Although, as is often said, money is not everything, it does hold the power to make life better and more comfortable for us. That is why many have gone off the edge and are in full pursuit of money every single day of their lives. You must have the right perspective about money and finances because unless you do, it is going to seem like you could never get to the level of financial achievement you have always hoped for.
You may have been working for a while, with a great pay package but still find it very difficult to make financial progress. Here are some probable reasons why financial progress is hindered for you and how you can make amends.
You have not made or followed any plan so far
If you have made plans to study, get married, have kids and raise a family, surely you must understand that the same principle of personal financial planning is required when it comes to making financial progress. There are spending, savings as well as investment plans that have to be made. Failing to plan is indeed planning to fail. Things may not have turned out the way you expected with regards to your finances because you only ended at expectations. You never really took any practical steps to make sure your expectations became a reality. So here is one thing you need to do today so that you can begin making financial progress.
Make a plan. Then add sub plans to it. Get the help of a personal financial advisor if you have to. From savings to expenses, everything that has to do with finances have to be planned. It all has to be included in your personal financial planning. Set a budget for each week based on your income. Then make plans on how you are going to make purchases, pay bills and take care of other needs that may arise within the family. If there is anything for example which has to be bought for the house, plan to buy it. Don’t buy anything that demands a large amount of money without planning for it. If you did not include it in your personal financial planning, it should not be part of your priorities. Also remember to include some good investment plans. So the issue of planning cuts across every financial aspect and should be taken very seriously if you must begin to make financial progress.
You have some misunderstandings about money
Here is another reason why you may be stock in making financial progress. Your thinking and attitude towards money is not right. Your mindset about the importance or value of money cannot be wrong and you make financial progress at the same time. It matters little how accurate your personal financial planning is. So long as your mindset and attitude is wrong, you will find it hard making progress financially. So lets look at some common misconceptions about money that could hinder your financial progress and investment plans.
Many people have the idea that money makes people rich. Well, it doesn’t, and has never. As a matter of fact, if you were put in the same financial situation as any millionaire today, you will definitely find that money is not what you thought it was. And you might want to know that those millionaires who have made so much progress financially do not consider money and its acquisition their main aim or target.
Another misconception is that money will make you happy and feel accomplished. Again money never makes anybody happy. What makes happiness is a personal development of value for oneself and commitment to impacting the lives of others.
If you hold any of these wrong ideas about money, you will never make any financial progress because your efforts will be against financial principles. You may want to talk further with a personal financial advisor to help you figure out what attitude you should really have towards money. You have to settle in your mind that money is only necessary to make life easier and to assist in the accomplishment of higher purposes.
You are Spending more than you earn (living beyond your means)
This is the area where many people fall short of making commendable financial progress. You find yourself always trying to get things you cannot comfortably afford. If there is anything that you need to buy, it has to be bought without placing any stress on your finances or worse still pushing you to borrow. That is why I recommend that your expenses always, as far as you can control, be guided by your personal financial planning. Generally, for a person to live beyond their means is a demonstration of immaturity when it comes to financial matters. Talking with a personal financial advisor could help you understand how to go about spending so that you don’t make mistakes which could hinder your progress. People assume that the one who makes money knows best how to spend it and that is not true.
If you spend more than you earn you will never be able to save or make any investment plans because at all times, whatever you have will never be enough, talk less of having something left over for more important purposes.
Now the question is what do you do when you have been caught up in a situation or habit of spending more than you are earning?
Start by planning for every purchase you make and we have already discussed that above. The next thing, is make sure you buy wisely to avoid double expenses. For example, you know that your family travels a lot, you may want to buy a larger car that can take everyone in the family rather than getting two cars to accommodate everyone. Even when it comes to your dressing and other small expenses, you have to be wise in order to meet your financial objectives and make progress financially. Instead of trying to buy a pair of shoes for every dress you have when the finances available to you cannot even support it, you can buy general colors like black and brown that will go with almost every dress you put on. Life does not always have to be as expensive as some people usually think.
There is little or no investment made in your name
In order of importance, investments some times come after savings. And that is only because one needs to save to make any reasonable investments. If you are still not where you anticipated to be financially, or not where you need to be, it could be because you are not making any investment plans or taking any actions. Remember in the matter of financial progress, even planning in itself is making progress. Though you will still have to go through the process, if you began with planning, you will definitely not be where you are right now.
Having just one source of income
Here is one surprising thing about money which even a personal financial advisor may not point out to you. If you are not careful how you deal with your income and investments, it will seem like getting more money posses more challenges than make you comfortable. When money increases, usually, our expenses or wants tend to exceed what is available almost immediately. Remember there was a time when you earned less than you do now. At that time, you must have thought to yourself, oh if I get a pay raise, I will definitely be under much less financial stress. How is that coming along for you now that you had your wish?
What you may have missed along the line is the fact that an increase in income or earnings without a change of spending habits will keep you always wanting more to be comfortable.
A guy has a bike now and with the cost of using the bike, he thinks it is going to be better if he could only get more money. But how right is he? Well, just 50% right. If the same guy got a pay raise by several thousand dollars and decides to buy a car, he will soon be telling himself the same thing a few months later. So what should he be doing instead?
Making investments. Or at least saving and only buying things that will help him spend less than he is already doing now. When your expenses increase with your earning, you must expect to always remain at the same spot financially, no matter how much increase you get. If you must spend therefore, do it wisely. Instead, make investments that will reduce the stress placed on your present channel of income. Save some money and invest in a business or something else to ensure that if your spending increases, you will not have to borrow to keep up. If you are not very sure what to invest in, it will be better you meet a personal financial advisor and get some quality advice.
