Budgeting as the First Step to Financial Freedom

Category
Topic
Words
1448 (3 pages)
Downloads
36
Download for Free
Budgeting as the First Step to Financial Freedom essay
Important: This sample is for inspiration and reference only

Creating a budget sheet is the first step to gaining financial success. I’ve found that a budget sheet can be a wonderful tool through personal experience. I created my first budget sheet about a year ago and found it to be very beneficial compared to just trying to be frugal. Thanks to this assignment, I created a newly-updated budget sheet due to my recent job change and commute difference. As most college students can relate, I believe that paying for college and learning about loans and credit is all way too much to handle at once! Financial skills aren’t taught to today’s youth and that’s why “many college students are finding themselves deeper and deeper in debt” (Valenti, 2018, p. 1). Creating a budget sheet can be the first step for these young adults to establishing a sense of financial security.

Dave Ramsey is one of the first people I read about, alongside Robert Kiyosaki and David Chilton, when I became interested in financial planning. I first heard about Dave Ramsey through a recommendation: my older cousin who is extremely successful in his career and financially well-off saw that I had an aspiration for financial success and told me where to start. I feel that Dave Ramsey’s steps are incredibly helpful because they are applicable to everyone, no matter how much money they make or what spending habits they have. Ramsey believes taking on debt to better one’s self is important (Ramsey, 2018). Whether it is higher education or for personal well-being (hospital visits and procedures), devoting funds to oneself can better set one up for what’s to come and lead to an improved and financially secure future. For example, student loans are terrible and many young adults go into tens of thousands of dollars of debt at the ripe age of 20. This isn’t to say that no one should go to school for a degree- they should just have a plan as to what they will use that degree for and how they are going to pay back their student loans. Although I may not have a credit card, I do have student loans taken out in my name. These debts reflect in my credit score and will eventually start accruing interest if I don’t pay them off in time. My plan to refrain from falling down the consumerism rabbit-hole is to not solely rely on a credit card in the future. On the contrary, having a credit card is vital to building your credit score. For this reason, I do plan to utilize a credit card but to avoid using it on a regular basis. “When you're getting started as an independent adult, it's important to establish good credit — that allows you to make larger purchases in the future, such as a car or home” (Elkins, 2017, p. 1). Aside from using my credit card to build up my credit score, I want to become reliant on my debit card. Debit cards don’t let you rack up debt with high interest rates like a credit card, instead the customer is reliant on their account balance. After experiencing the shock that comes along with student loans, I have formed a plan in order to pay them off. I have worked for nearly 3 years straight now and have developed a healthy habit of saving my money. I am currently in the process of paying off an unsubsidized loan so that I can eliminate all forms of debt with interest at the moment. This leaves me with subsidized loans, but those don’t start gathering interest until awhile after I graduate. I plan on slowly chipping away at those whilst in school anyways. To do this, I plan on directing a small amount of every paycheck I earn towards my loans. In doing this, I should graduate with a much smaller amount of debt and the interest each month will be minimized. I believe this is the smartest way for me to pay off my loans; I invest 15% of my earnings and I view higher education as my current investment as it will benefit my future.

No time to compare samples?
Hire a Writer

✓Full confidentiality ✓No hidden charges ✓No plagiarism

Being 19 and fortunate enough to live with relatives, I do not plan on buying a house for multiple years. Despite this, I do plan on eventually becoming a homeowner. It is very smart to save up for the down payment on a house- it minimizes the cost in the long-run and saves your credit score from an unnecessary hardship. I also plan on making extra payments on my house when able, just like my student loan debt. Making extra payments on a house cuts down on the time it would be accruing interest. The sooner something is paid off, the better. That goes for homes, automobiles, and anything else that’s listed on a person’s credit. It allows for your money to go towards savings or other payments sooner, leading to a financially secure future. Some may argue that renting for a period of time just to save up for a house’s down payment isn’t worth it and that purchasing the home earlier is smarter. I disagree because the house down payment loan would cost the homeowner much more than a few extra months of rent, accruing interest along the way. Taking out a loan is never a great move, especially when there are alternative options. A person is far more likely to fall down a slippery slope of spending by taking out a large loan than if they were to take their time saving and eliminate the need for a large debt in the first place. In doing this, the buyer would also be creating good habits such as prioritizing, saving money, and avoiding debt. Dave Ramsey expands on all of these topics and more in his podcasts and books; his incredible understanding and years of experience are useful tools for spenders to learn from.

Although I don’t have children, I do know what values I would hold according to them. In the event that I do have children, I want to help them financially, yet make sure they develop into independent young adults. If my children choose to go to college, I would want to help by offering the funds to attend community college for their first two years. They would be held responsible for the rest of their higher education, but I would be proud to help them attain their associates degree or get halfway through their bachelor’s degree. My significant other agrees with me that this is more than fair. Coming from our situations, we are both individually paying our ways through college and think that aid in the beginning would be a helpful stepping stone in learning how to properly finance your way through life at such a young age. None of this goes to say that my hypothetical future children shouldn’t aim for the stars. We want them to search for scholarships and try to earn their own education, but we want to support where we can.

I first gave serious thought to investing when I had just turned 18. I was reading a book on the topic of financial planning and realized how beneficial it can be to start investing at a young age. My grandfather was an accountant for Ford Motor Company, so I went to him with my questions. Through my grandfather, more financial planning books, and a serious interest in the topic, I learned how vital a Roth IRA can be. Currently, I am investing small amounts when I can into my Roth IRA account. It would be best if I were to max out my account at its highest capacity each year, but I don’t earn enough to do that at the moment. My main priority right now is to eliminate student loan debt, then invest what I can into my future.

Finances are a critical part of every adult’s life, and not learning how to utilize this skill can be detrimental. Just like any other skill, financing takes practice, studying, and devotion. Using resources like Dave Ramsey’s and other financial experts’ methodologies can aid in guiding a range of people to a successful lifestyle monetarily. From those who have never heard of a budget sheet to those who have been investing their money into index funds for years and watching their funds compound, there are always beneficial financial tactics to learn about. I have found Dave Ramsey’s content extremely user-friendly to the financially unsavvy, and as I have progressed in my studies, I still learn new things from his podcast frequently! If I were asked to recommend where to start on gaining financial freedom, Dave Ramsey’s beginner steps would be my initial recommendation.

You can receive your plagiarism free paper on any topic in 3 hours!

*minimum deadline

Cite this Essay

To export a reference to this article please select a referencing style below

Copy to Clipboard
Budgeting as the First Step to Financial Freedom. (2020, July 15). WritingBros. Retrieved July 25, 2024, from https://writingbros.com/essay-examples/budgeting-the-first-step-to-financial-freedom/
“Budgeting as the First Step to Financial Freedom.” WritingBros, 15 Jul. 2020, writingbros.com/essay-examples/budgeting-the-first-step-to-financial-freedom/
Budgeting as the First Step to Financial Freedom. [online]. Available at: <https://writingbros.com/essay-examples/budgeting-the-first-step-to-financial-freedom/> [Accessed 25 Jul. 2024].
Budgeting as the First Step to Financial Freedom [Internet]. WritingBros. 2020 Jul 15 [cited 2024 Jul 25]. Available from: https://writingbros.com/essay-examples/budgeting-the-first-step-to-financial-freedom/
Copy to Clipboard
Budgeting as the First Step to Financial Freedom essay

Need writing help?

You can always rely on us no matter what type of paper you need

Order My Paper

*No hidden charges

/