This blog post might seem redundant, repetitive or annoying to some but eye opening for others. I bet nearly everyone has most or all of these points before, but if you haven’t you’re in luck. I’m not looking to reinvent the wheel here as nothing I am saying is new or groundbreaking. I am hoping this can serve as a reminder or a quick eye opener for you to see if you are on the right track. If you use this information right, it has the potential to change your life and literally make your dreams come true. Corny I know. I cringed writing that but I truly believe these 5 tips to be spot-on and applicable to everyone.
1.) THE GOLDEN RULE – Spend less than you earn.
I know I’m banging my head against the wall with this one but it is astonishing how many people know this ‘Golden Rule’ but don’t follow it. In today’s age of credit cards, one-click shopping and intense consumer marketing, it’s easy to spend more than you have. You need discipline and common sense. Simple math says if you increase the gap between how much you earn and how much you spend, you will be able to purchase your ticket to financial freedom. Live below your means, it’s not that bad.
2.) MAKE MORE MONEY – If you want something, figure out how to expand your means enough to get it.
This is another obvious one to most people, yet how many people are actively pursuing this? Either they think it’s impossible with their current situation or are scared. There are plenty of ways to increase your income and I list what I think are the most important below:
· Education – Make yourself better. This doesn’t necessarily mean going back to school. We have this wonderful thing that is a source for pretty much EVERYTHING the human race knows. It’s called the internet and you can literally learn anything you want. Start reading up on things that interest you; take extra classes your employer offers to pay for. Make yourself indispensable to your employer to a point where they can’t let you go or you can write your own ticket, or take what you have learned and become an entrepreneur and be your own boss. You are never done learning. The world changes fast so keep up or get left behind.
· Side business – If you are passionate about something or have a good idea, why not take some time and turn it into a side business? In today’s economy, everything and anything can be monetized. Having multiple income streams not only will increase your current income, but it will act as a safety net just in case one of your income streams dries up (e.g., losing your job).
· Connect with people – Seriously, no one can do it alone. Whatever you do there will be someone helping you along the way in some way shape or form who, in return, might ask for your help. Don’t burn your bridges. You never know when there will be a new opportunity sitting right in front of your nose.
3.) LIVE FRUGALLY – This doesn’t mean being cheap…
· Maximize your money – Eat out less and cook more. Find ways to cut expenses. Spend some time researching a big (or small) purchase. Bike to work/school more often. Understand what you really need vs. things you want. When you really want something, take some time and see if you still want it in a week or if it was just an impulse. You know the difference between a good choice and a bad one, and every time you spend your money you are making a choice. Make sure they are the good ones.
· Your habits are killing your bank account- Distinguish between good and bad habits and find what gives you the most joy with the least impact on your wallet. Bad habits are hard to quit, whatever they may be. But in the long run you and your wallet will be happier with the result.
· Use a credit card as an asset – Most people I encounter use their credit card to frivolously spend on things their regular income stream(s) can’t cover. Use your credit card to your advantage by spending on stuff you would regularly buy and then paying it off EVERY month. There are tons of great rewards cards out there that help you rack up air miles, free groceries or gas. Take advantage of your credit card company and don’t let them take advantage of you!
· PRO TIP – Don’t make yourself miserable, balance your happiness with your financial success. You will never achieve a goal if you are not happy pursuing it, but sometimes the hard work is not the fun work. If you have an end goal in mind, it may not be easy to get there but if you are happy pursing your goal because you know it will change your life or get you to where you want, then it is worth it. Like our old friend Floyd Maywether always says “ALL WORK IS EASY WORK”.
· Here is another blog our team wrote outlining some tips on being a little more frugal with your hard earned cash.
4.) MANAGE YOUR MONEY – Sounds complicated but it’s not.
· Make a plan and set goals – Planning and goal setting does a lot for the psyche. It decreases worrying, keeps you accountable, lets you know where you stand and what steps are needed for you personally. It doesn’t matter what everyone else is doing, the only goal that matters is yours!
· Get out of debt – If you have debt pay it down first. There are odd cases where it’s not prudent to pay debt first, but 99% of the time, your debt has to be the first thing to go before you can start building.
· Build an emergency fund – A couple months of living expenses is generally the rule of thumb for this. You never know what will happen in the future and personally, my emergency fund has saved me more than once!
· Save early and with purpose – The earlier you start saving the easier things will be. Compounding is a beautiful thing, especially when you witness it first hand in your accounts. If you haven’t started seriously, get started NOW. Pay yourself first and make it automatic.
· Invest don’t speculate – Think of speculating as gambling and investing as making an educated well researched decision. Don’t gamble with your finances, make informed decisions and stick to them.
· Ask for help - If you are out of your element or need more info, get help from a professional. A lot of the time a financial advisor can help stand between you and a BIG mistake. Don’t know what questions to ask to find the perfect advisor for you? Check out our two-part blog that helps determine what you should be asking prospective advisors. Part 1/Part 2
· Review your progress and revaluate – This is often an important step that is overlooked. You have to consistently review your progress and make changes in order to reach your goals. If you don’t review your progress and plan, how are you going to know if it’s working? Take time to do this and you will see a clearer and closer finish line.
5.) TAKE MATTERS INTO YOUR OWN HANDS – If you are willing to make the sacrifices necessary to achieve it, you will.
It’s up to you. If you are waiting or hoping for something to happen, you might as well grab a chair and some popcorn because you are going to keep waiting. Either you have to change your outlook on your current lifestyle/situation or make a change to get the lifestyle you really want.
So in reality this is what it’s all about: Taking matters into your own hands and owning it.
Put yourself in the position to dictate your success and achieve your financial freedom. Notice I didn’t say get rich. It’s not about being rich! I have met many people that society would deem rich only to find out that they are the biggest slaves of all. They have no time, they don’t like what they are doing, they spend way more than they make and they are miserable. On the outside they look like they have it all but looks can be deceiving.
Money is a tool that can help provide freedom -- freedom from debt, freedom to do what you love, freedom to spend more time with your family and friends. You have to control your money and make it do what you want instead of letting it control you. Know that you might not have an easy start or journey, most people who are successful didn’t. That’s the part you don’t see. The failures, the hardship, the struggle. All we see is the success. Ask yourself what you really want from this life and work backwards to get it.
Prepare for the struggle and embrace the process on your road to financial freedom and personal success.
If you liked this blog check this out: Finance Myths: Debunked