The best time to work for your financial freedom is now. Start by deciding to invest instead of just saving. When you invest something, it grows—it has to. When you simply set aside something, it just sits there and stagnates. Investment is alive while savings is dormant. By investing, you make your money work for you.
Your initial investment can be as little as a dollar or two but its potential to grow is only limited by your desire and imagination. A dollar can buy you piece of chocolate bar which you can sell at double its price to an office-mate for his snack. Repeating the process, your 2 dollars can easily grow to 4 dollars, and so on. This may be a very simplistic view of growing your money but that is the core of investment.
Now that you have taken the first step in investing, it is much easier to let the ball keep rolling and gaining momentum as it does. How do you gain the financial freedom you dream of from this humble beginning? This is where the secrets of investing come in.
Many fail to realize their goal of financial freedom because they do not know what to do with what they earn. By learning the secrets on how to maximize each dollar you earn, you can quickly put yourself on the right financial path. Here’s how:
- Come up with a realistic budget. As a rough guide, you may follow the 60/30/10 (that is: 60% for needs, 30% for wants, and 10% for investing). The 10% for investment should take priority and not to be reduced at all cost. The remaining 90% can be juggled between the “needs” or necessities, and the “wants” or luxuries.
Set a strict difference between “needs” and “wants”. Do not delude yourself into thinking “wants” as “needs”. If you can survive without an item, then it is only a “want”. Cut your budget or eliminate it totally from your list.
- Limit your expenses to your actual money on-hand. Do not count on “unhatched eggs”, meaning do not spend in advance against money not actually in your hand yet such as bonus or commission. The risk of not getting it on time, if at all, is very possible. Base your expenses on your current financial standing, not on your projected financial state.
- As muUse cash. Credit cards are the greatest destroyers of sound budgeting and financial stability. If you cannot pay in full the amount you bought in credit within the month, never buy in credit. Otherwise, you end up paying more for all of your purchases. This limits or completely stops the amount of money for your savings, thus making it impossible for you to attain your financial goals.
- Make your money work for you — invest. In order to build wealth, you need to make proper investments and earn a good return. However, before plunging into any investment, settle first your debts. Being debt-free is the path to financial success. Your net worth is your assets minus your liabilities. Therefore, it makes sense to eliminate your debt before you start investing your money anywhere else.
- Set an investment goal. This will serve as your guide for investment decisions such as where you should put your money, how much should you save each month, or when to make certain changes.
- Seek professional advice on investing. If you do not fully understand the investment and how it works, then never put your money into it. You want to understand it and be 100% comfortable that you know what you are getting into before you give your money to anyone. Consult people you can trust and teach you what you need to know regarding stock market, mutual funds, diversification of investments, allocation of assets, reading charts, graphs, etc. in layman’s terms. For this, your financial advisor must be a teacher and not a salesman.
These are basic tips for investing to build wealth. You are the only one responsible for your financial well-being. Take charge and gain the financial freedom you dream of!