Whether you’re newly employed or a seasoned professional, you must control your money.
If your goal is financial freedom or wealth, and if you don’t start, how can it happen? Wealth building starts in your mind and requires a plan. Many times we talk a big game and dream of millions of dollars in the bank, nice cars and a beautiful home. But why doesn’t it happen. After dreaming about it, it is now time for the call to action and work toward it.
Why is this true?
The U.S Census Bureau and the Social Security Administration conducted a survey. They discovered only 9 out of 100 Americans are financially successful in retirement. Financial success is measured as an annual retirement income of at least $65,000. 66% of the population exists on $14,000 to $65,000 per year. Many of us are not controlling our money. The money is controlling us. We seem to live in a ‘here in now’ mentality. One in which we don’t prepare for tomorrow. All wants and desires must be fulfilled as soon as possible. Tomorrow can wait. “I’ve got time. Let me enjoy my life”. Unfortunately when tomorrow comes, we are ill prepared. That time of enjoyment never stopped or even slowed down. As they say, “let the good times roll.”
When times are good we tend to think they will always be good. But when times are bad, sure we buckle down. But as soon as things improve, we revert to habits that don’t prepare us for the next downturn.
How to fix this?
Live on 90% of your paycheck and save the remaining 10%. Start this as soon as possible. Is it really that difficult to achieve? Think about this; if your take home pay is $4,000 a month, how hard would it be to save $400 each month (10%)? Can you exist on $3,600 of the $4,000 each month? Instead of buying the 65 inch television, will you purchase the 60 inch and save the difference? Or can you wait an additional year, while the price drops. The 65 inch is now the price of last year’s 60 inch. The picture is just as beautiful.
Use the ‘Golden Rule’ of paying yourself first. Saving is paying yourself for the hard work you did. Simply spending it leaves little trail of the work you’ve done and is easily forgotten in time. Savings can build a legacy.
When you are able to achieve this, then work toward living on 80% and saving 20%. To many, it may be surprising that it is actually not that hard to do. Many will find the 10% they save could come out of their disposable income. This is typically money spent eating out, buying sprees or ‘must-haves’ that truly aren’t. Once this is implemented and formed as a habit, it seems only a natural part of life. This is because, no differently than the farmer whom stores grains for the winter, or the businessman whom maintains cash reserves, backing up your computer files, a second pair of black pumps, there must always be ‘just in case’ moneys to overcome the bumps in the road or possible loss.
Saving money becomes habit forming and quite joyous as you see it grow into something substantial. You’ll find yourself seeking new ways to increase its growth more quickly.
Savings begins to open up a new world for you. Debt control is much easier. High credit ratings and thus offers to put you back in debt increase. The latter is not a good thing, just a note of warning. But more importantly, better financial situations come your way. Typically discounted because you can afford it and they know it. A little secret, the wealthy typically don’t pay full price because they have more options where they put their money. Offers for their money must be incentivized, thus discounted. These discounts are normally in lower interest rates or greater returns on value, which helps their money grow more quickly. These benefits are not provided to the less endowed.
Revisit your paycheck. This is the foundation for control. Divide and conquer your spending. Divide your paycheck in to categories or allocations. Set spending limits for each category.
Lastly save, then save some more. If you still feel you can’t save in your current situation, review your cellphone, gas, electrical services, etc. Eliminate things you don’t need, including things that can wait. Money manage as required. Perhaps a second means of income. This can include internet work which can be done on you own schedule. That money can be designated as savings. Let it grow. Then move it into an interest bearing account.
Every dollar saved can lead toward thousands of dollars later. True wealth is self-generated. It indicates the mind, body and spirit came to together to bring you forth to a new world of peace.