad look at who I am, I want to share a more personal look into my life. 

About Me

A More Personal Look

Why I seek financial independence:

I seek financial independence so that I can live life work-optional in the future. I have experienced and currently am in debt from higher education loans. I enjoy the feeling of having money set aside for my future self and have become fascinated by the financial independence retire early (FIRE) movement. After joining Instagram in January 2023, I have found a community of like-minded individuals who support each other on their financial independence journey. 

As someone with a background in psychology, I truly enjoy delving further into money habits and why individuals make the choices they do regarding finances. I believe a lot of someone’s financial future is changeable depending on the habits someone adopts and the information they have access to. I want to continually learn more about and grow in my own personal finance journey, and share the resources I gather along the way to help others grow alongside me. 

My financial privileges

I grew up in a financially stable position and would consider my family finances as upper middle class. Because of this, I had access to a quality education and opportunities that others may not have had. I had opportunities for private music lessons, and went to a public school with access to advanced placement (AP) classes that gave me a step up when it came to applying to a quality college program. 

I’m open to continually learning about my own privilege and understanding the ways in which my typical has been atypical to those with less opportunities. 

My money memories as a kid

I was ‘taught’ implicitly at a young age that money is not to be wasted and that living frugally is necessary. Because of this, I grew up in a home that would not heat our home in the winter past 62 degrees Fahrenheit (16 degrees Celsius). Instead, we would wear layers and hats and sometimes even gloves inside in the winter months. Living in this extreme environment due to a parent’s stingy-ness and frugality impacted my views on finances. 

This led to me as a young twenty-something fighting against a scarcity mindset that even when I have money, I typically don’t spend it even if it would improve my current quality of life. Learning to work against this is a constant battle and now I work towards living a life in which money is a tool for improving and balancing my future and my current happiness. 

What you can expect from me

  • Authentic personal financial lessons, goals, and habits
  • Simplified and accessible language and info
  • Resources for your own FI journey

Thank you for being here!

I have really enjoyed the creativity and challenge of putting my time and effort into growing the community that I have thus far on the Instagram debt free and financial independence community. I never imagined the support I would encounter from strangers, but the community and willingness to help each other and support each other as we grow is something I’m passionate about contributing to. Thank you for being here, and welcome to the community!

The post About Lizsfijourney appeared first on Lizsfijourney.

]]> https://lizsfijourney.com/about-lizsfijourney/feed/ 0 100