If you were asked about your finances at night, awaken from sleep will you remember the figures?
Will you remember your deposits, your debts, your net savings, your average monthly expenses? Not many of us can answer these questions. Money is one of the most important parts of our life, but we don't know much about our own finances in precise terms. Is that not surprising?
Money management plays a very vital role in success. If you were to put the same questions to a very successful person, you will get all the answers with analysis thrown in for good measure. Those who make very big money understand the importance of money management. Unless you manage your money properly, you will not be able to make the best use of it.
I would discuss few important parts of money management here, that I learned the hard way.
Debt - don't take debt if you can manage without that. The thought that you have debt makes you feel uncomfortable and kills enthusiasm. Ask two persons about their life- one who has no debt but lives very simply and the other who has debts and lives lavishly. You will find out that one without debt is enjoying his/her life more. But there is according to several business people, like Donald Trump, Robert Kiyosaki or Grant Cardone, that there is good debt and bad debt. Good debt is a debt that makes you a business deal possible where you profit more than the debt itself is or you build a positive cash flow. You pay back the debt, let's say monthly and you have cash left and maybe even a property or a business the is growing in value.
Bad debt is anything you buy to currently enjoy or show off, mostly a depreciating item like a car, a watch, a vacation, a piece of furniture or clothing, you name it. Anything that you spend money on, but it does not bring you anything basically. My new rule is: Never buy a car for more money than your monthly income. I do this, driving a Mercedes-Benz, paid even less than my monthly income. Bought a meticulously pre-owned one direct from the owner, and have no worries.
Increase Profits - target good profits and try to reach that figure in your business. If you are employed, set targets for your salary and achieve it. Aim for the higher position, by delivering more value and leadership character. Maybe at the same company, maybe somewhere else.
Increase Savings - Save more and spend less. Your savings will not only be useful for a rainy day but also create a war chest for you that can be used when the right opportunity arrives. But save in different things, not only cash. Have some different currencies, stocks, gold, silver, cryptocurrencies. So your eggs will not be in only one basket. Educate yourself about fintech and the new world of decentralized finances. For example: only save in my home currency HUF would not be good, as it depreciated a lot to EUR in the last 10 years, but in the last 3 also.
Reduce Costs - Wherever possible, reduce costs. Avoid all unnecessary expenditures. Reduce every cost. Grant Cardone said once, I remember it well and took his advice: " Do not change your lifestyle for eight years." -while increasing your income. That makes it possible to gain some capital After that it will become easy to earn more and spend more. If you don't do that right from the beginning, you will never be able to save a serious amount. There will be always something to spend your money on.
Own your own business - that gives you a lot of benefits, including tax advantages. You can learn a lot about why owning a business from Robert Kiyosaki, he was my mentor too, through his books, like the " Rich Dad, Poor Dad"
Article written by Silard Matrai, inspired by CDMohatta
Comments
Post a Comment