Archive for October 2011
Personal Finance – Three Personal Finance Guidelines For Achieving Financial Freedom
I am sharing these personal finance guidelines for anyone who wants to achieve financial freedom. Of course, everyone wants to have financial freedom…but wanting it is not always enough. You also have to be willing to do the work and (more importantly) to learn what is really going to produce results. These strategies for increasing personal wealth and financial freedom will help you to learn what works, and doing the work is up to you.
The First Step to Financial Freedom: Powerspending of Money
The first of the personal finance guidelines is to spend money for value. This is the practice of “Powerspending” and it is one of the most commonly neglected strategies for personal wealth. Start by keeping track of all your financial transactions by writing them down. Then, go through the list every week and ask yourself: “Am I spending money in a way that adds value to my life or to someone else’s?” Things which add value to other people’s lives are: paying interest on loans, spending money on things that do not add economic value to your life and which you do not really need and “bandit costs” such as late fees, overdraft fees, penalties, and so on.
The Second Step to Financial Freedom: Powerspending of Time
Powerspending of time is using your time to do things which will add economic value to your life instead of things which simply waste time. Donald Trump talks about this in his book on building wealth. He talks about the difference between the working class and the wealthy. The wealthy value their time and they commit spending their time creating and working plans and strategies for increasing personal wealth. Meanwhile, broke people are more likely to do things like spend three hours a day watching TV or an hour arguing with the phone company over a $10 charge on their bill.
Start keeping track of how you are spending your time and ask yourself: “Am I spending my time on things which will help me add value to my life or not?” Most likely, you already know the answer…but it is important to be honest in order to motivate yourself to change.
The Third Step to Financial Freedom: Powerspending of Your Talents
Powerspending of talent is using your talents in a way that they add value to your life instead of to someone else’s. Brian Tracy said that every person has at least one idea a year that would make them a millionaire if they just acted on it. In the same way, all of us possess talents which could bring us a lot more wealth than we realize. The problem is that we spend too much of our time investing this talent working for someone else so that they can profit from our talent….and they are. In fact, they are generating more profit from our talent or else they would not be able to afford to pay us.
So take inventory of your spending when it comes to money, time and talent and begin focusing on Powerspending those resources towards building your own financial freedom.
Personal Finance – A Simple Personal Cashflow Strategy to Follow
Simple personal cash flow management beats out complicated every single time. You’ve probably met your share of people who have a lot of complicated knowledge about personal finance and all these ideas about how to achieve financial freedom, yet they’re broke or pretty close to it. It’s funny how this works, but when you think about it, smart people often have a very difficult time using their knowledge to create real life results.
This is because simple personal cash flow strategies are just a LOT more applicable to real life…especially when your commitment is tested. Let’s look at one simple personal cash flow management system that
The Four Buckets: A Simple Personal Cash Flow System
The four bucket personal cash flow system is so simple that once you get into the habit of using it, you can almost live off of it without having to refer to a written spending journal. It works like this:
1. Commit the first 10% of your income towards investing
2. Commit the second 10% of your income towards building cash reserves for the sake of emergencies or planned purchases.
3. Commit the third 10% of your income towards charitable giving
4. Commit the remaining 70% of your income towards living expenses.
Now, just a few things about the order here…don’t change it. One of the most common habits which broke people have is that they try to pay their expenses and then invest what’s left. This is a certain way to remain broke forever. If you want to start investing money towards building financial security, it MUST become a priority. If you think you can’t pay your expenses with only 70%, start with 5% in each of the other categories and work with that until you get your expenses down to 70 or less%.
However, don’t change the order, because that’s the secret to getting your financial habits turned around and getting out of the paycheck to paycheck trap. The other thing you might be tempted to change is the giving step. However, it might interest you to know that the marketer Dan Kennedy (also known as “The Millionaire Maker”) recently stated that giving was one of the most powerful wealth building strategies….so try it out before you dismiss it.
Keeping it Focused and Simple
I had mentioned that the four bucket personal cash flow system is so simple that you can almost live off of it without writing things down. However, you still need to keep a written spending journal if you want this simple personal cash flow system to work wonders for you. Writing down your spending will keep you focused and disciplined which is the key to long-term success in achieving financial freedom. You can start your simple personal cash flow system today and find out just how effective it really is.
Be successful!
Personal Finance – Successful Financial Budgeting Tips
Personal finance has always been one of the crucial aspects of success of an individual. Execution of one’s personal finance budget often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.There is also personal financial software to help with your financial budgeting which saves a lot of money and certainly your time.
Financial budgeting is the key to unlock your monetary success as well as your means of reaching your goals and dreams. Everyone wants to pay all their bills on time. Successful debt and asset supervision is the starting place for good credit. Unless you have unlimited funds to spend however you wish, the place to start is with good personal budgeting skills.
Here are some helpful tips in creating your personal finance budget:
Create a personal household budget which includes all your monthly and yearly bills. You must also include your spending money, savings goals, and retirement funding. It doesn’t matter how much money you make, it’s how you spend it. A personal and household budget will help you make payments on time, provided you follow the plan. Aim for your housing expenses to be about 33% of your income. If that is not possible, cut some expenses or look to at ways you can make more money. Follow a debt management program. Your debt may overtake your income and then you are forced to make late payments on bills or no payments at all because you don’t have the money. This becomes expense and can topple you over. A total debt payment (which ideally should be zero!) shouldn’t exceed 30%. If it does, look to consolidate and chop ups some store cards with high interest. You can’t just spend money and hope you have enough for your bills. You must spend within a budget. Use personal financial software to save you time and accounting fees. The software will ask the same questions that a personal finance advisor asks, without charging you a high hourly rate, during a financial planning interview. Everything is already put in to the software so you don’t have to start from scratch or think too much.
A strong and stable financial situation has always been the short route towards a sound and independent financial situation. Maintaining control over your personal finance enables you to maintain control over more aspects in your live than just money and it all starts with having a good budget and sticking to it.