This is the first in the Getting Started series of posts that will show why Liquid is a totally different way of looking at your money and how you can use it to make a real impact in your life and the lives of your family and friends.
There are a lot of numbers floating around that people tell you you have to worry about. But the truth is, if you can stay our of debt and have an emergency fund, then you'll be better off than nearly everyone. Are you a victim of unexpected expenses? Everyone is. It never fails, as soon as you think you're getting ahead with money, something comes up. Life gets in the way. It happens to all of us.
Shed The Complicated: Don't Worry About Investing
We try to get a plan that can help prevent the chaos. But in order to plan financially, we have to gather all our financial information. It's scary and confusing.
That is why we're going to forget about the long-term stuff for right now! You know, all the retirement talk, well, that's way off. It is going to be important eventually, the brutal truth is we just need to focus on the near-term stuff for the moment. Until we take care of the day-to-day stuff, we'll just be spinning our wheels if we try to move on to the plans for years from now.
We need to break it down to more manageable parts.
First things first: Month-to-month money is king
The first part is the short-term things, otherwise known as the day-to-day or even month-to-month finances. That's the first bucket. The second bucket is the long-term stuff, like retirement and your children's education.
Is that simple enough? Two ideas. However, they are the two most important ideas you'll have when it comes to your finances.
So, how do I manage that first idea that we need to focus on?
Liquid To The Rescue
Our app, Liquid, only cares about your month-to-month money. We're not worried about the value of your house, your car, or your stock in your 401(k). You might have today's value, but it won't be the same when you're ready to sell and even if you do sell you have to get another one so you just shouldn't think about it.
We're only concerned with what you have minus what you owe. Let me be more specific: the "what you have" part is the stuff that is liquid (wink, wink), which is the money you can get your hands on, such as your checking account balance, plus what you'll be receiving in the current month like your paycheck. The "what you owe" part is your credit card balances you need to pay off, all your expenses coming due in the month, plus anything you're saving for to buy pretty soon, even somehting a few months away, like auto insurance.
The difference is what we call your Liquid Number, which is also known as your emergency fund. This money is what you'll have left when life gets in the way.
When your emergency fund gets excessive, then you take the excess out and put it towards that second idea it, otherwise know as the long-term investments. But first you have to make sure that you are never getting charge interesest on debt from credit cards or loans. Why? Well becasue the interest you make from your investments probably is less than what you are getting charged as interest from debt.
The Liquid App helps us stay prepared month-to-month and keep a solid emergency find. It's a joy to use every day for each transaction you have. You'll relish finally knowing how you are going to finish the month. Download Liquid now for iPhone and iPad.
So have you been confused on what to focus on with all the numbers and investing advice floating around? Let us know in the comments.