New Year, New Life, New Start… on Personal Finance
This year is another opportunity for us to “get it right.” This is our chance to start fresh — with a positive attitude — and open our arms and hearts to the possibilities of new beginnings. And it all boils down with our personal finance.
The hardest part of personal finance is just having the courage to take that first step. Want to know more? Letʼs go.
Idea #1: Spend Less Than You Earn!
Example:
Daily Allowance – P200.00
Less: Daily expenditure – 150.00
Result HAPPINESS P 50.00
Daily Allowance – P200.00
Less: Daily expenditure – 220.00
Result MISERY (P20.00)
It is easy to see it when you look at each side of the coin.
Let us say your daily school allowance is P200.00 and you spend P220.00 a day. That extra P20.00 has to be borrowed, often from your friends or classmates. The following day, in order to maintain your lifestyle, you still spend P20.00 a day more than your P200 school allowance, leaving you a total of P40.00 in the hole. The debt builds – it keeps growing and growing and growing until that debt is eating up your entire daily budget, leaving you in misery.
On the other hand, letʼs say you only spend P150.00 a day. That extra P50.00 goes into your savings account and earns 3% or P1.50. The next day, you drop another P50.00 in the account and now you have P101.50 in there. That money builds up and soon you have the seed money to start the small business of your dreams – or even something as simple as the ability to easily pay for a computer repair without your heart skipping a beat.
There are two avenues to achieving this goal: spending less and earning more. By working on either (or both) of these areas, you can increase the gap between those two numbers – and that gap is your ticket to freedom. The harder you work on either spending less or earning more, the bigger that gap will become and the quicker that train to your dreams will arrive at the station. Letʼs always look at each side of that coin.
Idea #2: Earn More!
It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.
– Warren Buffett
So how does one earn more? Many people will argue that there is no universal way for people to earn more money, and they’re right: some people are born entrepreneurs; others function much better in an office environment. Some people are endlessly creative; others are masters at completing long lists of tasks.
Get Educated
This doesn’t mean drop out and go back to school. It merely means to keep learning new things. If something interests you, read a book about it. Take evening classes to get certification in a certain area or get a masters’ degree. No matter what you’re doing, there’s some way you can learn more and improve yourself.
Develop More Income Streams
Always be on the lookout for ways to have money rolling into your pocket from a lot of different places. Maybe youʼre a good writer and can sell a short story or an online ebook. Having more income streams merely means that losing one of them (like your job) is less devastating in your life and it also means your overall income for now will go up.
Start a Side Business
Instead of burning a few hours in front of the television each evening, how about investing at least part of that time into starting a side business? You can try starting a blog with a few ads on it, or maybe youʼre good with woodworking and can make deck furniture. There are lots of possibilities out there for starting a business that will supplement your current income and perhaps eventually grow into your main income.
Move Towards Your Passions
Whenever the opportunity presents itself, gravitate towards the things that really excite you, because passion is what will make you successful. Whatever really excites you and makes you want to do more and more and more and better and better and better, that’s what you need to move towards at all times.
Donʼt Burn Bridges
You never know when a relationship youʼve forged in your past might come in handy later on, even the ones you completely donʼt expect. Thus, even if you feel wronged in a situation or want “revenge” on some people – or even if you just feel an urge to spread negative gossip – resist it. As you get older, youʼll find yourself time and time again bumping into people that you forged relationships with earlier on – if you burned those bridges, youʼll find that eventually youʼll have burnt that very bridge that you need to cross to get ahead. My advice? Never spread a negative word about anyone, because it never helps.
Keep in Touch
When you do build a bridge with someone, donʼt let it get old and worn out – spend the time to keep in touch with that person. Shoot them an email or a phone call every once in a while just to see what theyʼre up to. When itʼs clear they need help and you can easily provide it, always provide it. There is book entitled “Never Eat Alone” by Keith Ferrazzi and it provided tons of tips on how (and why) to keep contact with people.
Idea #3: Live Frugal!
Industry, perseverance, and frugality make fortune yield. -Benjamin Franklin
For a lot of people, frugality is a nine letter word for cheap. They think of people doing stuff like buying cartloads of generic products, wearing patched clothing, driving a rusted-out old vehicle, and other such things that it’s easy to look down your nose at.
Here’s a secret: those frugal people that you look down your nose at often have a mountain of cash in the bank (not always, of course, but more often than you think). They’re not drowning in a mortgage; they’re not making payments on a five figure credit card debt. They’re not working to death on the weekends or drowning an ulcer…They’re living their life according to their own rules.
The best part is that we can all apply some of those same rules in our own life. Here’s what you can do to start reducing that spending.
Maximize Every Peso
Every time you spend money, you make a decision. You decide that whatever you’re giving that peso for is worth it, and thus you make the exchange. The real key to spending less is to raise that definition of what a peso is worth. Here are some great tactics for reducing your spending and saving more money.
- Turn off the television.
- Turn a critical eye to your “collections.” Most people collect something – what do you collect? Is it something that consistently brings you joy? Or is it something that you just do out of habit at this point? Focus on trimming the things you don’t feel strongly about.
- Master the thirty day rule. Whenever you’re considering making an unnecessary purchase wait thirty days and then ask yourself if you still want that item. Quite often, you’ll find that the urge to buy has passed and you’ll have saved yourself some money by simply waiting.
- Write a list before you go shopping – and stick to it.
- Invite friends over instead of going out. Almost every activity at home is less expensive than going out. Invite some friends over and have a cookout or a potluck
- Clean out your closet. Go through your closets and try to get rid of some of the stuff in there. You can have a yard sale with it, take it to a consignment shop.
- Cut back on the convenience foods – fast foods, microwave meals, and so on.
- Give up expensive habits, like cigarettes, alcohol, and drugs.
- Be diligent about turning off lights before you leave.
- Swap books, music, and DVDs cheaply on the internet.
- Buy products based on reliability, not what’s cheapest at the store.
Idea #4: Control Your Own Destiny!
Freedom is not merely the opportunity to do as one pleases; neither is it merely the opportunity to choose between set alternatives. Freedom is, first of all, the chance to formulate the available choices, to argue over them and then, the opportunity to choose. -C. Wright Mills
Most people see the goal of all of this as being rich. Here’s the secret: it’s not about being rich. Having a big net worth is just an indicator of what this whole process is really about.
It’s all about freedom. Freedom from debt. Freedom from supervisors telling us what to do. Freedom to spend the time to do things right. Freedom to try out new things and follow our interests. Freedom to sleep until eleven one day, then stay up until two in the morning working on what we’re passionate about.
That’s what most people really want – I know that’s certainly what I want. Having a big bank account just means that I’m not beholden to others. I can follow my passions and dreams wherever they take me. If my job is not satisfying to me, I’m no longer tied to that paycheck – I can just get up and walk away. I can do whatever makes me happy and avoid most of what makes me sad, without regrets or worries.
It might be a bit unpleasant to substitute a Starbucks latte for a homemade cup of Juan, but compared to that, how can little things possibly compare? It’s a lot of hard work to climb that mountain, but the air up there is the sweetest thing that there is.
Reference: http://www.thesimpledollar.com
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