Put this source of power to use and let it lead you to financial success in the future. Here’s an extremely valuable thinking secret. The magnate, John Paul Getty, said that in order to be truly successful, one has to develop a millionaire mentality.
This means you should regularly think success thoughts. The secret, he added, is the fact that a true millionaire mentality is not cultivated by thinking “big”, but rather by thinking “small”. By thinking “small” you can focus on feasible plans.
Most people who think too “big” can’t implement their plans and remain unsuccessful dreamers forever. However, those who think “small” can successfully put one plan into action after the other and build wealth step-by-step in the process.
What “small” things can you think of during this holiday season? Think of a small business you could start in the New Year. Think of starting an exciting investment club with your friends or family. Think of forming a group to buy a holiday property. Start thinking and dreaming
Saving and investing
In today’s debt-driven society, saving is one of the most overlooked ways to build wealth. In fact, the majority people, don’t save or invest, as they are either trying to make ends meet or they are living beyond their means.
As I have mentioned in my posts. It’s vital to save regularly. Aim to save at least 10% of your monthly income – and preferably more. It doesn’t matter how big or small your income is each month. Everyone should save and invest, as small savings now can enjoy the power of compound interest and eventually grow into big savings.
Set savings goals based on your short-term and long-term needs and work towards them. For instance, you should save and invest for your retirement, children’s education as well as an emergency fund. You could also save towards smaller goals, such as a holiday, a new car or a deposit on a home.
Using and managing credit
On the other end of the spectrum is debt. The more debt a person has, the less money is available to save. So, debt and saving have a causal relationship.
When using and managing credit, it’s important to differentiate between good debt and bad debt. If, for example, you borrow money to buy something that will increase in value, such as a property, that’s good debt. On the other hand, borrowing money to buy things that decrease in value, such as a car, is bad debt. It’s even worse when people use credit to purchase consumable goods or to cover their basic living expenses.
Use good debt to acquire assets that will improve your financial standing. minimize impulse buying, avoid bad debt and save!
A useful tool to help you save and manage debt is a budget. Far too many people do not use a budget. Or, they create one, but do not follow its financial guidelines. A budget is simply a map of your finances. It’s a list of all your income and expenses, which gives you a clear picture of your finances on a monthly basis.
Everyone’s budget will be unique, as we all have different lifestyles and priorities, which affect our needs and wants as well as our income and expenses. It’s important to keep your budget as simple as possible. If you create a budget that’s too complicated, it will be difficult to maintain.
A good way to approach a budget is to be conservative with income and generous with expenses. If you focus on reducing and settling your debts, you’ll have more money in your budget to save and invest towards your short-term and long-term goals.
Planning for the unexpected
Another aspect of managing your finances is to plan for the unexpected. There are many unexpected events that could potentially be detrimental to your financial well-being.
- minor and major events such as repairs to an appliance,
- your car or home;
- the loss of your job;
- a prolonged illness or an accident;
- theft; natural disasters;
- interest rate hikes or a decrease in investment income;
- or anything else that you never even imagined, which could be financially devastating.
As we mentioned above, one way to plan for the unexpected is to make sure you’re insured. However, an emergency fund is equally important, because insurance can’t cover you for every eventuality. An emergency fund is a cash cushion and safety net. It’s money you save specifically for emergency purposes due to urgent, unexpected situations.