This is a very common line and this line helped me to identify which people to model and not to model in my financial journey.
Your friends, your family and most of the people in your life affect the quality of your life.
You are the average of the people you spend most of your time with. Why is this so? Because you could emulate both the positive and the negative aspects of their lives. The type of conversations and advices you get from them shape the decisions you make consciously or unconsciously.
I grew up in poverty. Experiencing its difficulties led me to promising myself to change my story.
Over the years, I have been blessed to have met the people or experiences the gave me countless of positive influences that brought me to achieving my financial literacy and freedom.
1. To change the size of your wallet, you need change your mindset.
I was raised in a traditional Filipino family where the first choice of growing wealth is by landing a white-collar job or becoming an overseas filipino worker, also famously known as OFW.
I was both! I previously worked as a Hotel Duty Manager and an OFW.
But while there, I have seen people living on the same financial situations running for pay check after pay check including me.
Yes we have bigger pays but we also have growing expenses back home like hospital bills, utility bills, groceries, a relative is needing assistance, tuition fees for their kids or their extended family members.
This is very noble! But what is lacking is the right mindset about money. That it's not only about earning but it also includes saving and investing.
We lack the will to educate our family about self-sufficiency or by simply teaching them to be responsible for their own finance and not to depend on one source. That employment is not giving us infinite wealth and we need to have a back up plan.
I am not your school principal! I am sorry for my words but I wanted you to see what is less spoken.
It is not easy to work abroad or locally. The number of hours, the demands of the job, the sacrifices each of those workers - well deserved to be called modern HEROES.
That was long for an introduction!
To change the size of your wallet, you need change your mindset.
There is a word is not so new but is not too common to you - ENTREPRENEURSHIP!
You are capable of changing your income potentials but for you to earn more, you need to be aware of it. You need to have a financial goal and a timeline as to when are you committed to achieve that?
I can still remember when I was 20 years old, that I set an income target for myself that if I make it at age 25 I will quit my job and be a full-time entrepreneur.
Because I had that goal, it led me to finding and working on those opportunities that could helped me to achieve my goal. Three years later I saw myself growing my income potentials 5x bigger then 12x more then that's it - I QUIT MY JOB!
You need to accept it that you need to change your mindset which could lead you to changing your perspective then your reality.
Napoleon Hill said, "What a man can conceive, he can achieve."
2. Income minus savings equals expenses.
We are sometimes trapped in a rat race because of our own financial decisions.
Our own behavior and beliefs about money.
That because you are employed, you are secured (monthly.) And it is fine to use your credit card to shop as you desire and pay them later.
The next step towards financial happiness after changing your mindset is changing your financial formula.
Save first before you spend. Save at least 10%-20% of how much you make.
It's obvious right? But have you tried it?
I found it very challenging too the first time. But I am happy to say that I am credit card-free for the past 5 years now.
3. Why are you saving?
I have seen people earn so much but never spend it until they grew old and sick.
Wait? Money is a tool. It's most important use to to serve you and give you convenience or pay for those that matter to you.
If you are a millennial like me, don't just save for no reason. Save so you have something to invest later, save to pay for your first home, save for your next assets.
Don't just save for nothing. Money depreciates over time.
Your $100 today is not the same $100 years from now.
4. Differentiate a need to a want.
Here comes your impulsive buying behavior! I have that too. Congratulations you are not alone.
But one of the most important mentors told me? "Delayed gratification is the key"
Because you want instant gratification you buy it even if you don't really need it. Just because you want it.
Ask before you spend. Regardless of what people will you, it's your wallet that you are either increasing or decreasing.
Buy a car if you really need. I don't have one because I am a digital nomad. ;-)
Buy nice clothes if you really need it. If it's just to beautify your social media photos, don't! I love nicer clothes too but I only buy it for my business and my business meetings.
Don't pay for a gym membership unless you really need. Going to the gym and still eating unhealthy food or with bad lifestyle habit does not make you healthier.
I spend on quality food and nutrition to keep me active and be at my peak performance. Because if I get sick I have a huge family that might go hungry.
Create your give up list to help you liberate yourself from big financial burdens.
An aromatic cappuccino will only make you feel rich but it will not help you grow your finance unless you are there because it's your office, it's where you do business.
My formula in allocating my finance:
By the way here are some of my give up lists:
I had to miss partying for 3 straight years so I can have more time to be spent for the opportunities that I believed will help me with my goals.
I had to not celebrate my birthdays for 8 straight years so I will be able to effectively use my resources.
I had to sleep 6 hours a day most of the time for over 5 years so I can maximize my time. (Not recommended.)
And these happened to me later....
I saw myself in Las Vegas last year. What happened in Vegas stays in Vegas ;-)
I saw myself this year celebrating my birthday in the club floor of a 5 star hotel in my city.
And finally I can decide to set my sleeping and working hours at my own choice.
I am not rich yet! If we use the traditional description but I have enriched my life with experiences, with friendship and with wisdom to fuel my ambition in life.
5. Set a monthly spending limit.
The things that I wrote here cost me so much.
I also had my own financial mistakes.
But what is most important is the awareness to improve our circumstances.
You can start your own journey now, set a monthly spending limit.
Then divide it by 4 or weekly or daily. How much is you daily allowance?
I am self-employed. I need to properly identify how I use my resources:
- Advertising expenses
- Entertainment expenses
- Travel expenses
- Insurance
- Other fundings
- Food and transpo
Setting your spending limit will help you maximize your resources, avoid what is not necessary and identify where most of your resources are spent and determines if it is giving you back the expected outcome.
6. Sell or be sold.
If you don't like selling then you are then on the other side, you are buying.
If you want to grow your wealth, the more you spend, the lesser you save. But the more you sell the more you make.
If you want to grow your wealth, the more you spend, the lesser you save. But the more you sell the more you make.
Our economy is fueled by consumption.
Do you manufacture what is consumed?
Or selling what is manufactured?
Or working hard to be able to afford what you need to consume to survive?
7. Be a giver but help yourself first.
Work on improving your financial condition.
Because the best way to help is not when you are broke but when you have enough to give.
Help yourself first.
As written, "Give a man a fish, and you'll feed him for a day. Teach a man to fish, and you've fed him for life."
Have a victorious life!
Have a victorious life!
Disclaimer:
Whatever principles are written here, they do not serve as a financial advice that fit for all. You can use it at your own choice but the author does not guarantee an exact outcome.