Money that comes your way through inheritance or even through tracking lost policies can be most gratifying. It can be a surprise or the successful result of a long search and high expectation. However, the most satisfying and intelligent way to gain money is to make your own.
You only earn a salary? And you therefore never have anything left by the 10th of the month? How often do we hear that story…and it doesn’t seem to matter whether the salary is large or small, the cry of frustration might be the same. This is because some fundamental actions are patently ignored – and cognisance of them might just change your life, no matter what you earn.
The basics of money management
And no yawning…yes, you’ve heard it all before, but with money the rules don’t change. Cash, investment and wealth building have always operated in the same way, so nobody can claim they didn’t know, or they were ‘done down’ in some way. Money is always fair in the eternal constraints of canny knowledge and compound interest.
Budget: For many people this basic money principle sounds tedious, and they can’t be bothered. Keeping track of what you have and what you spend can also be constricting because the first thing you may discover is that you are living beyond your means. For a short time each month, you should check your finances and follow some limitations. Measure that small effort against endless struggle – and it’s a no brainer. So do it. Reconcile income with expenditure. This way you will be able to judge what you can do without, and how much you might be able to save.
The left-over money: What will you do with this? So many people assume that it’s money to burn, and give themselves little presents of enjoyment every month. Change this thinking by initially taking just half of that money and putting it away in a good investment account recommended by a professional financial advisor. As this money grows, the success will motivate you to push the savings higher as time goes by or as you receive any increase in earnings. Try it. You may just surprise yourself.
Track your spending: Small purchases add up quickly. Be aware of what you are spending and where you might be overstepping your limit set in your budget. We often spend without taking cognisance of money disappearing in small bits. It’s a good idea to save your receipts and write your purchases in a spending journal. This way you can balance up with your budget and maybe compensate the next month. And avoid credit cards if you can. Use a debit card instead where you know what your limit is, and you can’t overspend.
Don’t buy what you can’t afford – and don’t take out loans to do this: In other words, don’t commit to extra monthly bills. Rather wait and save until you can purchase the item. Learn to delay gratification. Just because your income and credit qualify you for a certain loan, doesn’t mean you should take it. And that goes for opening accounts. Once you do this, the impetus to buy on credit blossoms, and very soon you find yourself under pressure at the end of each month.
Save regularly: Deposit money regularly into a savings or investment account. Use a debit order system to make sure you don’t forget and the amounts are consistent. Saving is not a luxury or a chore, it’s a necessity if you want to build wealth in any way. And the amount you begin with doesn’t matter – what matters is that you begin.
Building wealth is mindset
- Money is not finite. That is often the biggest mistake we can make, when we think other people have more and therefore we will always be stuck with less. In fact, if you put your mind to it, you can make as much money as you like. But it does take focus and hard work. If you feel stressed about money or negative, you are unlikely to make any. Think about being successful and having an abundance.
- Don’t believe there are limits to how much money you can make. The amount of money you can make is limitless once you learn how to make, keep, and multiply your money. Does that sound fantastical? No, it isn’t. Money is often simply related to the way you think.
- Learn to manage your money as early as possible. Maybe with that very first pay-check. People who get into debt have never learned to manage the flow of their money, never developed the focus and motivation to work within their limits, while at the same time growing their investments.
- The purpose of money is what you make it. If you think it is just something to be spent – in other words the more you have the more you must spend, you’re missing the point of money. Money’s biggest purpose is to work. It works in several ways: spending; saving; investment; donating.
- Money must move and engage creatively to remain viable. Investments reflect money constantly moving – and this drives economies. If everyone spent all their money and left nothing for investments, the economy would collapse. What you spend and what you save, are vital functions of money. And the more you understand this, the more adept you will become in managing your money.
- Never spend more than you earn; always save, always budget. Spent money is ‘gone money’. It’s also expensive because that money is lost to the returns you could have made had you invested it.
- On the other hand, spending money should be part of life. And you should enjoy your money. But if you have planned well, budgeted wisely, then you won’t feel guilty about spending an allotted amount each month. Money must make you feel good, but then so must the savings you put aside. Savings should not become a restriction or a noose around your neck. In the beginning you may have to really bite the bullet, but eventually you will be in charge of your money and how it is growing.
- Watching your money grow is great for your mindset. Saving should become a habit, because that too is a good feeling. Hone your skills and your knowledge all the time. Never stop learning. And look for advice from people already well set in their finances.
- Learn everything you can about investing – because that’s where the true money growth systems can be found. Keep it simple, and keep to proven strategies: property, index funds, and intellectual property. Don’t chase trends, keep to long-term, proven investment vehicles.
Check your policies, check your life
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With Verifi you are able, for no charge, to access information on all your life and investment policies at a glance. You are able to check the types of policies you have, the names of the insurance companies providing the cover, the nature and extent of the insurance cover provided – and other vitally important information such as the details on your policies being correct.
To find out more, please visit: www.verifi.co.za