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In part 1 of this series we looked at the cost of waiting when it comes to investing. An example of this showed that waiting only 5 years to invest could cost you literally hundreds of thousands of dollars over the long run. Many people want to pay off debt before they start to save. Figure 2 shows the excuse debt and how much it will cost to play catch up. For this example we will use a fixed total amount to save for, let’s say $500, 000 by age 65:

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            Do you know how much it costs to wait to invest? What if I told you that a couple of years could cost you more than a million dollars over time. Would you care? Would you do something about it,? or would you just read this and carry on the same way? Many people think they can play catch-up, but it is much harder and much more expensive to do so.

            Are you like most people? Do you wave your arms forward and say something like: “Ah, no problem, I will start investing when I get my student debt paid off?”. Then its: “I will start investing when I am done saving for a house”. Then, “I will start investing when my kids move out”. Then, “I will start investing when my house is paid off”. Then, your life is over. Sound grim? This was most of the excuses I heard while working in the field. I realized that most people always had an excuse not to invest no matter where they were in their lives. I think people would be more likely to invest sooner if they knew what the price was to wait.

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            In the last post on March 24, 2009, you were given a free budget spreadsheet that allowed you to analyse your income and where it goes. In this post we will look at the spending guideline, which outlines where your money should go.

            The guideline below shows what the proper allocation of your money should look like. In the free income statement sheet you will have your own pie chart to compare to this guideline.

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          Budgets don’t work. What? Then why the heck am I writing a post on how to create a budget? Budgets don’t work for the same reason diets, or new years resolutions don’t work. They appear to be too restrictive, oh yeah, and were lazy. We are inherently lazy and we like things to be easy rather than difficult, this includes me. I myself don’t like to use the “B” word, I prefer to call it “a guideline for money so that you don’t have to be a greeter at a department store during your retirement”. I’ll give some personal finance help and show you how to create a working guideline in 4 simple steps

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