By Goke Ilesanmi
Let me first ask you this question. Are you nervous about your personal finances? Will your savings and investments be able to meet your retirement needs, children’s school fees and other goals? Although no one can see the future, there are things that you can do to reduce your worries. Research shows that most people are only a little amount of money a month away from financial success or empowerment Financial success or freedom is not about millions of naira in the bank, but simply about generating investment income that exceeds your cost of living. Once you are there, you are financially free.
Thelma Coleman, a personal finance expert says as we mature into adulthood, the whole process of growing up and making a life of our own entail a great deal of new responsibility. Nobody wants to deal with the chores of daily living, among the most dreaded and overlooked being management of one’s finances. We all love money, that is what we all work so hard for, to earn money and save and spend it as we like. In Coleman’s words, “Unfortunately, earning money also entails keeping track of your expenditures in order to be fully aware of how much money you have to spend, and how much you’ve socked away for the future or a ‘rainy day’.”
Financial freedom means that you no longer have to work for money. Rather, it is money working for you. According to Van Tharp, D. Barton, Jr and Steve Sjuggerud, financial and stock investing experts and co-authors of “Safe Strategies for Financial Freedom, “Imagine that you never have to work again in your life. If you do choose to work, all the extra money that comes in is used to improve your lifestyle and help those you care about. You take two month-long vacations each year. You even have a list of places you want to visit – exotic places around the world that most people will never get to see. You are now free to spend most of your time doing the things you love to do. You spend at least 30 hours per week on your hobbies.”
The amazing part is that your new hobby will bring you much more money than you ever made while you were working many hours per week on paid employment. All it takes a slight in the way you think about money to achieve financial freedom.
Discovery and enlightenment
People have been brainwashed to think that they need millions of naira or dollars to be financially free. This is not true. It is also noteworthy that financial freedom is not just a goal for the rich, and you do not need to be a genius to achieve it. All you need to do is look at how much money you require to live comfortably. Then find ways to bring in that money from investments that work for you rather than for you working for money. When you have this passive income every month, you are financially free.
Procedure for prudence
Coleman educates that every time you earn money and deposit it in your account, write it down in your chequebook ledger. This financial consultant says if it makes it easier, buy a separate ledger and use. “Also take an envelope and set it aside for receipts you get when you use your bank debit card to withdraw funds (or make a purchase) so you can calculate your account balance as accurately as possible,” adds Coleman.
The same goes for other forms of spending you do. Make it a point of writing everything down. If you forget even a single item, it can result in undue time and effort trying to reconstruct these expenses from memory or to get the information from your bank. Experts advise that you might do well to make a habit of saving every receipt, so that you always know that between your ledger and your receipts you have everything you need – even if you forgot to record something. But this must become habit or you will only end up frustrating yourself even more.
To achieve financial empowerment, you need to learn and become more skilled in financial matters. The best way to improve your financial education is to read personal-finance magazines, books, and even newspapers. The educational materials sent out by mutual-fund companies and brokerages are also valuable. You may come across conflicting information and advice, but if you read wide, you will eventually get a better idea of how to manage your money.
John Miller, an expert in how to earn multiple streams of Internet income says, “Do-it-yourselfers are not the only people who can benefit from learning more. If you use a financial planner and yet are knowledgeable about investments, insurance, etc., you are more likely to end up with a solid financial plan. If you find yourself teamed up with an inadequate or unethical adviser, and you have a good understanding of investing, you are more likely to recognise bad advice.”
Saving a portion of your income every month is a timeless practice that will lay the foundation for your financial freedom. How you put these monthly savings to work determines how fast you can achieve financial success. In fact, you have to think like a financially-free person before you can become one. Your goal is to start (or continue) saving to build your asset base.
Another thing to do to achieve financial empowerment is to engage in stock investing. There is the likelihood of times being very tough for stocks, but not for you if you are knowledgeable in this area. Tharp, Barton, Jr and Sjuggerud submit that generally, the market will tell you when it has corrected sufficiently because it will go down to normal values (or below). “And those normal values will be your guide to when to go back into the market to buy stocks for the long term. We can judge these normal values by two factors – the price-to-earnings ratio of stocks and the dividends that stocks pay. Many investors judge the value of a stock by the ratio of its earnings. This is called the price-earnings (P/E) ratio. For example, a company that earns $1 per share and sells at $15 per share would have a price-to-earnings ratio of 15,” educate these authors.