You do not have any financial priorities
Having financial priorities is an important thing for people who hope to make financial progress. Progress is hindered when one has their priorities misplaced with regards to using finances. Basically, there are four things you can do with money. You either, spend it, save it, invest or give it away. These four are not equally important. You should have them in a definite order of importance in order to make financial progress. Now lets look at these four ways of using money according to their order of importance.
1. Investing. So long as you receive an income, investing part of it is the most important thing you can do with whatever money you get. Here is the reason why. All other uses of money (apart from saving) are just channels through which money leaves you to others. However, investments make it possible for money to flow in rather than out. It increases your chances of having more rather than loosing more. So when you do receive an income, however frequently you do, ensure that you are actually making serious plans to invest a greater part of that money.
With every income you get, once you have set aside a part for investments, you can then save a part of it that should be about the same amount you set aside for savings. What most people do is, they just save and when an investment opportunity comes up, they make the investment from their savings. Doing that would post no problem if you earn a reasonable amount that could let you save enough for investment and other unexpected expenses in one bulk. If that is not the case, save differently and set aside some money for investments.
You are making the mistake of living in debt
No matter how much you earn, borrowing shows that you are not making any financial progress. People don’t borrow for the fun of it, they do it because what they have is not enough to get what they want or does not permit them live at the standard they would like to.
Generally, some hold the impression that those who borrow are poor or do not have enough. On the contrary, many people who are neck deep in debt today actually make more than enough money to live a comfortable or even luxurious life. The problem is that many such people spend their money the wrong way, and maybe because they never seek the help of a personal financial advisor or any other person for that matter. They have their financial priorities in total disorder.
It is quite simple to understand. If you make about $500 thousand a month, that is too much money to live a comfortable life with. At the same time, if you have a bad attitude with money or do not know how to handle finances, you will always live on the edge. Always in debt. Always needing more though you earn more than enough.
So lets look at some things you should consider closely in order solve the problems above and begin making tangible financial progress.
Understand that those who make tremendous financial progress value that progress more than showing it off. For the average person, people must always know how well off you are by the kind of things you wear, house you have or even car you drive. But those are the things that distract people who actually want to make financial progress. Looking good is important but when one becomes obsessive about looking rich, they become blind to the fact that looking rich does not always mean being rich. You have to make a choice on which you want. To be rich or to look rich. You can have both, though, but one has to be held in much greater esteem than the other or else you are never going to make any financial progress. This should constantly be your mindset. To be more focused on building wealth than looking like a wealthy person.
By the time you come to the latter years of your life, when you cannot stay on any job and no income is forthcoming, your investments will be your legacy and what keeps you going. So stop wasting your years on a formal job without creating something for yourself that others can even rely on.
Reconsider your spending patterns. Of course you always have to spend a part of your income. But the way you spend it goes a long way to determine how much progress you are going to make financially. You will be surprised how much what I call wise spending could help you save from your current monthly expenses. Even your spending could prevent further expenses in the future and cut down your cost of living by more than a quarter. Lets look at some examples of how you can make this work.
How much are you spending on mortgage? How much longer are you willing to stay in some other person’s house and pay rents? Making a choice between owning your own house and renting one shouldn’t be a hard choice to make, especially when you have the finances to. So many people should have been far beyond where they are financially if they just made the decision some time ago to buy a house for themselves instead of paying rents. It may seem like a lot of money to spend at a time, but if you do have the money, spending it in this way will prove to be a wise investment in the future.
In the long run, those who buy their own houses are far better off financially than those who do not. Remember while you live in some other person’s house, you are spending on rents and still paying bills. Consider how it could feel knowing that for the salary you get every month, you don’t have to pay rents. Just your bills and some household need that have to be purchased. You will have a lot more to save and to invest.
There are a few efficient alternatives to electrical power these days, some of which are quite convenient and much cheaper than the conventional electricity supply for which one has to make monthly payments. One of the most effective with regards to this is making use of solar energy. Solar technology has become much less expensive to acquire now than was the case when it first became popular. Apart from its initial installation cost using solar energy as an alternative for electricity will certainly save you a lot of money. An there are really other advantages it holds over normal electricity supply.
What kind of car are you driving and is it costing more than it is helping you achieve? Cars come at a great cost to individuals. Though cars are a means of easy transportation, there are alternatives you may want to take advantage of rather than bear the expenses of using a car. If you simply go to work and return everyday, you may not need a car as badly as you think after all. You can catch the bus instead. This is even more important to consider if you are not a travel friendly person.
Even your shopping habits which may seem very trivial actually hold the potential of helping you make financial progress if you will make some little changes. Be wise with regards to what you buy and you will not have to spend as much as you are already doing on the things you buy. A simple tip is make sure you are not buying more perishables than you need in a few days. If you do, chances are most of it will just end up in the trash and that will be money wasted which should have been invested, saved or spent on something more appropriate.
In the end, making financial progress from where you are now to where you may want to be is going to take some conscious effort. That is what many people are not willing to put in and it is the reason why we have so many people lagging behind financially. It is not going to happen by wishing. Neither are you going to make such progress by working harder or earning more. As we have examined, there are principles and spending tips which are more important than making more money because getting more does not always mean you are going to be better off financially than you are now.