Today, I’m going to try something new. I’ve noticed that I have a tendency to ramble on when I write my blog posts, and I’d much prefer to try to become more succinct in my writing. So, as a way of testing myself, I’ve decided to write a series of answers to common personal finance questions, while keeping my answers to one hundred words or less. In the process, I should be able to improve my writing skills, keep my wordiness to a limit, and of course, answer some personal finance questions.
Since this is my first attempt at doing so, I don’t (as of yet) have any questions from my readers to try to answer. (Although, hopefully, that will change with future editions.) So, I will start by answering a few common personal finance questions with my own particular take on what you should (and shouldn’t) do with your finances. Now, let the questions commence?
Q: When should I begin investing?
A: In general, you should start investing as soon as possible. There are a few things you should do before you start investing: building up an emergency fund, paying down all your high interest rate debt, and ensuring that you have adequate insurance to protect yourself and your family if something happens to you. Once those goals have been achieved, putting a portion of your income into investments for retirement and other goals is a great approach, as long as you choose reasonable investments.
Q: Alright, what investments should I choose?
A: It’s hard to answer that question simply, as it depends on your age, your goals, your time frame, and your tolerance for risk, among other traits. Trying to recommend one asset allocation that works for everyone is nigh impossible. If you want an idea of what your portfolio should look like, you can take a look at the portfolios offered in Target Date Funds for your desired retirement (or other investment goal) and use those as a guide to reasonable portfolios (or just use the Target Date Funds, for that matter).
Q: What’s the best way to find a job?
A: Ah, one of the eternal questions. The short answer: try everything. It’s nearly impossible to say in advance what method will yield the most results as you search, and what works for you may not work for others. So, submit your resume to companies you’d like to work for, contact their HR departments, apply to job aggregation sites like Monster and CareerBuilder, and of course, network, network, network! I’ll be the first to admit, it’s a slow process, but you should be successful if you try multiple methods and keep at it.
Q: What sort of money making opportunities are available to children?
A: Good news for the enterprising children of today: there’s almost limitless opportunities to earn money. While child labor laws keep you from getting a traditional job like a teenager or adult, technology enables you to do numerous jobs that would be impossible just a few decades ago, from blogger to webmaster. If that’s not to your liking, there’s always more traditional methods, from babysitting and dog walking to yes, running a lemonade stand. If you are the entrepreneurial type, there’s plenty of opportunities to earn money outside of a traditional job.
Q: How do you get out of debt?
A: There’s plenty of different approaches you can take, but the basics are pretty universal. You’ll need to earn more than you spend, by boosting your income, cutting down your spending, or a combination of the two. You apply the money above your spending to paying down your debt. There’s several approaches you could take to deciding which debt to pay first, if you have more than one, but the most efficient is to pay down the debt with the highest associated interest rate. Lather, rinse, and repeat with your other debts until you are debt free.
There you go, five answers to five common personal finance questions, all under one hundred words in length (although I was getting awfully close with that last question).