photo from Google
We are not taught in any formal framework how to save money or grow money. There is a huge gap between saving and investing money, and both have their different roles to play in your life. And how you manage these two things can have big implications on your financial life. Saving money is the process of storing cash in a safe and different account, for a stipulated time, until when it is due to be used. However, investing money is the act of allocating resources usually money, with the expectations of generating income or profit in the future.
photo from Google
My inability to manage my money and the extravagant lifestyle i adopted in the past years before finding my balance, is what motivated me to write this article to relate with alot of people that were like me to help them find a financial balance in order to attain financial success. Ultimately, how we behave with money is deeply rooted in how we think about money. Most people don't know where the money they earn goes to, what percentage of your income goes towards food, transportation or clothes. A lot of people adopt lifestyles that their income doesn't support in the bid to look appealing to the society also called fake life, with time, their income will suffer as it will fail to be enough to keep funding the kind of lifestyle they adopted, and the fear of failing starts to creep in, the fear of not being able to maintain the lifestyle they adopted, the fear of loosing it all, in the end, they go broke, or they become dependent on others.
As we know, money is finite. And running out of cash, or going broke if you lost your primary source of income today, you wouldn't be able to maintain the lifestyle you have become accustomed to, because you have no assets to rely on. Going broke, for people with bad debts habits will typically go into debts, buying things their income won't support. They will go as far as borrowing money to purchase things that don't appreciate in value, they majorly go for things that depreciate in value, and most likely can't cover the cost of the debt over time. Debt can be a useful tool to attain financial success if utilized properly. Business minds and wise people use debt as a tool to leverage their investment and increase their cash flow, but shallow minds use debts to purchase things that will make rich people richer. People should only borrow to acquire assets that will appreciate in value in the future.
Photo from Google
In the world we live in today, alot of people are about living fake lives which is a fact, we see it on the internet and around us. Living a fake life is living beyond your means, which a lot of us are guilty about. We all want to look good and flashy, and most of us wants to be presumed rich, but the big question you should ask yourself is, ' is my income proportional to my spending'? 'do my account have to go red before I can maintain the life am living? Is my extravagance more than my necessities? All these questions needs to be put in check and deliberated on in managing your money and attaining financial success.
Here are the ways in which you can manage your money and also live a great life;
photo from Google
Track your expenses: Most people don't know where the money they earn goes to, what percentage goes to what. It is important to track your expenses, you need to become the TFO of your financial life, and take control of the income you earn presently, instead of waiting for your income to increase in the future before you learn how to manage your money.
Live within your means: living within your means implies that you spend less on your lifestyle. It means not going out of your purse to maintain your lifestyle. Live according to the income you earn. Instead of trying to keep up with the Kardashians and their life style, live within your means instead
Identify the spending triggers in your life: spending triggers in our lives might be our friends, family, our obsession over a certain material thing or even events. To treat this, think of the times you have been involved in the unnecessary spendings that is against your goals and plans you've set. Outline the things that triggers your spending, and device a means to avoid them.
Identify your core money values: if are struggling to get your money plan right, it is advisable to identify your core money values. Core money values are things that are mostly important in our lives. Most of us fail to identify our core money value, it's either we don't pay attention to them or find it difficult to pinpoint them. Failure to identify our core money values makes us spend our money on things that are less important leaving the important things unattended to, and at the end of the day, we are back to square one.
Don't wait for financial surprises: Not waiting for financial surprises means systematically saving towards emergencies. Emergencies can come up at anytime that requires fund. Advisably for an income earner, set aside some money monthly or weekly as you want it, you can call it ' Rainy day fund', separately from your bills and savings. And you have to be deliberate and intentional about it, so when you are being caught by emergencies unaware, you would have a cover without dipping into your personal purse or savings.
Invest in low-risk business: investing is another way to save our money, and also get profits or ROI. There is no business that doesn't suffers risk over time, however it is advisable to invest anyways, in order to secure the future. Investment can be either short-term or long-term, but look for a business with lower risk. To invest, you need to establish an investment goal, determine your risk profile, carefully pick an investment firm with no bad records on failed investments. Ultimately, don't invest in a business that you don't understand.
I hope these few steps will help people struggling to attain financial success like myself strike their balance.
Thanks for the read.