Money—such a loaded word. We spend an amazing amount of time, energy and emotion on money; loving it, hating it, worrying about it, or being frustrated by it. The one thing we don’t often do is talk about it. Sure, we’ll collectively moan over coffee or cocktails that we don’t have enough, that everything is so expensive; but the silence or moaning reinforces the illusion that money is complicated.
Are you thinking; what do you mean illusion? Money is complicated.
I get it. We can easily feel overwhelmed by debts, multiple investment choices, the general economy, job security, and pressing retirement decisions. But I would counter that while money may sometimes feel overwhelming, it really isn’t complicated or even all that interesting.
In fact, after more than 35 years in this business, I would say there are 6 fundamental money principles that anyone can master. If you take action on these 6 concepts you can change financial concerns into financial contentment.
Let’s take a look at them one-by-one
The 6 Keys to Money Success
Don’t spend more than you earn. Does that sound obvious and simple? It is simple. But you would be surprised how many people (maybe you?) don’t know how much income they bring in from all sources. If your money is blended with a spouse or partner your total income may be even more foggy. You may have a salary, commissions, bonuses, side-jobs, passive income streams, pensions, investment income, or rental properties. And if you aren’t clear about what you earn, chances are good you’re less clear about what you spend. Even those who have a good grasp on how much they earn are frequently less certain about where that income goes each month. Action: Switch-off financial autopilot and use the On Track Money Management System
Keep your lifestyle debt to a minimum. This refers primarily to credit card and line of credit debt that creeps up month after month, year after year. We are a nation of debtors, but this doesn’t mean you have to be part of the craziness. Unexpected things come up in life and a credit card can certainly get you out of a jam (car repair, furnace failure) but don’t just let the debt sit there, pay it off as quickly as possible. If you like to shop with a credit card to earn points or cash back bonuses; be sure to spend within what you can payback before you are charged interest. Action: Don’t spend what you can’t pay in full by the end of the month. If that isn’t possible (because of an emergency expenditure), create a plan to pay it off and stick to the plan.
Create savings over time. Review your cash flow and make sure there’s some left over for emergencies (to avoid those credit card scenarios mentioned above) and future savings. This may take a lot of discipline and maybe even some sacrifice, but it’s absolutely essential if you want to retire someday or avoid a potential financial crisis from job loss, illness or another inevitable downturn in the economy. Action: Start right away. Get clarity on what you need to save and then make a realistic plan to get there. Don’t wait because you think the amount you can save right now is not substantial enough. Every. Dollar. Counts.
Make sure you understand the basics of investments. Do a little advance homework. There are many books that will teach you the basics of investing, and if a book seems daunting just do a google search, but make sure you only read articles from reputable sources. Action: A good place to start is the Money Coaches Canada Your Investment Check-Up. Afterwards, if you have questions or concerns about your investments, an On Your Side Investment Report Card™ will provide an evaluation of your investments, and a straightforward action plan to implement our recommendations.
Know when “enough is enough.” Do you know how much money you really need/want at this specific stage of your life (student, business owner, family person, retiree). How will you know you’ve reached this target? In a social media obsessed world we can lose sight of what is important to us and start comparing our choices to those of our friends and neighbours. Action: Turn off the noise of the internet and really think about what you value. There are no right or wrong answers, it’s your life. Once you know how much money you need, it’s time to crunch the numbers so you can make a plan to get you there.
Appreciate what you already have. It might sound trite, but there is a great sense of relief and freedom in acknowledging your past successes and appreciating what you already have. This is not only about the material goods you own, such as your home, investments and savings, but also about your education, job satisfaction, family and friends, talents and skills, quality of life and so on. Don’t believe you’ll suddenly become happy when you reach a certain wealth milestone. That sort of happy is fleeting. Once a level of financial success becomes your new normal, it won’t be enough to make you happy anymore. Just look at all the unhappy wealthy people in this world. Action: Understand that happiness is a mindset that you can adopt daily by choosing to focus on growth and gratitude. Happiness comes from a sense of purpose and connection, not from things.