My Chequing Account
This is a snapshot of the lowest amount of money I had in my chequing account before I began this blog on September 6, 2023. It was $1.98. I have been fortunate enough to have paid all my student loans with the help of family. It was tough selling parts of my portfolio to be able to do so but I am glad I did. The peace of mind of not having to worry about payments towards student loans was immense.
This is my current balance today, July 12. 2024. I have earned significantly more however I have been adding 20% of my income each bi-weekly pay cheque into my tax free savings account.
The total amount with my savings and cash accounts amount to roughly $30,000. It has been over 10 years since I have had this amount of money.
There are three actions I have taken to grow my income. The first is automatic deposits into my tax free savings account and the second is investing the money in my tax free savings account in exchanged trade funds and various stocks. The third is to budget at least $30 per week for eating out.
Automatic deposits has made it so I pay myself first as soon as my pay cheque comes in. This makes it significantly easier to know how much money I actually have post savings.
If there's an area where I can improve upon is understanding my financial budget. First is to create a financial spreadsheet of my portfolio to understand how much I am earning on a monthly basis. Secondly by creating a zero sum budget. This is where you account for all your expenditures and income sources so that the end result equals zero. With these two important financial documents, I will be able to forecast how much is required to reach my financial freedom.
I discovered on Instagram, @Braiden.fulcrum, someone who is teaching people how to become financially savvy. I have included a transcript of his post below, https://www.instagram.com/reel/C5WQCmwR3MN/?igsh=Y3dmczZiaXltbDY3.
"Here’s how to calculate the “never have to work again” number. So many of us have this goal of growing our net worth but honestly, none of us really understand how much do I really need to be financially independent and this is the quickest way to do it. What you’re going to do is take your annual amount that you want to live on without a job. Let’s say that it’s $100,000. So you want $100,000 a year the rest of your life. What you’re going to do is take that number and multiple it by 25.
$ amount you want annually x 25 =
never have to work again #
Example:
$100,000 x 25 = $2,500,000
I’ll explain why this is going to work out because of the 4% rule, so you’re going to need $2,500,000 inside an account to never work again. So what the 4% rule states is that once you have an account of that size, if you withdraw 4% every year you will never run out of money. That’s because historically the stock market returned 9.9 % every year averaged out the last century. But if you adjust it down for inflation, it’s actually closer to like 7.6-8%. So in actuality, when you are talking about retiring and living on this number for 30+ years, you need that number because inflation adjusted. So if your money is going to grow 7.5% you should in perpetuity always be able to draw 4%and never run out of money. Because if your money is growing at 7.5% inflation adjusted and you’re withdrawing 4%, your money will continue to grow upon what you’re already getting and you should run out of money."
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