An often quoted saying about change is:
The more things change; the more they stay the same
That adage also especially applies to your personal finance. The foundational principles of personal finance has (and will always) work for anyone. You do not want to be creative with your personal finance when it comes to certain principles. Instead, you want to duplicate those success principles so that you will gain the same success others have attained before you.
Why would you want to innovate or change success? Consistency and persistency are admirable traits common to those who have attained a higher level of success.
Here are some success principles on personal finance that does not require complicated calculations or sophisticated degrees or knowledge. It requires common sense. By the way, common sense is an oxymoron these days since it is neither common nor does it make sense (or cents).
* You want to avoid credit cards or any other debt as much as possible. The borrower is always (and will always be) enslaved to the lender.
* You should never borrow from anyone especially relatives because it will change your relation to them from being a son or a brother (or a daughter or a sister) into a debtor and they will be your lender.
* You want to simplify your life by eliminating all debts.
* It is better to not owe any money than to have a zero percent loan or credit card.
* Get rid of the “stuff” fever. Stuff will accumulate and will go down in value as soon as you get that stuff.
* Never (ever) have any car payments. This includes leasing or fleecing. It is better to own a car and pay for the insurance and gas and maintenance.
* Practice the lost art of delayed gratification. Buy from a written list (e.g. grocery list, etc.) rather than your emotional impulse.
* Learn and practice to save at least 15% to 20% of your gross income by paying yourself first (before the mortgage, bills, etc.)
* The best things in life are free. Parks, walks, playgrounds, etc. are free and even more healthy than computers, video games, or movies.
* Cash is king. Credit will make you a pauper.
* Your best wealth building tool is your job or business income.
* You have to allocate your money very specifically or it will go away very generally.
* You should have at least a 24 or 48 hour moratorium on any purchase over $100. You want to let the emotions cool off before you buy.
* You should learn to give to charities. This will make you think of others rather than yourself. Giving is becoming a lost art.
* Spend all your money on paper (using a budget or expenditure plan) before you spend it.
* Never ever use credit cards again.
* Carry cash in your wallet. What is in your wallet? Cash.
Once you have determined and drawn your financial plan, there things you can do to make sure the plan works. It is not enough to just draw a budget and leave it at that, you are required to act on it to achieve financial freedom.
With your long term goals and short terms financial goals in place, you need to break down the plan on how you are going to spend you cash from day to day. By these I mean you stop spending your money on expensive clothes or going out so that you can be able to save for your dream house or car. Financial planning is about how you use your money each day. Have a budget that will prevent you from impulse buying.
Life is about the choices we make thus choose to stay at home with your family rather than go out with your friends for a drinking spree. It is this kind of spending that will delay or make you fail to achieve your financial goals. Some of these things, you can make a conscious decision to do avoid them for now and do them later once you have achieved financial freedom.
Idleness is what brings about this habit of overspending therefore get involved in more constructive activities which contribute towards your financial goals. You can buy a book that shares on how to implement a business strategy or teaches on financial planning tactics. Choose to go to school and advance your career thus avoid impulsive behavior that only lead to overspending.
To achieve financial freedom and fulfill your financial plan you need to be disciplined. Make conscious decisions that positively affect your financial goals. With dedication, determination and focus you can generate wealth thus personal finance success.
There are many advices out there on how to deal with and succeed in your personal finance. Just like your goals in physical fitness and other areas of your life, you have to have goals in order to succeed in your personal finance. What does it mean to succeed in your personal finance? Success in personal finance means different things for different people.
If you make a lot of money but have a lot of debt, then you will still struggle with your personal finance because you are not making the most out of the money you have. You will be like a bath tub full of water coming in but most of the water is going down the drain. The end result is that you do not have enough water to take a bath.
If you do not make a lot of money (compared to the meridian family income which varies from city to city) which for the sake of argument is less than $50,000 a year but you do not have a lot of debt or other expenditures. You will notice that you do not struggle financially because your income is suffice. Over a period of time, your accumulation of income will enable you to succeed financially.
After listening to many experts and even practicing many of their advices, there is one advice that allowed and enabled people to succeed in their personal finances. Here is that advice:
THE BORROWER IS SLAVE TO THE LENDER.
What does that mean? It means that if you owe money then you are always enslaved to the company or person you owe that money to. You will never get ahead financially if you owe more than you make. Your net worth is your asset minus your liabilities. In order to have more of a net worth, then you will need to have more accumulated financial assets than financial liabilities.
Most people will argue what can be called a financial asset. With the down turn in real estate, many of the properties have become a liability when they were once an asset. But, most people including those experts would agree that credit cards and loans (especially car loans) are a liability.
We have to eliminate those liabilities such as credit cards and car loans in order to not be financially enslaved.
Money is definitely not the most important thing in life. But, it is important enough that we have to pay attention to our liabilities by eliminating those liabilities in order to succeed in our personal finances.
The following list of personal finance secrets to avoid bad credit are a simple yet effective means of achieving personal finance success. This disciplined approach to personal finance will help you avoid bad credit and get you on track to wealth building. Some of you might already be following this advice without realizing it, for others, life’s distractions have led them to forget these common sense guidelines.
The personal finance secret to avoid bad credit and financial ruin is to create an accurate budget monthly. Wealth building is a journey and it is vital to this journey to know where you are to understand where you need to go. Successful wealth builders keep track of their money with meticulous precision, and this focus on your monthly income and expenses helps you maintain spending discipline. If your budget is currently too painful to consider, try not to worry, and keep track anyway, there is no avoiding this vital step towards wealth creation. Bad credit and financial ruin is often caused by life’s surprises, or poor planning or projections, a budget will help you be prepared for and limit these unexpected expenses.
The next personal finance secret to avoid bad credit diligently spend less than you earn. Don’t try to make the money game harder than it really is. Your income minus your expenses per month leaves you with your spending money. Evaluate the results of your budgeting, are you leaving enough money for savings and emergencies, and how much money are you spending on luxuries and treats. Prioritize your spending with a sober eye, if you are over budget, and cut out all spending that is unnecessary until you are spending less than you earn. Avoiding bad credit and creating wealth has much to do with delaying gratification, and avoiding impulse spending that cannot truly be afforded without adding a debt burden.
The next common sense secret of personal finance to avoid bad credit is to get rid of and avoid debt at all costs. The idea is to make paying off your outstanding debt burdens a primary focus. If you are carrying the extra weight of a car bill, house payments, student loans, and other financial instruments, you are not alone. The secret is to make paying these debts off your number one priority after food and shelter. Harness your energies and start gnawing away at your debts and make living debt free a goal that once achieved is maintained with religious fervor. These debts are like anchors over your shoulders that are slowing your wealth building progress. Shed them at all costs and promise yourself never again to return to debt spending. By paying off your debts, you are well on your way to building better credit and wealth.
The final common sense personal finance secret to avoid bad credit, is to accumulate an emergency fund, and only to spend it in an emergency. Emergency savings is essential to weathering life’s little unexpected disasters. Preparedness will help you to maintain your financial obligations and avoid bad credit with on time payments while you get back on your feet. A half years income in emergency savings is usually a good standard for an emergency fund, and these monies should not be touched unless absolutely necessary.