Happy New Year! It’s 2016 and it’s time to plan and build your prosperity for this year. And I think it is important to start by taking care of your money. Hot topic, isn’t it?
What I have discovered over the past 3 years is that I used to have a bad relationship with money. No wonder since I grew up in a family who thought that “money doesn’t grow on trees”, that “you have to save for rainy days”, “we can’t afford this”, “you have to work hard to earn some money”, “it’s very hard to make a living being self-employed”.
Does any of these messages resonate with you? I bet it does.
However, what really changed my attitude and thoughts about money was realising that no money management and investing tip or rule will work unless I changed your mindset about money.
Here are some of the best personal finance tips we’ve learned and that I think everyone should learn or relearn.
Create a budget
A budget helps you figure out where your money should go; without one (or without tracking it), you might find yourself thinking that money is just disappearing from you bank account. Personally, I’m using a budgeting method I have learned from T.H. Eker (By T. Harv Eker – Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth)and that has really changed my relationship with money. Thanks to this approach, I’m really taking control of my spending and my investing.
It consists in dividing your income as follows:
55% for necessities (bills, rent, mortgage, ecc.)
10% for long term investment (this is money you should never touch)
10% education (for seminar, courses, coaching, mastermind programs,etc.)
10% for play (dinners out, cinema, theatre, travel… I’m sure you know pretty well how you like to enjoy and treat yourself)
5% charity (helping others expands your prosperity, it’s true I can assure you!)
2. Spend less than you earn, or earn more than you spend (same thing, but different perspective)
This is one of the personal finance basics that everyone should remember:you need to have a gap between your income and your spending, and what your earn should be more than what you spend.
“Earn more than you spend” places the emphasis on the earning end of the formula. We want to get rich gradually and consistently, not live poor comfortably. And for this we need to make enough money so that our surpluses can actually get us rich.
3. Money CAN buy happiness
While true happiness may be something that can only be found in your heart, there are ways money can actually buy you some happiness here and there.
You can use your money for buying time for yourself, for example. Paying somebody else to do things that you don’t like to do or that take a considerable amount of your time, can make you happy, more relaxed and free to spend time on things that really matter to you or that you enjoy or are particularly good at.
Hiring a house cleaner or a virtual assistant are good ways to spend your money for your happiness.
4. The earlier you start saving, the better
This is something we probably all intuitively know, but it’s not until you witness the power of compounding and how time is your most powerful asset that you realize, hell, I should’ve started saving yesterday (or last year or 20 years ago). According to Warren Buffet, not making a habit of saving early is the biggest money mistake people make.
I’ve just finished reading “The One Minute Millionaire” by Mark Victor Hansen and Robert Allen (The One Minute Millionaire by Hansen, Mark Victor, Allen, Robert [31 October 2002]) where they show that if one starts saving and investing 1 dollar a day from the day of birth, by the time one retires, thanks to the power of compounding, this person is a billionaire. This is only 30 dollars a month! Honestly, I wish I had this knowledge 30 years ago….
5. Don’t let others manage your money
Nothing stays the same in this world and your financial situation will change and keep changing too. The financial environment will also keep fluctuating. You must stay on top of this by being open to new advice and regularly challenging your money beliefs. Other peoples’ experiences can help too. Keep learning about money and don’t let others decide on your behalf: treat your money well, and it will reward you.
Now it’s your turn. What are your money habits? Are you taking care of your money?
Remember to share as much detail as possible in your comments: many people come here every week for inspiration and advice, so I encourage you share your thoughts. Your experience and insights may inspire and trigger a meaningful change for someone else. And if you have someone in your life who could benefit from this article, share this post with them – they’ll thank you for it 😉
Thank you for reading, whatching and sharing
To your success and prosperity
P.S. If you’d like help making the mindset shifts necessary to earn more than you spend, turn your idea into a profitable business, find and be found by the right clients – I’m here to help.
Simply, click here to book in a call.
(Image Credit: lifehacker.com)