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“If money be not thy servant, it will be thy master. The covetous man cannot so properly be said to possess wealth, as that may be said to possess him.” -Francis Bacon
Money. Some of us love it, some of us loathe it and all of us need it in some capacity to live our lives. Whatever your goals are when it comes to creating a simply luxurious life, the good news when it comes to mastering our finances, as Jean Chatzky reminds us in her book The Difference: How Anyone Can Prosper in Even the Toughest Times, is that you is we do not need to be born rich, have attended an Ivy League college, received a windfall of money out of the blue, caught a lucky break or bring home a six figure salary.
With these 12 basic tips, I assure you financial mastery is indeed possible. After all, refusing to let money master you will allow you to sleep soundly knowing your financial house is in order, so that you can go about the business of living the life of your dreams.
1. Save Regularly
As I mentioned in this post, create three different accounts for savings – retirement, emergency and dreams/goals. Get into the habit (automation is extremely helpful) of putting away a certain amount of money each month into each of the accounts. No matter how small (you can always increase the amount as you are able), save regularly.
2. Sleep on it Before You Splurge
Anytime you are about to make a large purchase or investment – car, wardrobe, home, business, etc – do your stress level a favor and sleep on it. The excitement in the moment when the beautiful new designer coat is staring back at you begging to be taken back to your closet is a hard one to walk away from, but you will feel far better when you know you’ve made the decision with a clear mind rather than letting your emotions determine your decision – a decision that will deflate your monthly budget at least once, if not on a monthly basis.
3. Set up a Simple Monthly Budget
Create a “Money Date” with yourself each month and track your spending as well as pay bills and plan for the month ahead. Perhaps you already have a program to track your finances, but if you want a simple budget template, click here and print off TSLL “Simple Budget Template”.
4. Create a Plan to Pay off Debt
While there are different types of debt – good and bad (good: education, mortgage, business loan; bad: credit card, etc) – either way, create a plan for eliminating it and stick to it. Here are some simple tips that will help you successfully rid your life of unnecessary debt.
5. Become Immune to the Art of the Sales Pitch
Understand that the salesperson has a job, and if they do their job well, you will be wanting to buy what you were initially only window shopping for. If this occurs, we should not blame the salesperson as they are simply doing their job. However, if we make a purchase that we don’t need or can’t afford, we must solely take the blame. Knowing what we need versus what we want as well as knowing our budget is the key to realizing we are the captain of our financial ship, and since we are the CFO of our lives, we must make the best decision for the life we are creating for ourselves.
6. Invest Regularly – Keep it Simple
As you begin to save regularly, choose to invest in something more than a savings account in order to accrue interest that will compound favorably over time. Whether you choose to invest in a 401K, Roth IRS, specific stocks or bonds, keep it simple and do so regularly – each month. Tuck away $50 to begin with as you get your feet wet, and then begin to increase it as you feel comfortable. The key to making money is to be consistent, remain knowledgeable of where your money is going and why you are investing.
7. Monitor Your Money
Just as you keep a monthly budget you most likely will be monitoring your money. In other words track each expense, come to understand how you spend money, where it goes and begin to assess if you’re spending it wisely. Also, by monitoring your spending, you can catch any nefarious behavior and become aware more quickly if someone has hacked your account. Upon realizing this, contact your bank or credit card company of the issue so the issue can be resolved and your accounts made secure.
Continue reading, learning and rereading if necessary books, blogs, magazines that deal with money and how to properly handle it. Jean Chatzky’s book mentioned earlier is one that I reread simply because each year or couple of years I am in a different financial place and will grab on to other bits of wisdom that she shares. Click here to discover blogs, books, authors and other publications you may want to take a look at to continue to bolster your financial wisdom.
9. Be Willing to Take Risks
While being in the black (having no debt) is a wonderful goal and ideal for the majority of your life, there may be times when you should invest – a business venture, home remodeling, etc. The key to knowing what is and isn’t a good investment is doing your homework. While you will never know with 100% certainty if something will work out, as we look to the 5% of America who are deemed millionaires or more, 85% of them are self-made. In other words, they had to invest in themselves. Dare to dream, do your homework and work your tail off. Life has a funny way of rewarding this winning combination.
10. Evaluate Past Failures and Successes
Often the most valuable lessons are the one’s we learn first-hand, but that doesn’t mean we have to continue to make the same mistake. I myself, have learn some of the lessons I talk about here on the blog the hard way, but the goal is to learn from the ignorance we once had and turn it into gold. By evaluating what worked, what didn’t, what our weaknesses are and when our tuition has paid off, we will be better able to make the best financial decisions as we move forward.
11. Create a Lifestyle that doesn’t Drain the Budget
As you begin to reorganize your budget so that you are living below your means, paying off (or staying out of) debt and allowing yourself to sleep soundly at night, you may realize your lifestyle has to change in order for these all to occur successfully. I would urge you to heed this calling. Downsize: limit your shopping, purchase quality when you have saved up, but bring fewer items into your life to take care of, find a job closer to home, reduce your discretionary spending. The weight that money going out can cause when removed can feel so freeing.
12. Use Cash
Not only is it a good idea to have cash in your wallet, or to use only cash when out and about, but have cash available for emergencies. In other words have that Emergency Fund accessible within 1-3 days so that if you need extra money for an unexpected but necessary expense, you have it. The goal is to refrain from living paycheck to paycheck. Once you get into the habit of saving regularly, you will begin to create a cushion of savings and cash that will allow you to live in such a way that handing over cash is not something you do without really wanting to, and sleeping soundly knowing that if an emergency hits, you will be able to deal with it without destroying your livelihood.
Everyone’s financial path will be different, but the interesting fact is that just because someone makes more doesn’t mean they have a better handle on their finances. Whatever your income is, master the money that you have worked so hard to earn. And I am confident that you will feel richer and more attractive to wealth due to your confidence and peace of mind that is attractive in so many different situations that life presents.
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