Creative art of personal finance
Money, Money, Money..!!! One way or the other we are all running after it. So much so sometimes we forget that money is just the means to an end. Money is supposed to fulfill your needs, desires, buy that experience, get that feeling of security, buy that luxury you always wanted, etc. But what we end up losing all that and more in the race to earn more money. Don't get me wrong; money is important; nothing in the world moves without it.
This is where managing money comes into picture. This is where the rich separates themselves from the poor. The wealth mindset separates itself from the consumer mindset. Always measure your income by how much is left at the end of the month (surplus after deducting all your expenses including monthly allowances for annual expenses like insurance, annual fees, etc). So in a way, it does not matter how much you make, if your expenses are more than what you make.
Do you talk about your dreams or are you afraid that others would laugh on it or you know for certain that you would not be able to fulfill it or you dream according to your current situation. The reason to have a dream is because it is first step towards setting up goals. Would you sit in a car or bus or train if you are not certain where it is heading. However, when it comes to life we are just clueless where we are heading. Once you have dream identified, decide an amount that you would need and the date by when you want them to be fulfilled or achieved. This is not supposed to be one time process, you keep re-evaluating, adding and re-writing your goals as and when circumstances change.
Now when you know what you want to achieve and the amount of time and money required, it is time to do resource analysis or situation analysis. There is very high probability that you would be way short of the money and time required. That is when you start thinking of creative ways to fill that gap. When you start thinking about it, you will discover creative ways to bridge the gap. One thing you need to be careful about is to not to discard your goals in disbelief.
One of the primary goals that you must have is to design an emergency fund. When you start allocating money, make sure that you allocate specific investment vehicle/s for specific purpose. Do the portfolio mapping exercise so that you do not end up mixing allocation.
And you are ready to go. Now you know if you need to work that extra job, or another source of income or if you should stick to whatever you are doing. The above exercise is easier said than done, it is evident from the fact that most of the people just go through life to end with no planning and too many regrets.
It will take creative visualization and all your energy to achieve all your goals, even if you think otherwise. So take help from someone who has done this exercise already and has fruit on the tree.