I am on a personal quest to manage the way I spend and use money in an attempt to reach my long-term goal for financial freedom. Put in simple terms, financial freedom is when an individual has passive income that is able to pay for his or her bills and lifestyle without having to physically work as the money is now working for you.
But before you get there you have to do an inventory on how you actually handle your money. We all talk about how we want to drive luxury cars, live a lavish lifestyle and have money in the middle of the month – but it is essential to first look at your money habits because they indicate how you would handle a large amount of money. If you cannot manage P2000 then you cannot manage P20 000.
Inspired, by Mr. Robert Kiyosaki, I am going to give a few tips on how you can begin to pave your way to financial freedom by first changing your money habits. I recommend that you invest in your financial education so that you align your mindset to those of the wealthy class.
- 1. Pay yourself first
Forget about paying the bills first. Yes, you MUST pay your bills – “owe no man nothing but love”, says Paul from the Bible. He simply meant pay your bills on time. However, I will let you in on a secret the wealthy know. You have to pay yourself first. That means you should have a savings account where you dedicate a small portion of what you earn so that when the money has accumulated you can use that money to invest in something. That is being smart. Even if it is just P50; that P50 will mean something, believe me. If you feel that you won’t have enough money left over after paying your bills and everything else that is important, then you are in luck because that will force you to find another stream of income. You will begin to expand your mind. You can cut your weekend sprees and babysit your neighbour’s child. You can join a Network Marketing Company. You can bake and sell muffins at the office. You can do anything, if you really think about it. An extra P300 will make all the difference! So pay yourself first!
- 2. Be honest about where you are
It is easy to lie to other people about where you are but you cannot lie to yourself because your bank account says it all. You have to come to a point in your life where you are completely honest. If you spend more than you earn then you have to look at the psychology behind it. Are you going out too often just to impress people? Do you splurge on new outfits unnecessarily? I have found in Botswana the number one money locust amongst the youth is spending recklessly on entertainment. If you are doing this, which I myself have been guilty of, then stop right now and ask yourself this question: if I carry on like this what will my net worth look like 5 years from now? Remember, that is 60 months. You can do a lot in 60 months.
- 3. Write down where you want to be in 5 years
Many people never write down their goals. You need to have monthly and yearly goals because without writing them down you will be blown with the wind and it will toss you hither and thither. Is that the kind of life you want to live? Just going along with the status quo? I will give you some advice learned the hard way: if you do not take hold of your own future, the government, employers, friends… just about anyone will. Write down a realistic plan and get to work. It doesn’t take a rocket scientist to know that small actions compounded over time create your big result. So you can do it or not do it. Either way, you will get a result. It is called the Slight Edge. Google it.
- 4. Get rid of bad debt NOW
Most people have accrued bad debt such as clothing accounts. I can’t even begin to tell you how my Edgars account gave me a nightmare- but these things have to be paid off and never, ever be opened again! If you have bought furniture or a car on credit, or have a mortgage please work on a plan to pay these off as quickly as possible. It will take discipline and it won’t be nice because your mind will not be used to it but would you rather suffer for two years setting yourself on the road to financial peace or would you rather, ten years down the line sign up for bankruptcy? Remember what I said earlier. If you cannot manage P2000 you cannot manage P20000. If you cannot manage P20000 you cannot manage P200 000. You do the math…
- 5. Begin to think like the rich
I have made it my personal goal to change my mind set. I am going to forget everything I have learned about money and learn the way the rich do. Why would I act like a chicken if I want to soar like an eagle? These things are common sense. Check your environment. What comes out of the mouths of the people with whom you spend 80 per cent of your time? What sort of books are you reading? Are you always looking at the down side of life? Have you found yourself a mentor? I cannot stress this enough. I used to think that all of this did not matter until I realised how unhappy I was with my situation. I know that there are certain things that happen to us that we cannot control but the truth is, and people never want to admit this, that 95% of your life is due to decisions YOU made. Walk into Exclusive books at Riverwalk Mall and you will find a plethora of books written for your financial education; just be careful what you choose to read. It’s amazing how, if we dedicate just 5 hours a week to a certain subject how our choices change within 90 days.
This is just the foundation of everything. I have chosen to take the road less travelled because I want an amazing life. We have all made mistakes when it comes to money but we can choose to change starting now. Implementing change is never easy but remaining the same is even worse. Jim Rohn said, “Discipline weighs ounces, regret weighs tons”.
By: Neo Sophie Molefe