How can you achieve the financial balance to enjoy yourself and live your live debt free.
A wise man once said, “You Only Live Once” — so dance like no one’s watching and spend your earnings like there’s no tomorrow, right? Not quite. Although this sounds nice in theory, it’s not in your best interest.
In this post, I’ll explain how you can achieve the financial balance to enjoy yourself and be confidently cash-flow positive. By reading you will find tips on how to live up your prime earning years without crippling debt and don't sacrifice your life when you are still young.
The financial advice you’ve heard over the years is probably not as straightforward as it should be. The 3 pillars of a strong foundation in personal finance are:
- Use money to achieve financial freedom.
- Know what you’re spending money on.
- Avoid debt.
Some high earners tend to associate spending freely with financial freedom – but what they actually desire is freedom from debt, freedom from constantly worrying about money, the security to provide for their family’s needs and comforts and the choice to enjoy their life if they would like to retire early.
The key to achieving financial freedom is to make hard money choices today.
To make your budget realistic and sustainable, it’s crucial to have room in the budget for fun! Put aside some money each month for something you really enjoy — like a dinner with friends or a trip to the next holiday spot you want to go. If you don’t plan to spend on things you enjoy, you will get frustrated and give up, rather than making progress towards your financial goals.
When your budget is balanced and you're committed to your plan in time you will see that thanks to compounding effect on your investments you will start to see the profits which will generate the capital needed to achieve your goals.
You have probably heard that your money should be working as hard as you are if you want o enjoy financial freedom.
It’s rewarding to indulge every now and again, but you always have to remember that money is essentially your “life energy.” You exchange your time and your energy for money, so spend it intentionally on what’s most important to you.
you can simply achieve that by spend money on things that truly meaningful to you rather than buying into urges to purchase something just because you can. Do those 18 carat white-gold cufflinks really matter, or should you spend intentionally with your kids’ college tuitions in mind? Think about what matters to you most in the long run, rank them within your household, and make conscious choices. That’s how your life energy should be spent, and you will feel empowered by putting your energy towards what matters most and in time you will be able to see the results as you will have much more choice and less to be worried about.
Let’s focus on knowing where your money is going. If you want to build wealth and financial freedom for you and your family:
- Spend less than you earn.
- Track your spending.
In order to ensure you’re spending less than you earn, create a gap between your income and your expenses by living within your means. Take the time to reassess your spending continuously and ensure that saving for yourself is at the top of your priority list.
Whether it’s withdrawing money from an ATM look for low or no-cost alternatives. However, if you are investing in retirement funds or any other investment vehicles, follow the simple rule... if something is surprisingly cheap it usually isn't as good or secure as someone can claim. it should always ring your alarm bells.
You should try to seize any chance you have to spend less by being resourceful. It’s an incredibly empowering feeling.
You can use that excess to pay down debt faster and SAVE!
Remember: Having a high income does not mean you are wealthy. People who have a lot of wealth are those who adhere to this “gap” and, subsequently, can build an emergency fund, build net worth, pay off debt, and afford financial flexibility to lead richer lives.
Once you start tracking your spending, you’ll truly understand just how good or bad your situation actually is.
You need to know where all of your money is going, and then decide on where you want it to go. So, map out your spending habits and track your progress in a concrete format. Make sure that your plans aligns with what actually happens. And remember, what actually happens changes over time.
The last tip to create a financially comfortable life for yourself long term is: avoid consumer debt. Paying interest to buy something you can’t afford now, is often a curse that many households have difficulty freeing themselves from.
If you have debt, be proactive and pay it off, no matter the amount per month. Making progress is better than no progress at all. Paying off high interest consumer debt like credit cards and personal loans is the best risk-adjusted financial return you can get on your money, bar none.
Save money systematically and consistently and you’ll become wealthy over time. It’s a sure thing! “Slow and steady” really does win the race, and that’s how high-rollers get there. Math's are applying to this principal as compounding effect isn't a myth. It’s a driving force for your savings to grow over the time and generate more returns each period the interest is paid.
The key here is that financial success is a mindset combined with a math equation. If you’re in your prime earning years, take advantage of it, and position yourself for success in the long haul. Always assess your priorities and spend with purpose! The saved surplus will grow over time to give you financial freedom and debt free life in future.
However, you have to be aware of few factors which affect the money you are saving over the time. Most of people I met have initially thought that the best way to save the money is to put them in the bank... They couldn't be more wrong! Although, they had a good knowledge of returns they can expect from the bank they almost always failed to consider the inflation. You will agree with me that most of bank accounts offer the annual interest between 1% to 2% (some can go lower or higher depending on jurisdiction). The main point is that the inflation level in most of the western countries is approximately 3%… That means by leaving $1000 in the bank you loose money every year instead of generating more capital which in time will work for you instead of being profit of your banker.
If you’re interested in taking a good, hard look at your circumstances without doing all of the grunt work, free up your time and contact me for an appointment.
I’ll help you align your finances with your core values, priorities, and what’s most important to you while finding the best solutions available to help you grow your wealth and achieve financial freedom.