I always wonder why we shy away from talking about money. Yet, money is such an important topic not to pay attention to it. Its important to frankly talk about money because the decisions we make about money today will affect the quality of our lives tomorrow.
Unfortunately, majority of us are trapped in the comfort zone. The comfort zone of ‘hustling’ just a bit to make ends meet. As long as we have a job and a salary (however, meagre), we are cool – we can survive.
Our ambitions are limited by our comfort zones because we are afraid of the unknown or we simply don’t want to put in the time. While others are taking risks around us and making it in life, attaining financial freedom and independence – we are busy cheering them on. All the while hoping that one day a miracle will happen and release us from financial bondage. Well, wonder no more, here are a few financial tips to help you attain financial freedom:
- Spend Less Than You Earn. Never spend all the money that you earn. Keep your total living expenses and outgoing payments at no more than 80% of your take home pay. This gives you a cushion that you can use to implement a plan for future needs and even a few luxuries. If you are close to 80% or over already, review your finances to find areas that you can cut back, or look at ways to increase your income. Warren Buffet says: if you buy things you don’t need, soon you will sell things you need.
- Pay Yourself First. This means setting money aside for yourself to ensure that your future is secure. For instance, if you know you have challenges in handling money, one way to accomplish this is to arrange for your employer or bank to deduct a portion of your salary or income before you receive it. The deduction can then be deposited in a fixed account, investment group, Sacco or a project you plan to start or are already working on. You should aim for at least 10% and go higher if possible. In other words, don’t save what is left after spending, but spend what is left after saving.
- Needs First, Wants Later. Make a monthly budget for your needs only. This budget should include the basics such as food, rent, transport, and healthcare. You should consider entertainment and recreation, but give them a lower priority. This will help you separate mandatory expenses, you know the MUST HAVE’s and the GOOD to HAVEs, from discretionary income. It also allows you to figure out how much of your income is being directed towards things you want and luxuries. A good plan for optional things (wants) is to plan how to get them without decreasing the amount that you save or taking the money from everyday living expenses. Delaying the purchase of non-essential items also gives you time to decide if your money could be better spent in another way.
- Set Smart Financial Goals. Set goals for managing your finances. Create a roadmap for your future, so you will know where you are going and how long it will take to get there. Your financial goals should be specific and measurable. Do not just say you will cut expenses. Decide how much you can decrease one or two expense items.
Your goals should be achievable and realistic. If you want to buy a home, you need a plan for setting aside extra money to come up with the down payment. That might include doing odd jobs or seasonal work to reach your goal. Your goals should be timely. Set a date for them to happen. Even if you miss a milestone, here and there, you can get back on track by reviewing and revising your personal financial goals and strategies regularly.
Personal financial freedom and wealth creation doesn’t happen by chance. Its takes an acquisition of knowledge to know what to do. No one was born with the ultimate monopoly on financial knowledge. Remember your biggest enemy to financial independence is not government’s taxes, your boss or the devil, its ignorance – lack of knowledge. Decide today to start the journey towards financial freedom by acquiring knowledge. My people perish for lack of knowledge, the Good Book says.
I hope you consider joining LEMP 360° Course where you will be equipped, not only to attain financial freedom, but discover how to create wealth. We look forward to having you in the program.
Image Credit: budgetily.com