There’s an old adage that goes “failing to plan is actually the same as planning to fail” and I have observed that this saying is particularly true in the area of finances. You can’t afford to trust fate, chance, luck, or happenstance with your finances because you’ll most likely end up in a messy financial position.
The journey to financial freedom is riddled with a number of pitfalls and sinkholes that can get you stuck without attaining your goals. This piece looks at four stops on the financial journey with a view to helping you chart a course to financial freedom.
Being under water financially
The financial game is rigged against most people from the onset because they set out on their financial from a losing position. Most recent college graduates will have a massive student loan burden and a number of consumer debt hanging on their neck even before the paycheck from their first real job arrives. If your expenses are more than your income, you are already under water financially. If your credit card balance continues to increase every month, you are already on the path to financial ruin and you’ll need to take drastic measures to halt and reverse the trend.
Admit that you are on the way to financial ruin and start looking for ways to get your finances back in order.
Living from hand to mouth
Some folks only have their heads above water financially but they are paddling desperately with their feet in order to stay afloat financially. If you are living from paycheck to paycheck, you are just slightly above water financially. Interestingly, many folks in this category don’t even know that they are struggling financially because of the quality of life in this part of the world. Your paycheck comes in on a Friday, you pay all the bills, and snap –there’s nothing left in your account; hence, you ‘ll stop spending money until the next paycheck arrives.
Many people live from paycheck to paycheck over the course of months and years without stopping to think about the futility of their efforts.
Struggling with stagnant savings
You can stop living from hand to mouth by finding ways to reduce your expenses or finding ways to increase your income. Once you have some little money left, you can start saving up money to create a sort of financial buffer. However, you need to know that your savings won’t grow as fast as you want and you’ll have bouts of stagnant savings. However, if you don’t give up on your savings game, you’ll eventually find out that your are starting to gain traction and your savings is starting to show a decent increase.
Once you have sizable savings, you’ll need to avoid the lure of the shiny toys that could drain your savings, You should think deeply before you make lifestyle upgrades for a new house, car, or vacation home.
Having your money work for you
If you have been able to build decent savings (see above), you should seriously consider making the home run for financial security and freedom by finding ways to make your money work for you. You can use the savings as startup capital to begin a business or buy into a business that generates income for you. In fact, if your savings are not enough to get the business up and running, you’ll have a decent credit worthiness that will make it easier for you to access loans for your business.
You may also want to consider putting a part of your savings in investments that generate passive income for you on the side. However, whether you are starting a business or investing in a business, be sure to carry out your due diligence to avoid pouring money down a drain.
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