“If you want to know what God thinks of money, just look at the people he gave it to.” ― Dorothy Parker
Do you regret not earning truckloads of money that could buy you the luxury life you’ve always wanted? I’ve seen people become depressed because of their poor finances. Many teenagers miss out early in life just because their parents cannot afford the latest gadgets their rich friends can afford.
However, money is not everything. Money might buy you things that make you feel happy, but happiness from within is what money can’t afford.
I have a lot of friends who have very little money to spare, yet live a rich life. Their lifestyle, their personal satisfaction, and their acceptance of themselves are what makes them seem rich. Non-monetary things can also make you happy – and believe me, they will be your biggest asset in the long run.Advertising
Here are a few ways you can live a rich life without lots of money.
1. Learn to accept yourself
It can be hard for you to understand that money should be not a top priority. You can become rich in an instant and then lose it all the next day. You need to replace your personal desires with acceptance and learn to stay happy with what you have right now.
Seek inner peace and learn to control the uncontrollable in life. If you find yourself obsessing over things you want but don’t have, take a paper and write down that it’s okay to not have those things.
2. Become creative
You need to become creative to manage your personal finances and remain happy even if you don’t have much. If you are rich, you buy. If you are not rich, you create. Yes, not having much money can help you be creative.Advertising
Learn to find happiness in small things. Draw a picture, take a photo, and invent something that keeps you at peace. Happiness is within you.
3. Stay authentic
You need to stay true to yourself in order to live a rich life. When you find inner peace and do things you love, you are reflecting your inner-self. There is no greater wealth than understanding what you are meant to do in life.
Regardless of your financial situation, try to believe in yourself so that you can stay happy, enjoy the small things in life, and keep yourself motivated.
4. Do what you love
Making tons of money is what most people might call being rich. However, if the person is not happy with their job, he probably considers himself the poorest person on earth.Advertising
Floyd Mayweather’s net worth would not have been $700 million today had he not been a boxer. Similarly, Bill Gates would not have been the richest man on earth if there was no Microsoft. People who pursue what they love have always prospered more than people who work out of compulsion. The more you start doing what you love, the more money will continue to flow into your life. Even if it does not, you still get to stay happy as you grow rich within yourself.
5. Stay gentle
Gentleness was considered one of the greatest virtues by a philosopher named Confucius. When you are humble, you develop an ability to sense your environment and work accordingly.
For example, look at people like Buddha and Gandhi and compare how lived their lives. They were gentle, realized the value of their lives, and always stayed strong in their thoughts. Buddha left materialistic prosperity to live the life of monk and find the richness within himself. Gandhi belonged to a poor family, and despite leading one of the largest revolutions in the world, always stayed gentle.
Try to be soft and smile to make others smile. If you succeed in making other people happy, then you are truly rich.Advertising
6. Become generous
Giving money is not the only act of kindness. In fact, I would not call it being generous at all. Generosity is what comes from within. When you give someone something from your heart you feel happy, and that feeling is what makes you feel rich. You also need to realize that sharing what you have, without even thinking of what amount you have, is what an act of kindness means.
Also, provide undivided attention to people who need help from you. Nothing is more generous than giving all you have and making others feel good.
7. Build relationships
The real wealth that you build and will be remembered through your relationships. People need to value their relationships more than anything else. Seek to make emotional connections with your family, your friends, your partner, and people that you meet regularly.
“Matters of the heart are important to me. All this materialism and all the money and wealth are things that you don’t take to the grave. One day you have it. The next day you don’t.” — Shari Arison
Featured photo credit: Flickr via flic.kr
Last Updated on September 2, 2020
How to Set Financial Goals and Actually Meet Them
Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?
In this article, we will explore ways to set financial goals and actually meet them with ease.
Table of Contents
4 Steps to Setting Financial Goals
Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.
1. Be Clear About the Objectives
Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.
It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.
Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.
2. Keep Goals Realistic
It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.
It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.
3. Account for Inflation
Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.
Therefore, account for inflation whenever you are putting a monetary value to a financial objective that is far into the future.
For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.
4. Short Term Vs Long Term
As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.
By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.
How to Achieve Your Financial Goals
Whenever we talk about chasing any financial goal, it is usually a two-step process:
- Ensuring healthy savings
- Making smart investments
You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.
Ensuring Healthy Savings
Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.
This is the focal point from where you start your journey of achieving financial goals.
1. Track Expenses
The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.
Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.
If you’re not sure where to start when tracking expenses, this article may be able to help.
2. Pay Yourself First
Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!
Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.
The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.
Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.
3. Make a Plan and Vow to Stick With It
Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized
Nowadays, several money management apps can help you do this automatically.
At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.
Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.
You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.
4. Make Savings a Habit and Not a Goal
In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.
Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:
- Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
- If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
- If you go shopping, always look out for coupons and see where can you get the best deal.
The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.
5. Talk About It
Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.
Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.
6. Maintain a Journal
For some people, writing helps a great deal in making sure that they achieve what they plan.
If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.
When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.
Making Smart Investments
Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.
1. Consult a Financial Advisor
Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.
Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.
2. Choose Your Investment Instrument Wisely
Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.
Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference.
As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.
3. Compounding Is the Eighth Wonder
Einstein once remarked about compounding:
“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”
Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.
Start saving early so that time is on your side to help you bear the fruits of compounding.
4. Measure, Measure, Measure
All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.
If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.
Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!
The Bottom Line
Managing your extra money to achieve your short and long-term financial goals
and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.
More Tips on Financial Goals
- 20 Better Money Habits to Help You Increase Your Savings
- The Best Ways to Save Money Even Impulsive Spenders Can Get Behind
- Top 10 Recommendations on Money Management Apps
Featured photo credit: Micheile Henderson via unsplash.com
|||^||The Balance: Inflation, How It’s Measured and Managed|
|||^||Money Instructor: Basic Types of Investments — Financial Instruments you should Know|