10 Ways to Master Your Finances…
Consider these 10 primary areas of finance to be more adept at planning a solid financial future:
1. Planning your goals well
2. Living well within your means
3. Sharing your wealth
4. Rethink your spending patterns
5. Forget about the Joneses
6. Become frugal and cut out wastes
7. Manage your own money and investing
8. Discuss finances with your spouse
9. Get organized
10. Think about your future
Planning your goals well:
Be careful to plan goals that are realistic, while also challenging. Sometimes we need to re-evaluate our goals: Are they realistic, and are they really in line with our present way of thinking? Do they meet out future needs, or are they just adding luxury that really is un-needed? For example, while setting a goal to become a millionaire might be attractive, is it necessary in order to achieve a practical lifestyle that is fulfilling and rewarding? Most people can live a very rewarding lifestyle and never spend a lot of money. I have learned how to spend 3 months in Florida during the coldest months of winter for around $2,000. Maybe that is a good topic for a future article. Some wealthy people would spend that for one night’s stay at a fancy hotel where they spend most of their time asleep. How much sense does that make?
Living well within your means:
It is a wrong concept to believe that material things bring satisfaction and happiness. Things bring temporary satisfaction and happiness that last until the newness wears off, and then it is back to the usual, but what remains is the stress of paying for that new item. The reason why garage sales are so plentiful is that people buy a lot of junk that is later discarded. The difference in the way most wealthy people spend their money compared to poor people is they buy assets and the poor buy junk.
I was reading an article recently how this person was able to live on under $10,000 a year. He did it by buying and living in an RV. It included travel to many exotic locations that most with much higher salaries cannot afford. While most may not want to live in an RV, another alternative is buying a home of reasonable size in an older neighborhood and live within your means. I have lived in large homes and small homes and can truly say that either way had little to do with my state of content. Ironically, you can live below your means and still be happy but it is unlikely if you are trying to live above your means. Read my article, “How to live a stylish yet simple life.”
Do not misunderstand me: I am not talking about cutting your quality of life. I’m actually talking about increasing it by using better organization and being better at managing your finances. I don’t believe in cutting things that are essential to my quality of living. I don’t skimp on the quality of food I eat or doing the things that give me pleasure. It is those things don’t add quality to life but reduce it by enslaving you that is in consideration.
Sharing your wealth:
You don’t have to be wealthy to share your wealth. An often-overlooked way to achieve happiness is through giving to others who are less fortunate. The Bible states, “It is more blessed to give than to receive,” which simply means that you will be happier when you give something than when you get something. Designating a portion of your salary for benevolence is planning for meaning and purpose for your life.
Rethink your spending patterns:
For example, if your routine includes frequenting places that sell coffee for $4 to $6 a cup, you might need to rethink that and save the money for something more important. Most of us spend money needlessly on frivolous items, which are unneeded and add very little to our life. Take time to make a list of things you presently spend money on that you could do without or things that add very little to your enjoyment.
Forget about the Joneses:
It is always easy to find someone who is ahead of you in their material status, and it is easy to be envious and try to keep up with them. When you do think you are finally caught up to them, they refinance and put you back where you started.
Create your own personalized way of living your life and forget about everyone else. Set your goals to meet your needs not your wants. Be content with what you have; it is far above the world’s standard if you just have the basics of life. Oprah said, “If you aren’t happy with what you have now, you will never be happy.”
Become frugal and cut out wastes:
It is estimated that Americans waste 160 billion pounds of food each year. Often it is because food items are left and forgotten in the refrigerator until they expire. It is better to buy smaller portions more often than to waste. There is also a lot of waste from buying junk items on impulse and then discarding them later. Organization and discipline are the best way to deal with waste. Being frugal in the way you spend means looking for a better price, or better deals, or what serves your needs rather than impulsively buying things that you don’t need.
Manage your own money and investing:
There is no shortage of celebrities who have entrusted their finances and investments to others and have wound up broke or with great loss. I recently went against my own rule of managing my personal finances and allowed a broker friend to advise me. This was before the collapse of the economy. I saw what was about to happen and called him and asked if we should transfer an investment of mine into something safer. He said, “Naw it will be all right; it is better to ride it out.” My mistake for listening to him instead of following my own intuition cost me thousands.
Learn for yourself about finances and investing and manage your own; never trust others to do with your money what is in your best interest. Many times, they are more interested in their own firm and self gain than they are yours.
Discuss finances with your spouse:
The number one problem in marriages is the finances. Couples think that finances are a hot button, better left alone, so it winds up in some cases costing the marriage. Don’t hesitate to discuss finances with your mate and make plans together on how to best budget, save and invest. It could save your marriage, and it will certainly save you a lot of pain in the future.
Get organized:
Lack of organizations is often a determining factor in the fall of giant corporations. It is also a primary reason why individuals are in poor financial state. Organization is as simple as keeping track of things such as spending, saving and investing. Start a systematic saving and investment plan through an automatic deposit or investment if available at your work. Having a pre-arranged amount deducted from your income before you’re paid or arranging with your bank to deposit a certain amount into savings automatically at certain designated times is the smart way to organize your finances. Keeping good records is another. I ran across a good suggestion recently for keeping good records by using a three ring binder, a new one for each year. All of the receipts and all other routine documents can be kept in the binder in plastic pockets, also you can make notes of things you need to change or accomplish. Important documents should be placed in one location. I recommend a fireproof, lockable file box, safe, or a lockbox at the bank.
Think about your future:
Planning your own financial future is up to you; no one else is going to do it for you. You don’t have to plan to be rich, but you do need plans to have an adequate amount when you retire, enough to meet your financial needs. For example, if you are 40 now, you need to take into account what you will need and how much it will cost to live when you reach 65. Most people fail to include inflation when planning their future financial needs. Financial institutions like Transamerica, Fidelity, T. Rowe and Price, Ameritrade, along with others, can calculate for you what you financial needs are likely to be when you retire. You can also use free calculators from www.Bankrate.com.
If you don’t plan well now for retirement, then you can plan on working for the rest of your life, and I know some that are in that situation now.
Planning for your future is about being financially free when retirement comes, and most people by that time are anything but financially free; in fact the statistics are dismal to say the least. Here’s how it stacks up:
Of those reaching 65 and retirement age:
- 1% will be wealthy
- 4%will have financial freedom
- 41% will continue to have to work
- 54% will be broke
(Statistics taken from the article, “10 Money Principles for Financial Freedom” by Jimmie Burroughs)
From the same article above,” 85% of people over 65 could not write a check for $600 above their monthly living expenses because they simply do not have the money. Wow! That means that only 15% are anywhere near financial freedom. The reason this happens is that people do not discipline themselves to save when they are young and continue throughout their lives.”
Planning isn’t that hard: By just saving $1,000, a year and investing it wisely could make you a millionaire by the time you are 65 if you begin at age 25, and that is a lot better than broke at 65. Save $3,000, a year, invest it wisely and you will have $5.8 million at retirement if you start at age 25 and continue until 65. This, of course, is based on how well your investments do and how well you invest.
Conclusion:
I would be remiss if I didn’t add that planning for your material future is only part of planning for a sound future. More important than the material is the spiritual. To be complete in both the material realm and the spiritual brings all of life into perspective and supplies not only security but also meaning and purpose. If you are interested in your spiritual well-being, take time to learn how to have a spiritual connection with God.
About the author: Jimmie Burroughs is a motivational speaker and author who’s been involved in teaching Christian Personal Development for more than 30 years. He is a dedicated believer in Jesus Christ and considers helping others his calling in life. His websites contains over 600 articles on preparing yourself for success and better living through personal development.
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