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7 Ways to Apply Risk Management to Your Personal Life

7 Ways to Apply Risk Management to Your Personal Life

Risk management is everywhere in business, but what most people don’t think about is that risk management is also in our daily lives. Every choice we make has a consequence and a reward.

I recently sat down to speak with Ffx Academy founder, Patrick Kenney about ways people can apply risk management in their personal lives.

So, this is what I learned and what I want to pass on to you:

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1. You should surround yourself with the proper individuals

Surrounding yourself with people you can trust puts you in a place where risk becomes minimal. It puts you in a place where you have some control instead of no control. Being able to have some control over your surroundings and your environment helps downplay the risk(s) you take in business, especially since risk is inevitable.

2. Educate yourself in whatever it is you are doing

If you are educated in whatever you are doing, then you are lowering the amount of risk because you have a lower chance of making the wrong decision. There won’t be much setback because you either have a general idea about what you’re doing or what you’re trying to accomplish—even when something bad does happen, you have the knowledge to fix it.

Usually, worst things happen when you don’t know what you’re doing.

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3. Only listen to the people who have what you want

If you’re trying to be a good basketball player, don’t go to the person who’s never played basketball in their life. Go to someone who is where you want to be at and get them to teach you how to get there. There’s a few people out there that are perceived to be good until you figure out that they’re only perceived as good.

You need to find someone that is legitimately good at what they do in the area you want to be in; that way you minimize risk of taking advice from someone who has never done it before.

4. Understand you can’t have the good without the bad

In life, there’s no way you are going to be happy every single day of your life. You are going to have bad days and good days. It’s inevitable. But don’t let that stop you. Just knowing that it’s a part of life will minimize your risk of having mental breakdowns or making irrational decisions.

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With business, if you make a lot of money but have bad money management and you don’t think about investing, saving, taxes or expenses, then you are heightening your risk and can put yourself in a deeper hole than you were initially in.

5. Remember to enjoy the little things in life

People can be so stressed about becoming the next big thing that they forget to enjoy the little things in life. This might be the ultimate risk of them all because if you focus your entire life on working and not living you can end up missing out on a fulfilling life. It’s important to slow down and take the simple things in because we don’t get a second shot at life.

6. Risk is generated by character

If you’re an unethical person and step on people’s toes you have a higher risk of setbacks when you’re trying to accomplish something because you have more people out to get you. Even if people aren’t out to get you, they sure won’t want to help you. But if you’re a genuinely good person then of course their first thought isn’t to come and get you. In fact those people will push you further to your goals and help you get there. They will connect you with those you need to connect with.

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7. Don’t overthink it

You probably have been told to think long and hard about making the right choice. But too often you may find yourself overthinking about something that’s incredibly simple. You may overthink it and find all the possible bad things that can happen and then end up not taking the risk. Risk management is not solely on minimising risk. It’s also about taking them too!

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Adnan Manzoor

Data Analyst & Life Coach

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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