Research shows that another thing to do about financial worries is to be courageous, especially that fear creates worry. Gordon Gecko (Michael Douglas) asserts that “Greed is good!” Recent investment losses, corporate scandals, and a stagnant economy refute this statement. Instead, a warning is emerging in personal finance fora as we search and hope for indications that relief is in sight.
Fear is bad! Fear has driven many investors either to dump stocks and load up on bonds, certificates of deposit and other conservative investments or, even worse, to stop saving and investing. This creates new problems. Miller says people will be incapable of achieving their long-term financial goals because their portfolio may now be so conservative that it will not deliver the returns needed to retire in comfort, or they are simply saving too little. “Faced with this fear and uncertainty, financial knowledge is more important than ever. Instead of reacting to the market’s ups and downs, learn more about the characteristics of stocks, bonds, and other investments; as well as the broad array of personal finance and money management topics,” advises this financial expert.
Managing low income
Experts say if you struggle from week to week trying to make ends meet, or are consistently going without things that you really wish you could afford, there are some possible and practical solutions to your dilemma. There are many ideas that you could adopt to help your hard-earned money buy more than you could before. Do you take your lunch to work? You will save a lot of money, if you pack it yourself. Make it interesting so you are not tempted to go and buy something else. Make your lunchbox food, and that of your children, rather than buying stuff. If you add up the costs of bought biscuits, cakes, etc, you will realise these can be a huge saving, and considerably better for you. It is just a training and prioritising exercise, you can do it if you really want to save the money.
According to Mandy Nield, an authority on investing, “Menu planning is a great way I’ve found to reduce my weekly shopping bill. Menu planning involves deciding at the start of the week what you’ll eat EVERY night (and day) that week. Include a couple of pasta dishes or cheapies like tuna mornay or whatever. Determine what ingredients you’ll need for all these meals and then only shop for those items. You’ll find you won’t have the waste and you won’t buy ‘on the spur of the moment’ items. If you put your mind to it, I’m sure you could come up with heaps more ideas of HOW you could make your income go further.”
Nield educates that if you have your belt pulled in as tightly as you can, and you really cannot find any area of your life that you could spend less, then perhaps you can try and increase your income. “I don’t mean ask your boss for a pay rise either. There are many ideas of earning extra income at home, e.g. home-based business ideas or running your own internet business. Both of these ideas are cheap and easy to start up, you just have to know how and where,” adds this expert.
Nield says based on personal experience, investing in real estate, particularly real estate with a POSITIVE CASH FLOW, is the best and most secure way to get ahead and stay ahead. “Before you think ‘I can’t do that, only the rich can invest in property,’ then I want to tell you that ‘ANYONE CAN INVEST in POSITIVE CASH FLOW property.’ You just have to know how. Before you go investing in real estate, I’d encourage you to get educated so that you really know what you’re doing. If it’s not done properly, it could be expensive, but if it’s done correctly, then it will set you up for the rest of your life,” educates this investing authority.
Improving your income
We all want to improve our income, be it our salary or business profits. The following are some ways experts say you can achieve this goal. First and foremost, you need to figure out what you want, and do not settle for anything less without a struggle. Build a fortress around your desires. Figure out how you want it. Figure out how you are going to get it. According to Gordon Goh, author of the free, informative website Simply Motivation offering quality useful tips for motivation, “The difference between an achiever and a super-achiever is that the super-achiever gets out of his comfort zone and tackles the tough stuff. Modest achiever attempts to survive on their reputation. Learn from people who have done it before. Those people always set high goals and achieve for themselves.”
Another thing experts suggest you can do is to have focus. Do as you plan and do not let anybody steal your day. People can steal your day with their negative emotions, and sometimes they do not even know that they are doing this. Gravity is always there, and pulls you up through strong focus. Focus on the most profitable activity.
It is noteworthy that saving more money or earning more income on its own is not going to make you any wealthier. It is what you do with those savings or extra earnings that will set you apart from the normal and help you get ahead in life. Achieving financial freedom through income management requires a good dose of financial discipline, education and determination. You can achieve it.
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GOKE ILESANMI, Managing Consultant/CEO of Gokmar Communication Consulting, is an International Platinum Columnist, Certified Public Speaker/MC, Communication Specialist, Motivational Speaker and Career Management Coach. He is also a Book Reviewer, Biographer and Editorial Consultant.
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