Last week, we scratched the surface of why you might be broke, and gave you some tips on becoming more financially literate and responsible. Keep reading for your final four tips on how to manage your money!
4) You have no idea what the word “save” means.
You should be saving more than you’re spending, but saving might be a foreign language to you.
It may seem like the moment you get money, you have to spend it–but beware, life isn’t always sunny.
There will be times where you’re a little tight on cash, because life happens. That’s where an emergency account comes in handy.
An emergency account has at least three months of your income put away into a savings, for incidents like losing your job, a car issue, a medical issue–you name it.
Having this money on hand whenever a financial issue arises will make you feel a little better about overcoming whatever life throws at you.
Besides your emergency account, you should be putting away money into a regular savings account. Even if it’s just $100 a month, if you start in January, you’ll save $1,200 by the end of the year. And if you multiply that by 10 years, that’s $12,000 you’ll save.
This is how you build wealth.
Also, enroll for your job’s 401k program. They’ll most likely match what you contribute towards the plan. You’ll be putting away as little as $100 a month, and over time, because of compound interest, that small amount of money will reap you hundreds of thousands of dollars for your future.
5) You don’t give.
Since I grew up in church (my father is a pastor), I was taught how to tithe, which is when you give 10 percent of your income back to the church, and in turn, the church can use those donations to continue helping the community.
Now before you start judging me for being “religious,” let me tell you how this principle has affected my life. You may joke, or laugh, or think I’m crazy, but when I wasn’t tithing, I was perpetually broke.
Even when my past jobs were paying me well, I just couldn’t seem to keep money in my hands. But after I started giving to my church, the money came pouring in. I’m serious. From finding crazy deals when I was shopping, to getting random contracts to do work for people, it seemed that the more I tithed, the more my life started to richly come together when it came to my finances and my career.
When you give back, you open the door for more opportunities, more money, and more good things in general to come into your life.
When you don’t give, it’s like reassuring yourself that you don’t have enough, and that you’ll never have enough.
If you’re not a churchgoer, another way to give is to donate a portion of your income to a local charity, or a cause you care about.
My mom always quoted a passage in the Bible from Luke 6:38 that says, “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.”
Trust me, just give, and you won’t be disappointed. I know what I’m talking about because I’ve lived it.
6) You only have one source of income.
Everyone knows that rich people do not rely solely on one source of income. They have multiple streams of revenue and make their money working for all of them.
At the beginning of my financial journey, I didn’t have a flow of steady income coming from multiple sources, so I was limited to the bi-monthly paycheck my boss gave me, and I didn’t like that.
I made the effort to change–I set up my own website, bolstered my social media accounts, started offering my expertise to a wide variety of people, and the extra cash just kept coming in.
While it’s true that income inequality contributes significantly to the continuing prosperity of already-rich people, a poor mindset on the side of the other less financially successful 99 percent is a factor as well.
The 1 percent depend on themselves to make their next check, and the other 99 percent are mostly still working with a boss who determines how much money they’ll make each month.
The 99 percent are depending on their jobs to build wealth for them, but it shouldn’t necessarily be that way.
Everyone is gifted in something, and they can make money from their individual talents. If Terry Fator can get a five-year $100 million contract for making puppets talk, and if a fashion photographer like Scott Schuman can generate over $1 million from taking pictures of interesting people and putting them on his website, you can do what you want too–if you stay focused on developing your talents and monetizing them.
Start by doing some work on the side to earn a bit of extra cash. Do you dabble in web design, or take really nice pictures? Start a freelance service doing these things, and you’ll be surprised by how much money you can make.
Another alternate source of income can come from investments. After you’ve made that extra cash from freelancing, you can use the money to explore the world of stocks, bonds and CDs.
Experts suggest buying stocks in things you actually like and use–and what’s cooler than owning a piece of a company you really do support? On top of that, if the market is doing well and your stock soars, you can sell it and take home a nice sum of cash.
7) Financial literacy is not a part of your daily life.
Of course, everything I mentioned above is the high-level, basic version of financial literacy.
To be truly financially sound, you need to understand how money works, and how can you understand how money works if you’re not constantly learning about it?
Do yourself a favor, and promise yourself that you’ll read up on it, study it and live it.
Once you’ve truly dedicated at least part of your daily life to learning about money, you can set financial goals for yourself and ensure that you’ll never go broke.
Some people think, “If I had a million dollars, all my financial woes would be solved.”
But they’re wrong, because if they really wanted to have a million dollars, they would have it already. How can you expect to have more money if you can’t take care of the money you have right in front of you?
To sum it all up, I follow this financial principle, and you should too: Earn. Give. Save. Invest. Spend.
Featured Image Credit: https://flic.kr/p/9rn9Yh