Pay-check: Manage for Financial Freedom

September 26, 2018



Financial freedom is normally seen as "if it were just for a few people", however the reality may be that you are simply not managing your pay-check correctly. 


According to experts, financial freedom does contribute for the happiness index, not to mention the motivation one has at work. In order to help you accomplish such state here goes some tips you can follow according to two perspectives: Jean Chatzky Way (an American financial journalist, author and motivational speaker) and the Jewish way (considered one of richest group of people in the world).


Jean Chatzky Way


Part of your income should be dedicated to housing – fixed costs such as rent, mortgage, home insurance, taxes, or expenses like maintenance costs. Jean Chatzky recommends putting aside 35% for housing.


Transportation, such as car payments, gas, insurance, and other types it is recommended to be spent a maximum of 20%.


You also should devote 10% - 15% each for repaying debts and saving money. An amount of 3% should be kept for medical expenses, 5% for clothing and no more than 10% for discretionary spending.


According to Chatzky one should budget no more than 65% to pay all the expenses leaving 25% for miscellaneous or flexible spending and 10% savings.


Jewish Way


Jewish people are considered one of the most successful and rich groups in the world, but how do they spend their money?


Their financial education actually starts when they are at a young age, and parents start teaching their kids these five principles:


Tithe – paying tithes is part of jewish religion worship; here, not everyone will tithe because not everyone is into tithing, since there are different spiritual paths and choices, but jewish tithing can be seen to others as discretionary spending (10% which you set aside to spend as you may wish).


Giving – 10% is for your neighbourhood if in need. One of the reasons this group of people is wealthy is because in case there is a situation in the community everyone has set aside an amount to help. In the case of a non-jewish, this can also be seen as charity, or helping friends that may be in need – the principle is here is the more you give, the more you receive. This can also be seen as discretionary spending for non-jewish, but having in mind giving back to society is in fact a good thing, as the more you give to society the more society gives back to you.


Savings – 10%  is normally kept away for emergency, including medical and other needs that may suddenly arise.


Investing – 20% should be set aside to invest, and this is the best strategy according to jews to compound power and increase wealth. The next step here is to study the best ways to invest.


Spending – this is the biggest part, 50% for daily spending including housing, food, utilities and transportation.


Although both ways seem very different from each other we can conclude that the largest amount, for both Jean Chatzky Way and the Jewish Way is the 50%-60% of daily spending, housing, food, etc. The rest should be managed to your benefit, either through religious beliefs of tithing and giving back to society or other type of spending. It is also agreed from both views that money should be set aside for saving and investing, and these are actually the keys to your future financial freedom.


Last but not the least, both views also agree that before investing one should pay off your debts, thus utilising either the total amount or part of the investment money to repay you debts.


Financial freedom is all about making your own financial plan. Sitting down, opening your laptop, or your notebook and planning your own monthly budget, setting up targets, and study the best ways to invest in your future.


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