So, you are a hardened, tough man. You change the oil yourself, you shave with a straight razor, and you can lift 500 pounds. Wonderful! However, there are no real men without honed financial skills.
Many people refer to financial planning as something, “which I’ll do sometime later.” To some, this process seems too complicated. For others, the idea of sitting at a table cluttered with books, blog materials, and other sources is already discouraging. After all, financial experts are a dime a dozen; how to separate the wheat from the chaff?
By following their recommendations, you will soon be able to become a real expert in money management yourself.
Plan your budget wisely and put every dollar into action (John D. Rockefeller)
Let’s start with the basics. Before you decide what to do with your money, you need to understand your current situation. And there is no better example of this than John D. Rockefeller, who came from the simplest family and became the richest man in the world.
From an early age, Rockefeller was used to carrying a small ledger with him everywhere. He wrote down every dollar received, spent, donated, and invested. Bookkeeping became a way of life, and even after becoming a millionaire, he spent a lot of time on financial reporting. Here are his own words (from a speech at the Fifth Avenue Baptist Church):
“Let me give you a little advice. Get yourself a little ledger like mine. Write down what you get there, and do not be ashamed to record all your expenses. Write it down as if your parents could look into it and understand what you did with your money. This will help you save them, which is what you should do. “
It all starts with planning a budget. This is not a tedious compulsory duty but a means to start mastering yourself. Rather than simply recording income and expenses, budget planning allows you to see your prioritization. How to budget effectively? First of all, learn to clearly and clearly write down where your money is now going. The easiest way is to carefully read your account and bank card statements and record how much you actually spent in the last three months. This is the only way to really analyze your buying behavior.
Depending on your habits, the result may be unpleasant or embarrassing. And if you do this analysis with your “significant other,” very unexpected things may surface. However, this procedure is the key to your future success.
The next step is to prioritize. Your actions in the past should not influence future decisions. You can start using money in a different way.
What is important to you? Do you want to save up for a new home? Going on an amazing journey? Finally, pay off your student loan? The choice is yours. It is only important to make a clear conscious decision and act in this direction. Working with your own budget allows you to start taking control of your financial life and building your future the way you want it to be.
The plus is that you no longer need to carry a notebook with you, as in the days of Rockefeller (of course, if you want to, please!). There are many useful websites and apps that can make budgeting much easier and help you start looking at your financial flows from a different angle. My wife and I use You Need a Budget, and it’s an amazing tool. Some people prefer Mint.com, which is quite effective too. But whether you use a book, envelopes, or a smartphone, budgeting can change your entire life.
Pay Yourself (George S. Clayson)
So, the budget is perfectly planned out according to your priorities. The time has come for the next step – you need to strengthen your ability to achieve these goals. To do this, let’s turn to an idea that many, perhaps, have not heard of. George Clayson was a soldier, writer, and entrepreneur and is best known for his parables about frugality and the road to wealth. Even if you don’t know his name, you probably know his most famous book, The Richest Man in Babylon.
It was first published in 1926 and contained many wise thoughts. The most popular of these maxims is quite simple: first, pay yourself. Instead of rephrasing, let’s go back to the original:
From the first ten coins that you put in your wallet, take out only 9. Your wallet will start to get fat almost immediately, and its increasing weight will be pleasant to feel in your hands and delight your soul.
Don’t reject what I am suggesting because it is too simple. Truth is always simple. I promised to tell you how I amassed my fortune. This is how I started. I had a skinny wallet that I cursed because I had nothing to pay for my needs. But when I started removing only nine out of ten pieces of its contents from the wallet, it began to get fat. As will yours. “
Sounds almost primitive, right? It may seem that this is impossible. Save and not spend 10% of your income? Yeah, of course. It’s time to pay for utilities, for rent, the Internet won’t pay for itself either. And when the upfront costs are covered, you always want to have a hot latte, go to the movies, upgrade your phone.
With a few exceptions, this maxim applies to almost any income level. Your standard of living will practically not differ from the current one if you start spending only 90% of your salary, but you will finally have the initial capital to move towards your main goals. Don’t believe me? Run the experiment for at least three months.
Again, there are many modern tools out there to help you with this noble endeavor. Set up your bank account so that at least 10% of receipts are transferred to a less accessible “directory.” Or use any of the apps I mentioned above to share your earnings. The first couple of months will not be easy, but then you will notice positive dynamics on your account.