There are many ideas and strategies that can potentially lead to financial success. If you were to search the internet you could easily pull together a list of 100 points.
However, in this article I have compiled what I believe to be the three principles that helped me find success.
Treat Every Penny As If It’s You Last
Many people make the mistake of assuming that having enough money to buy something, is the same as being able to afford it.
However this is not the case, and if you live your life buying things just because you have the money, then you will not stay rich for long.
This is a mistake we hear being made by lottery winners all the time. They suddenly have a huge amount of cash, so they spend it all on expensive jewlery and fast cars.
Having such a short-term view of your finances leaves you with nothing to fall back on in the future. As Items like cars and holiday drain your overall wealth without generating any income.
To help prioritise and assess if something is really necessary, try to treat every penny as if it’s your last.
By doing this, you will start to prioritise what you really need, and stop wasting money on unimportant things. Whether that be something as small as an extra beer on a night out, or something bigger like an expensive watch.
Wealth Should Be Circulated Not Accumulated
For many of us, our parents instilled a philosophy of stockpiling any spare money we have into a savings account. This money would then be left to accumulate over time, with you adding more in whenever you could.
The problem with this approach, is the money in the account doesn’t really grow unless you keep putting more in. And with the current interest rates, you would be lucky to get more than 1.5% growth a year.
This means that you are doing all the heavy lifting to increase your finances. And your money is just sitting there doing nothing.
To make a success of your finances, you instead need to invest your money to bring in more wealth. As the old saying goes, ‘you have to spend money to make money’.
This doesn’t just mean putting your money into investments with a higher rate of return, like property, or Mutual Funds. It can also be investing in your own personal development and education. As by investing in yourself, you gain more marketable skills and can then land higher paying jobs in the future.
Create A Plan For Success Based On Your Goals
What success looks like is different for everyone. Before you start working on your plan, you need to decide what you are hoping to achieve. For example, do you want to start your own business? Or maybe you want an early retirement?
Once you have figured this out you can start to plan how you should be investing your money. Because if the aim is to start you own business, you may want to invest in further education or a business course, or developing a product. But if your aim is to retire early, you would instead want to be looking at property investment or Mutual Funds which offer a high dividend yield.
As the adage goes, ‘if you fail to plan, then you plan to fail’, so it’s important that you are clear in your mind what you want to achieve. Then highlight simply the steps you are going to take to achieve that goal.
Start as early as possible
Time is also an important factor when planning your goals and investments. For example, if you are in your 50s and looking to retire, then a high-risk investment such as Stocks and Shares, or a growth Mutual Fund are probably not the way to go. As they can be quite volatile investments in the short-term, and you need to have time on your side to ride out any dips in the market. You instead, should maybe looking property, or small side business.
However, as with everything, the sooner you start the better. If you can get an investment plan in place from the age of 21 that would be the ideal! And the more time you have to reach your goals, the more likely you are going to be able to hit them.