Trick to achieving financial freedom

by Orca Financial

Ahhh! Adulthood – regular paychecks, eating meals that don't come in a Styrofoam cup, and the ability to, as Tom from "Parks and Recreation" would say, "Treat Yo' Self" But how much of your newfound income should you be saving? Are you spending too much? Are you investing it in the right places and growing it or just letting it sit?

The suggestion is to always have at least 2-3 months worth of living expenses in your savings account. This includes rent, food, gas and any other basic living expenses. How do we decide what to spend, save, and invest? Apply the "50-30-20 Rule" to every paycheck you receive:

  • 50%: Spending
  • 30%: Savings
  • 20%: Investment

50%:

This amount goes to your recurring living expenses. Don't forget to include things such as:
-Food/Alcohol
-Rent
-Social
-Uber/Lyft
-Netflix
-Bills

30%:

This second part is adjustable. Put 30% of each paycheck away until you reach the suggest amount I mentioned above – 2-3 months worth of pay for a rainy day. Once you reach that goal it assess your immediate goals (a vacation perhaps?) to determine how much you should be putting in your savings versus investing. If you are comfortable with the amount you are saving, speak with your adviser about changing up the ratio to lend more to the investment proportion.

This is also where Orca's partnered adviser and signature "goal planning" portfolios step in. Have a specific question? Ask us here.

20%:

The final 20%, is also adjustable and goes towards investments. These investments can have different strategies based on what you want to accomplish and Orca's Advisers can help you pick the entry-level investments that are right for you. A good way to think about how much you should be putting towards investments is to write down your long-term goals; for example: buying a condo, starting a business, or graduate school. Investing ensures that your money is working for you and helps you raise money towards expensive goals much faster by accumulating money from other sources (stocks, real estate, etc.).

While its important to have money sitting in your bank account, it is also crucial to make sure your money is working for you. Make a timeline according to your goals and take advantage of the growth you can attain by leveraging investments.

At Orca and our partnered advisers specialize in working with you to create a goal-oriented plan specifically for you and your lifestyle. We understand that we all have short term goals as well as long term ones. Ask your questions here and schedule a free consultation here #orcafinancial.

The post Achieve Financial Freedom: The 50-30-20 Rule appeared first on Orca Financial.

RELATED: Personal finance books for everyone

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Personal finance books for everyone
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Personal finance books for everyone
The Millionaire Next Door

"The Millionaire Next Door is my go to finance book. It’s a great book to get your thinking differently about your money, and find out how others have been successful building wealth." -Debt Discipline

"The Millionaire Next Door is an explanation of how average people with average incomes have been able to attain millionaire status. If you don't think you're ever going to become wealthy, this book is here to prove you wrong!" -Financial Fanny Pack

"This best-selling book by Thomas J. Stanley dispels misconceptions about the wealthy and reveals the common traits they share. It was an eye-opening book that helped me get a better vision on my journey toward financial freedom." -Marriage, Kids and Money 

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I Will Teach You to be Rich
"Ramit is amazing at explaining boring and complicated personal finance topics in a conversational, fun, and easy to understand way. This book totally covers everything you need to do for healthy finances and dissects it into simple, actionable steps you can start on immediately. Recommended for anyone who wants to get their money matters in order!" -InvestmentZen
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Your Money or Your Life
"This book offers unique perspectives on personal finance, including challenging the reader to consider how many hours were spent working towards items they've purchased, rather than just the price. If you're looking to transform your finances, this is a great resource." -Mystery Money Man
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Scarcity: Why Having Too Little Means So Much
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The Simple Path to Wealth

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Rich Dad Poor Dad
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The Top 10 Distinctions Between Millionaires and the Middle Class 
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The Total Money Makeover

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The Richest Man in Babylon
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Money Talks: When To Say Yes And How To Say No
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The Wealthy Barber Returns
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99 Minute Millionaire
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Awaken the Giant Within
"If you're going to make any money or be successful in this world, you need to understand yourself and get clear on what you want.  There is no better book out there for accomplishing your goals." -Jiu-Jitsu Finance
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