Are you really in control of your personal
Do you do the right things to make your
money work for you?
How do you view money?
The reason that I am asking you these
questions is because most people are not truly in control of their finances.
I want you to make a lot of money with your
property investment business. But if you don’t manage that money properly then
you will not achieve the freedom that you desire.
I was not always in control of my personal
finances. If I made a lot of money I would buy a new car or some other toy that
I didn’t really need. Do you do things like this?
I wasn’t achieving my goals mainly through
poor money management. So I decided that enough was enough and it was time for
me to take control.
In this post I will share with you the 3
personal finance habits that I embraced that put me on track to achieving my
freedom goals. These all make perfect sense and will transform your finances if
you adopt them.
One of the things that I learned from my
assessment of my personal finances is that those that have wealth earn interest
while those that don’t have it pay interest. So please read this post in full
and commit to making the 3 personal finance changes in your life.
You need a Budget
Creating a budget was the most effective
way that I was able to manage my money and I strongly recommend that you create
a personal budget too. When you have a budget you take control of your money
and use it where you want to.
Something that I strongly recommend that
you do before you create a budget is to take a look at what you are spending
your money on over the last 6 months for example. I actually went back over a
year because I knew that I had a couple of annual subscriptions lurking in
there such as AA membership.
You need to critically examine what you are
spending your money on. I found that I was paying out for monthly memberships
that I wasn’t using any more. I also discovered that I was spending a great
deal of money annually on things like coffee and eating out in general.
Spending £2 – 3 on a coffee doesn’t sound much but over a year it is a lot.
Sometimes it is difficult to let go of
certain things. If you have a new car do you really need an annual AA or RAC
membership? Are you paying too much for your car insurance, home insurance,
life insurance etc. I am not suggesting that you stop spending money on
important things but is there a cheaper alternative?
I started by assigning a category to all of
my expenditure. It doesn’t take that long to create a budget and it is easy to
start off with a simple spreadsheet. There are a lot of personal budget apps
out there but I suggest that you just keep it simple to start with and focus
all of your energy on sticking to your budget.
When you have a budget you can make
decisions at the beginning of each month a lot easier. Before I had a budget I
would just get everything that I wanted without giving it that much thought and
then be shocked at the end of the month to find that I had a lot less in my
bank account than I expected.
It should not take you too long to master
budgeting. The concept is pretty simple really – know what is coming in and
control what is going out. Having a budget really helped me to change my
financial situation for the better. I am not going to pretend to you that it
was easy to follow at first – old habits are hard to break.
But when you see the cold numbers in a
spreadsheet or budgeting app on a daily, weekly and monthly basis it does help
to focus your attention on eliminating unnecessary spending. By setting a
budget each month you can plan your expenditure properly and with time you will
be in total control of your money.
Get rid of that Debt!
Do you have credit cards with debt on them?
What about loans for a car and other items? How much interest are you paying to
service this debt every month? Think about what you could do with that money if
you didn’t have to pay it for debt.
Now don’t get me wrong here – I believe
that credit cards are useful and I still have them. But what I do now that I
didn’t do before is to pay them off completely each month. At first this was
really painful but it made me examine closely what I was using the cards for. And
I found a number of things that I didn’t need.
If you have a lot of credit card debt then
you need to take steps to reduce this as quickly as possible. It is likely that
the interest you are paying on this debt is a lot higher than with a loan. Take
a look at your options here. Can you get a loan at a good rate to pay off your
credit card debt and save yourself a lot of money in interest?
Your debt situation is going to be
difficult to mine. What you need to do first is be aware of exactly what your
debt position is. Then you need to look for strategies to eliminate your debt.
There are a lot of good ways to do this that are beyond the scope of this post
but there is plenty of good information online.
Make it your mission to become debt free.
It is very liberating and you will save so much money. You can use this money
in a smart way to invest in your future. Getting out of debt was one of the
best things that I ever did.
Invest your Money
Once I had created a budget to control my
expenditure and eliminated my debt I started to invest the extra money into a
savings account. Sure you can do other things which provide a better return for
additional risk but a savings account is a good place to start.
Even with a lowly savings account it is
amazing how quickly the money builds up and seeing that interest accrue each
month is very satisfying. Another advantage of having savings is that you can
use them for those unexpected things that happen.
Maybe your car needs an expensive repair or
you need to take care of some other large bill you were not expecting. You
don’t want to get into a debt spiral again by using your credit cards so pay
for this using some of your savings.
As for other forms of investment well you
are in the business of property investment which should deliver higher returns
than most other methods. I am a great believer in diversifying so it will not
do you any harm to investigate other options. Talk to a financial advisor and
see what they have to say.
In my opinion it will be difficult for a
financial advisor to come up with anything better than property investing in
terms of the return on your money. But you can give it a shot. Just make sure
that you are using your money to earn interest instead of paying it.