Tuesday, November 27, 2007

Money Talks-The Rules of Money

Money Talks-The Rules of Money

It's Not What You Earn, It is What You Keep.

Your income is important, but it's what you keep that counts. Think about what you will earn over your lifetime. If you work form age 25 to age 65 or about 40 years, and assuming you gradually increase your income and your average income comes out to be $30,000 a year over your working years.

$30,000 x 40 years = $1.2 million

So you have earned a million dollars, but where did all the money go
If you're doing really well you could easily average $60,000 per year, earning $2.4 million over your working years. If both husband and wife are working these estimates are low. Why is it that with all this money passing through your hands, most people could not imagine being a millionaire and are living from paycheque to paycheque. Look at the money you have earned in your own lifetime and you will be shocked. How much have you saved?

The Things That Keep You Poor.

Where did all the money go? You know that it is important to save, but you need to live today, so you are pulled in several directions at the same time. We all want to have all the toys, the thought is we deserve them for all the work we are doing. Therefore we end up with more bills than there is money. You end up stuck living paycheque to paycheque.

Using some simple principles and a little discipline can change everything.The most important thing that you can do to solve your financial challenges is to change your attitude and believe it is possible. Why don't we make the effort to learn how to manage our money smarter?

1) You do not think you have enough money to manage. You can find ways to free up money- no matter how tight it is.

2) You do not think you have the time. Are you kidding! You can not afford, not to take the time to learn about money or would you rather retire broke?

3)You do not think you have the knowledge. You think the rich have some hidden advantage, they don't. You think that you need to pay money managers hefty fees to look after your money. The truth is the same money management techniques are available to everyone. A personal money manager knows and applies some basic rules to gain maximum value for the minimum price. An advisor can be hired for little or no cost and will keep you accountable to saving. Your financial institution has financial planners that you can hire for nothing, they are paid on salary and don't charge you a dime. They want you to invest your money with them and will give you advice on how to save and invest. Find an advisor that has a recognized financial planning designation and let them help you.

Building the Foundation.

The foundation to your financial house needs to be sound or the house will collapse. If the foundation is not solid when you construct a house the rest of the effort is useless. The cement that holds together your financial house includes three ingredients, the belief that you can achieve financial freedom, clear goals, and a definite plan.

The belief that you can achieve financial freedom, must be a passionate belief. You must live in the present believing in the abundance of the universe and attracting that abundance into your life. Your thoughts must be of abundance and gratitude for what you already have and for the financial freedom that you know you will achieve.

You need to set goals as an incentive to make the necessary sacrifices and as a benchmark to gauge your progress. You need short term goals that are quickly realized and long term goals for major cash accumulation. A short term goal could be a summer vacation as a reward for setting aside extra money during the year. A long term goal which requires more discipline over a longer period may be owning your dream home.

Setting goals forces you to think about what is really important to you and make choices to achieve those goals. Retirement should always be one of your goals, because before you know it, it will be a reality.

The financial roadmap is the first step to reaching your destination. Keep your financial plan simple, it's mostly about having a plan to save money. The plan must have specific goals, but must also be realistic. A reasonable and attainable plan is the secret to success

A Specific example of what you need to consider!

If you are 30 years old and want to save one million by retirement, first you need your specific retirement age, lets say, age 65. You can use a financial calculator to find out that you need to save $261 per month earning 10% to reach your goal. You are currently saving $ 100 per month, so the next question is how to save the extra $161. There are a couple of choices, you can cut back on spending or make more money. If you cut out one latte a day at $3.50 over 20 days per month, that would be $70.00. Or you might become a more valued employee by learning a new skill and get a raise at work of $1.00 an hour, which is an extra $40.00 per week or $160 per month. You may have a hobby that you love that could earn you a part time income by selling information in an online business. Check out our web site for more ideas. You can check out the numbers with links to financial calculators from our web site.

You get the idea, small changes can make a big difference.

Financial security is starts by saving small amounts over time, which can be used to build larger amounts by investing in assets that increase in value.

Where did the money go? -the dreaded "B" Word

A budget sounds like a lot of trouble, and too much sacrifice, but if you keep it simple that need not be the case. If you just keep track of spending for a few months and make a conscious effort to reduce waste you will get a picture of where your money goes, and chances are you will immediately see some areas that are out of line.

The real shocker for most people is cash and how it just seems to disappear. Keep track of where the money that comes out of the ATM goes. The more you live with the budgeting process the more it becomes second nature and you begin to control your expenses rather than your expenses controlling you.

Go to our web site to get a simple Monthly Budget Planner.
Separate Wants From Needs.

You must constantly keep your priorities in mind, control impulse buying, and keep in mind that bargains are only bargains when what you are buying is something you actually need.

None of us like to face the basic rule of managing money that you can't have everything, which means distinguishing between wants and needs. Do you need a new car or do you just want a new car when the old one will actually do for a while yet. If is going to cost you more in repairs to keep the old car, it may be time to change. The consideration of all the costs in purchasing the new car versus keeping the old car should be considered. You may have to postpone some of your wants for a while, which is not that tough, but is very important to your financial health.
Everyone knows someone who seemed to have all the toys, but when tough times hit was financially ruined. If you focus on wants and ignore savings you are leveraging your future for a present of fun and can end up paying a horrible price.

Procrastination the #1 dream killer.

The most important part of your financial plan is taking action. You can't do everything at once, don't get stuck in the planning stage, start one thing that will move you closer to your goal of financial freedom. Don't get discouraged it will take some time, but once you start and you have some small successes you will begin to see the light at the end of the tunnel.

David Lee is Financial Management Advisor, FMA, and has over ten years of experience as an independent advisor and working with major financial institutions. His goal is help people achieve financial freedom and enjoy the freedom to do what you want , when you want that wealth can provide.

Visit our web site at http://www.manifestingwealth.ca/ for resources and and free reports.

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