A low income is not an obstacle to building wealth…
…Unfortunately, a negative mindset is.
There are a myriad of books available on how to put yourself and your family ahead of the financial curve. Yet people still find themselves living week-to-week, pay-cheque-to-pay-cheque. The problem is 3 fold.
- Firstly- people have a tendency to think that getting ahead financially, can only happen when you already have a high level of income.
- Secondly, that the 1% improvements you are able to make, are not worth the time and effort and seldom produce the desired results,
- And thirdly, being committed to these strategies is too difficult.
The most fundamental question you will ask yourself is… How important is improving my financial position?
If the answer is ‘Very important’ then it doesn’t matter what level of income you are able to generate. It is all about your mindset and the plans you put in place to make it happen.
There are a number of ways to improve the income you are able to generate, but they are for another post. Here we are focusing on what elementary steps you can adopt to ensure that you are doing everything you can to get ahead.
- A penny saved is a penny earned
It seems simple, changing the way you see your progress will pay dividends. The world’s richest people still save when and where they can. Warren Buffet was asked at a university Q&A… If he dropped a quarter, would he turn around to pick it up?? Given the time and effort, it takes is massively outweighed by his earnings of $26,600 per minute. He replied that he would! And he would have to before his close friend, Bill Gates, who was also sharing the stage at the time, did.
It is interesting to note, that Warren Buffet still reportedly lives in the house he bought in 1968 for $31,500. This is vastly different from the lifestyle of high profile celebrities who are often screaming poor or funding their next project with a kick-starter campaign.
- Pay yourself first
Rule one in the book ‘The richest man in Babylon’ by George S Clason, is ‘pay yourself first’. You have to work on your financial goals first. Every dollar you pay or give to someone else works on their financial goal, their mortgage, their beach house, yacht, plane, or their funeral in space.
You must recognise that you are a priority. Don’t put yourself at the bottom of the bills you pay. You deserve to be at the top. It is important to learn to ‘Spend what is left after saving’, not ‘Save what is left after spending’. See the attached article titled ‘Warren Buffett’s Best Money Advice‘.
- Price V’s Value
Learn to understand the difference between price and value. Ben Graham says that ‘Price is what you pay; value is what you get. This is regardless of what you are spending your money on. It could be shares, an investment property or a new car. Perhaps something a bit more routine like your groceries, fuel for the car or daily coffee.
Learn to spot true value and spend wisely. It is a skill that will see you make smarter financial decisions and keep money in your pocket.
- Visualise and Plan
Plan for what you want to achieve. Consider your goals with every financial decision. If spending your disposable income is not working toward your goal, then it is working against it and stifling your progress. It really is that simple. Having a clear understanding of your long-term goals and being able to visualise them, is an excellent way to build wealth and get yourself out of the rat race.
Remove yourself from the dependency on financial institutions for your credit, insurance, and mortgage. The longer you have these things, the longer you are at the behest of their seemingly arbitrary decisions.
Think as far out as your retirement. By addressing that issue now, you will make it easier on yourself tomorrow. Plans and goals provide the necessary context to focus each and every decision in your life with purpose. Time spent writing goals and building step-by-step plans to achieve them, is an investment in your future. It reduces mistakes, increases efficiency, produces desired results and best of all, costs you nothing.
Finally, if you are unable to do this on your own, or you need help, schedule a time to sit down with a professional and review your strategy. It will pay dividends in the long run.