Am sure you’ve heard one of these statements before: money can’t make you happy, money can’t buy you happiness or money isn’t everything. These statements might be true but the fact is that money is vitally important. It is as important as the food it provides, the shelter it can buy, the quality of education it can afford.
Let us not kid ourselves by thinking that there is a substitute for money where money works. No there isn’t. Money is vitally important in our reality. If you want good food, quality shelter, good infrastructures, quality education and many more things, then you simply need money and you actually loads of it.
Because of the importance of money for a person wellbeing, I think it is time I cover it on this website. If you are penniless today, I can assure you that if you do everything written in this article, your financial future will be so much better.
Here are the seven steps to a better financial future:
(1) Ensure You Earn Regular Income
You will struggle to be financially independent or create a better financial future for yourself if your earning is inconsistent.
If you make £500 this week and make nothing next week and then make £400 the week after, you will struggle financially, emotionally and mentally because you are not sure when your next income will arrive.
So, the first and foremost thing you must do right now is to ensure that your income is regular. The emphasis is on “consistent income“.
This can easily be solved by securing a normal monthly job but if you are self-employed or a small company, then try and secure yourself a contract with people and companies that will pay you regularly and on time.
(2) Pay Yourself 10% Of Every £1 You Earn
Have you noticed how we go through life paying for everything we purchase but we never seem to remember to pay ourselves?
I know what you will say; “I don’t even have enough money to pay my bills let alone pay myself 10%“. Let’s look at this in great detail.
So every month you earn money; each time you get paid, you pay the government, you pay your energy company, you pay your mobile network provider, you pay for your cable or satellite TV subscription, you pay the supermarket for your grocery, you pay the oil companies so you can fill up your vehicle tank with fuel, you pay your gym for access to there pieces of equipment, you pay for your new clothes and shoes, you even paid to your church through tithe and offerings but for some reason you believe you can’t afford to pay yourself?
I mean you should really think about this carefully. You can afford to pay everyone else but you? How much do you hate yourself? I ask this question respectfully because you can’t claim to love yourself and still say that you cannot pay yourself 10% of your earning. You just can’t.
No matter what your excuse is for not being able to pay yourself 10% of every £1 or $1 you earn, I want to tell you now that your excuses or reasons are not good enough. You paid everyone else but you claim you can’t afford to pay you – You that did all the work.
Each time you get paid, pay yourself 10% of that earning and make sure you pay yourself first. This is a vital step towards a better financial future.
(3) Reduce Your Spending To The Bare Essentials
When you follow the instruction in step 2, which is that, in every £1 you earn, you MUST pay yourself 10% first. Obeying this advice in (2) means that every month you have 90% of your monthly earnings to live on.
Knowing in advance that you will have 90% of your earnings each month to live on is good for you. It means that you will force yourself to cut out waste from your spending.
Majority of us spend a large sum each month on one form of vanity or the other. These include partying, eating out unnecessarily, excessive shopping, impulse vacations and e.t.c.
I am not saying you shouldn’t indulge yourself from time to time, but you must do it in a reasonable manner and you MUST do them within the 90% of your monthly earnings income.
(4) Invest The 10% You Paid Yourself
If you pay yourself 10% of every £1 you earn and just leave the money in a savings account that earns 0.5% to 1% per annum, then you will still struggle to create a better financial future for yourself and your family.
The trick to attaining a better financial future is to make your money work for you. A lot of smart people prefer to invest their money in stocks, bonds and funds.
Why do smart people prefer to invest their hard earned money in stocks, bonds and funds instead of in Forex, Options or Binary Options? It is because of risk. This leads us to the next step – Only invest your money where it is safe.
(5) Only Invest Your 10% Where Your Money Will Be Safe
For you to be successful financially you must first learn and understand two vital rules of money and investment. These two rules are:
(I) Rule 1 – Never lose your capital.
(II) Rule 2 – Never forget rule 1.
Let’s for the sake of example assume that you currently earn £2,000 after tax and you pay yourself £200 each month. So, in a year you have saved up £2,400.
If you invest this £2,400 in a fund, on average you will get 6% return per annum. That means your £2,400 will become £2,544 (£2,400 + £144 – The 6% interest from your £2,400) at the end of the financial year.
The following year you add £2,400 to your £2,544. So altogether you invested £4,944 at the beginning of the following financial year. At the end of the following financial year, your £4,944 will become £5,240.64.
You can see how it is nicely adding up. All these completely depends on you not losing your capital. But if you naively look at the 6% as small and believe you can make 10 times that amount from trading Forex, Options and Binary Options, you will likely regret that decision. Always invest conservatively.
The fact is that the higher the returns/profit in any investment, the higher the chance of you losing your capital. YOU MUST NEVER LOSE YOUR CAPITAL.
Before investing your hard earned money, always ensure you will get it back.
If you live in the UK, I will advise using Artemis Funds https://www.artemisfunds.com/
(6) Increase Your Ability To Earn
I have always advice people to continue to grow and better themselves because, in life it is either that you are progressing or you’re regressing. There is no neutral position between these two.
The same pertains to your income, you must grow yourself and increase your earning potential. If you are a receptionist today and you are still a receptionist ten years from today, then that is not really growth unless you have managed to increased your earning potential in that period through other legitimate means.
You must commit to increasing your ability to earn. Set a goal of what you want to earn in 2, 3, 4 or 5 years from now and find out which skills you must acquire in order for you to earn the amount you desire.
In fact, immediately you set the target for the amount you want to earn, you have already done half of the job.
You don’t have a problem of achieving your goals, your real problem is setting your goals correctly.
Today, write down in a sheet of paper three incomes:
(I) How much you want to earn.
(II) How much you want to save each month or each year.
(III) How much you want to retire with.
Once you write down these figures, ask yourself, what do I need to do to bridge the gap between what am earning right now and what I want to be earning in the future?
Your answer to this question will open up opportunities to you; these opportunities have always existed but you have never taken notice of them. Your realisation of these wonderful opportunities will force you to acquire a new set of skills.
(7) Provide In Advance For The Need Of Your Growing Age And The Protection Of Your Family
He that fails to plan, plans to fail. This is the fact of life. You must plan in advance for the things you want. This last step for a better financial tomorrow is important because it helps you plan in advance for things that will suit your ageing body and family.
For example, if today you’re working and earning good money as a personal trainer, obviously you can’t still be doing that at 50 or 60 years old. Your body will struggle to keep up with a personal trainer timetable.
So you have to plan for your ageing body financially and career-wise.
Do you want to retire at 40, 50 or 60? Do you want to send your children to Universities? Do you want to start an easy, laid back type of business at 50? Do you want to travel around the world later in life or do you want to move to a different country?
You have to plan for all of these now, not in the future. Now is the accepted time – 2 Corinthians 6:2.
It doesn’t matter where you are financially right now if you obey and adhere to the instructions given in this article, you will have a better financial future 10 years from now. Am not saying you will become a millionaire in 10 years but am saying you will become financially comfortable if you do as advised in this article.
All the steps given in this article are vitally important, so you must follow all of them if you want to have a better financial future.
I hope you’ve found this article useful in one way or the other. If you know anyone who might find it useful, please be kind enough to share it with them using the share buttons at the top of this article.
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Have a wonderful day.