At the beginning of this year I wrote a post called ‘Smart Money Moves 2018,’ which was focused on providing tips and advice on how to make better financial decisions for a healthier cash flow throughout 2018.
Making smart financial decisions is extremely important as it can help us reach our financial goals, but these decisions can be very hard to execute and of course stick to. Having good financial etiquette and practices can be the difference between creating wealth and living from salary to salary.
So below are 5 very important questions that we need to ask ourselves in order for us to have healthy finances and create a foundation that we can build on to create wealth for ourselves, our families and future generations.
1. Where is my money going?
Have you ever conducted a healthy analysis of your spending habits? Do you know what you spend the most on and what you spend the least on? You need to know every inch of spending habits in order to cut down and/or to save better. Is it time to stop throwing away your receipts or maybe it’s time to invest in a Monzo account? This is the first step in gaining control of your financial situation.
2. Am I successfully managing my debt?
Just because we have access to loans and credit cards does not mean we should live above our means. Building up your credit score is important but excessive spending and misuse of loans and credit cards can bring the score right back down. Is it time to assess your debts and create an easy-to-follow debt management plan that can lead to better cash flow? What’s the point of getting a salary every month if it’s always being used to pay credit card bills and car loans rather than being used to save or invest. Building wealth is difficult if debt plagues your life.
3. Is budgeting something I do?
This will tell you how to allocate your resources and will reflect what you value. Budgeting means sacrificing but this is a major key to becoming financially stable and thus successful. Create a budgeting plan for your bills, mandatory expenses, food shopping, emergencies and even your saving habits. Knowing where your money is going will give you serenity and peace.
4. What is the vision I have for my life?
I’m sure you all have some sort of idea about the type of life you would like to live within the next 5-10 years, so maybe it’s time to ask yourself the following questions:
– How can my money help me to get there?
– What are some of the financial goals that I need to set myself from now?
– What category of spending is not a necessity that I can cut down on to help me get there?
– What are some of the financial sacrifices that I am willing to embark on now to make sure that I have a better future?
5. Do I let my money work for me?
A lot of us get so caught up in securing one major source of income – our salary – and stop there. But in order to build wealth and generational wealth at that, we need to have more than one. How can we do this? The answer is pretty simple – make the money from your salary work for you. This can be through investing in shares/bonds, buying property and letting it out, starting your own for-profit business and much more. Before you decide what route is best for you make sure that you do your homework, building wealth isn’t easy so let’s not pretend that it is, but thanks to the internet and technological advances there are so many resources out there to help us. Making money whilst you sleep is possible, so don’t let anyone ever tell you that it isn’t.
Now that you have asked yourself the above questions ask yourself this; am I ready to embark on a smart money moves journey? Remember it’s not the money itself, it’s the knowledge acquired and the decisions you make that make the difference.
As Benjamin Franklin said “an investment in knowledge pays the best interest.”