Change is hard for most people. The most challenging things any of us have to learn is Self Discipline, and when it comes to our personal finances this can be especially true.
Financial fitness and ultimately being free financially, is simply a result of learning and applying the basic principals of financial success, no matter how much money you make.
Success is simple. Learn and follow the principals of financial fitness. The hardest part for most people is simply getting started. But learning from the examples of others who have made the switch from financial weakness to true financial fitness, helps!
A news outlet interviewed Warren Buffet, one of the wealthiest people in the world, and asked him: “What is the one thing young people should be doing about money?”
Buffet replied: “I tell them two things, generally. One is stay away from credit cards… The second thing I tell them is to invest in themselves.“
So if you break his answer down, he’s basically saying two things:
- Stay out of Debt
- Invest in Yourself
So, #1 is fairly straightforward. If you don’t have debt, don’t get any. If you do have debt, pay it off as quickly as possible to get out of it.
#2 might be puzzling you. What is meant by investing in yourself? Well, how do most people invest in themselves? Usually it’s with education of one sort or another, and No, that doesn’t necessarily mean going to University or College, both of which will put you deeply in debt. You need to carefully weigh the return on your investment with any traditional educational institution or program.
Buffet emphasized a point to these students in this way: He asked these college students if they would take $50,000 cash for 10% of their future pay. When nearly half of the students raised their hands to accept the offer, Buffett pointed out that they must be worth at least $500,000 since 10% of $500,000 is $50,000. Then he drove the point home by asking the students how many other $500,000 assets they currently had. Of course, all the hands went down. YOU, in other words, are your greatest return on investment. Period.
Getting out of debt is the defense you will have against poverty. You need to learn how to corral this “defense” before you can go on the Offense to start gaining financial prosperity.
Now, I’m not talking about getting filthy rich. I’m talking about being in a financially healthy position where you’re not suffering a lack of money.
Once you begin the process of implementing solid money strategies and gaining small victories, the momentum for future successes is almost guaranteed. You’ll eventually get debt-free and accumulate thousands of dollars in savings.
So, let’s recap the first 4 Basic Principals.
- When you receive income, immediately put 10% toward tithing and 10% towards saving.
- Then, minimize expenses (self-entertainment) and maximize investments (self-education)
- Then, Pay the minimum payments on your debts and put any extra from cutting expenses toward the balance of your highest interest rate debt aside from your home.
- After the first Three items are done, pay the rest of your bills.
Everyone has to eventually make the decision to become an adult when it comes to finances. The sooner you do it, the easier it usually is. Also, there are powerful techniques you should implement to become better at financial discipline.
One of these techniques is to RESIST THAT GREAT DEAL.
One of the biggest problems people have, that keeps them from improving their financial habits, is the inability to resist what seems like an amazing deal. Not resisting it can blow your budget for the whole month and throw you so far off track that it’s hard to get back on track.
That my friends, is a temptation you need to learn to resist. It happens when you’re shopping and a deal that is “too good to pass up” presents itself. You need to look at that deal like it has horns, a long pointy tail, holding a pitchfork and beckoning you to fail. If it’s not in your budget, RUN by it. Keep this in mind when temptation calls your name…