Advertising

The 5 Pillars of Financial Health

Advertising
The 5 Pillars of Financial Health

Getting on your feet financially isn’t rocket science. It’s simple, but it requires a proactive and persevering mindset. Here are five principles that apply to every person on the planet when it comes to their financial health. I call it the BISEED and you’ll see why.

1. Budget

The first step to taking charge of your finances is understanding where your money is coming from and where it’s going. Once you’ve painted this financial landscape of your situation, you’ll be ready to strategically move forward, get out of debt, and go further. The second step of budgeting, has to do with deciding what’s a priority, how you can spend less on expenses, and then plan and project your short and mid-term financial situation. There’s nothing new here. But then again, most people get budgeting right and then just stop. That’s a financially fatal mistake!

Advertising

2. Invest

Your budget may not look great. Money-sucking-black-holes (personal loans!), high mortgages and lots of unexpected expenses makes you wonder, “How in the world am I ever going to get out of this!?” Glad you asked: make your money work for you. This is also how you break free from the mentality that money buys you things. Money’s power isn’t in how much it can buy—and really, it can never buy the most important things of life; love, joy and health—but money’s power rests in it’s ability to be multiplied. That’s what investing is: money multiplying.

How do you invest then? You first invest by giving because that breaks the powerful hold of money on you. And then, wherever you are, whatever the economic situation and whatever your budget—invest in any of the millions of ways you can.

Advertising

Now, most people just jump in the water without knowing how to swim. Why traumatize yourself? Before you invest, spend time—days, weeks, even months—learning about investing and exploring opportunities that come your way.

3. Save

But never for the long term! Saving cash in an account will always generate a loss—we’re talking years here. But saving is an excellent strategy, not to build wealth, but to reach specific, short and mid-term goals. Saving is also good to smooth out the rough edges of your monthly and yearly budgeting cycle, as life happens and that means many unexpected expenses arise.

Advertising

4. Entrepreneurial Endeavors (EEs)

A huge lie many people swallow is the belief that they’re not cut out to start or run a business. They come up with all sorts of excuses to convince themselves this, but the truth is, it’s all about what you are willing to do and learn. Being an entrepreneur is different from being an investor, because you are doing the work that you love, preferably, to earn money. Many times people jump into EEs because they have no other choice, but why wait till the pressure builds like that? (Speaking of which, I highly recommend the great movie Joy!) And why deny yourself the personal rewards of running a business? There are a virtually infinite number of ways you can start engaging in EEs. Whether you start something on the side or even grow further to the point where you quit your day job, dream big, and enjoy the journey!

5. Debt

Debt is last because if you focus on debt, it’s bound to bring you down, down, down. So before you drown, face your dragons head on. Debt is just a number, it’s not who you are. Speaking of dragons, why are you in debt? Because you spend more than you earn. So, the answer is easy, right? Spend less! Not really. Go out there and invest and make business. You’re most powerful weapon is your mind, so exercise and nurture it to grow financially. That said, the real way to get out of debt is to both increase your income (investing and EE’s or even getting a better job) AND spending less.

Advertising

BISEED. Buy Seed. That’s what money is. It’s a seed, and like the seeds you sow, when handled correctly, money will multiply.

Here’s to your bright financial future! Cheers.

Advertising

Featured photo credit: Dogancan Ozturan via unsplash.com

More by this author

How To Get Good Grades While Studying Less The 5 Pillars of Financial Health 5 Things I Wish I knew As A University Student Six Great Tips For Success In Any Business

Trending in Budget Activity

1 6 Easy Ways to Treat Yourself 2 Seven Tips to Save Money While Renovating Your Home 3 4 Ways to Make Every Penny Stretch in 2017 4 Getting Out of Debt in 4 Simple Steps 5 10 Amazon Review Sites That Will Get You Really Good Deals

Read Next

Advertising
Advertising

Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Advertising
Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

Advertising

Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

Advertising

If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

Advertising

Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

Advertising

8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

Advertising

Reference

[1] Hartford Gold Group: IRA Retirement Accounts

Read Next