With the latest feedback that you (the reader) gave me here in my surveys, it became clear that the #1 issue you would like to improve is your money situation. Your answers ranged from:
- „Help me to get out of debt“
- „Solving my problems with money“
- „Escaping the trap of living paycheck to paycheck“
- „Help me to achieve financial freedom“
In this money guide I’m going to write about the strategies that will lead to a stable financial situation.
This is seeing the big picture. While you read, do your own reality-check and look if you are currently implementing these strategies in your own life. They are not short-term hacks, but overall strategies to shift your thinking and doing away with harmful money habits.
So in a way, this could be your starting guide to develop your own financial independence.
1. The Right Mindset for Money
The number one advice is to take a look at your mindset when it comes to money. Because your attitude towards money is creating your financial reality. [Tweet this!]
In a recent facebook-post Robert Kiyosaki, author of [amazon asin=B004XZR63M&text=“Rich Dad Poor Dad“] (which I would highly recommend), said:
The number one question asked this week was how to start investing with little or no money. Please hear this as this is the hardest thing for people to understand: you do NOT invest with money! You invest with your mind! No matter what the field, your biggest asset is your mind. Once you have knowledge, you find deals, find your team and use other people’s money.
Your money mindset consists of the beliefs you hold true. Where you want to go is to develop a mindset that is supporting you in every way possible when it comes to your finances.
Carefully analyze what you think about money and what money means to you. As a starting point, common limiting beliefs are: „Money is the root of all evil.“, „Money is not important.“ or „I’m not good with money.“
Such limits need to be addressed if you want to get ahead. If you find something that could get in your way to financial freedom, try to reevaluate this belief and find something that actually helps and encourages you.
Replace limiting beliefs with more supporting ones like: „Money is a neutral medium for value. It’s in my hand to do good with it.“, „Money is a priority in my life.“ or „I’m continuously studying and eventually mastering money.“
Changing limiting beliefs about money really deserves a more comprehensive post on it’s own, so here it is: The 10 Most Limiting Beliefs About Money (& How to Remove Them)
2. Make Money a Priority
If there is a problem in your financial situation you probably don’t have enough focus on your finances. Either that, or you have difficulties with increasing your earning potential (see points 3 and 4).
To improve your finances, make money a priority in your life. [Tweet this!]
As long as money is just an abstract and far away area of your life you will suffer with it. I’m not saying obsess over money and make it your one and only goal. That would be plain wrong. The easiest thing to start is just devoting some time and attention to this area of your life. Maybe read a good financial book.
It is said that you can’t manage what you don’t measure. So what you want to do is to look very closely at where you are right now. Then think about where you want to go in your financial life and then make a brief plan how to get there and do something about it.
3. Study Money
Money is an area of your life like any other. To improve, you need to learn more about it. You need to understand that area. You need to take it seriously.
So educate yourself with money. Study money.
Money is not a boring topic. On the contrary, it can be very interesting and above all, very helpful for almost everything in your life. You don’t need to understand complicated financial analysis. What matters is to understand the big picture and to develop the right mindset and thinking patterns when it comes to your finances. Then the right habits and results will flow from there.
Here are some books about money that helped me a lot:
- [amazon asin=1612930298&text=Think and Grow Rich] by Napoleon Hill
- [amazon asin=B004XZR63M&text=Rich Dad Poor Dad] and [amazon asin=1612680054&text=Rich Dad’s Cashflow Quadrant] by Robert Kiyosaki
- [amazon asin=1589795474&text=The Millionaire Next Door] by Thomas J. Stanley
- [amazon asin=0761513116&text=The Wealthy Barber] by David Chilton
- [amazon asin=0060763280&text=Secrets of the Millionaire Mind] by T. Harv Eker
4. Increase Your Earning Potential
The one thing I see all too often is when people are stuck in a job or maybe self-employed situation where they just don’t make enough money to grow financially. This is a common trap with money.
To get to the edge of your earning potential, you need to identify the parts of your job where you make the most money. Then focus single-mindedly there! [Tweet this!]
When you identify the most lucrative areas of your job, you can start to do more of this and less of the rest.
You also want to learn how you can intelligently raise your income. Find ways to stop trading your time for money. What that means is that you may want to look for things that generate passive income. Set up systems that earn you money even while you are sleeping. Leverage your ability to earn money by creating something that you can scale, i.e. make sales over the internet, more or less automated.
Maybe you even need to quit what you are doing. I liked Steve’s post 10 Reasons You Should Never Get a Job saying:
„Getting a job and trading your time for money may seem like a good idea. There’s only one problem with it. It’s stupid! It’s the stupidest way you can possibly generate income! This is truly income for dummies… Because you only get paid when you’re working.“
If you are really stuck in your current job and can’t get ahead financially, finding something new may be the right thing. Just make sure that you are not running from yourself (by understanding the points of this guide). To find success with money, follow your passion and understand how to combine it with your biggest personal strengths and what people need.
5. Set Financial Goals
You want to develop an idea of what financial success means to you. You have to define where you want to go in order to create a natural drive towards your money goals. And also to keep your mind focussed.
So the best way is to develop a compelling vision of your ideal financial future and then put this vision into specific goals you are targeting.
This process will also give you clarity and a financial plan to follow. Remember, the first creation always happens mentally.
6. Spend Less Than You Earn
One very common pattern I see is this: Bob lives from paycheck to paycheck. When Bob earns a bit more money, for instance from a job well done, he spends all for celebrating, for family and friends, for some nice things, and then goes back to living paycheck to paycheck.
Because that’s Bobs money reality. Created from his money mindset.
This is another money trap that occurs because you may not have understood what really leads to wealth. It is your attitude towards saving and investing money. You have not yet decided to develop the right mindset with money (see 1.). You have to change your mindset in a way that you start saving money.
Saved money is not dead money. It’s money that will create your financial freedom! [Tweet this!]
How else do you want to get a millionaire if you never keep your money?
Make your money work for you. For instance: Put 10% of all your earnings into a savings-account. Then…
7. Learn to Invest Money
Investing is were you learn to use our monetary system in your favor. You are switching sides. (see Rich Dad’s Cashflow Quadrant) If you invest money you usually get your money back with interest on top. Without investing your money will actually lose value over time, due to inflation.
Let your money work for you, instead of you working for your money. [Tweet this!]
Here are some starting points:
- [amazon asin=0060555661&text=The Intelligent Investor] by Benjamin Graham
- [amazon asin=0743200403&text=One Up on Wall Street] by Peter Lynch
- [amazon asin=1612680208&text=Rich Dad’s Guide to Investing] by Robert Kiyosaki
- [amazon asin=1611634091&text=The Essays of Warren Buffett] by Warren Buffett
8. Improve Yourself
My final advice to improve your financial situation is to start by investing in yourself. Improve your own abilities and learn to use your personal strengths. In other words: Personal development.
Improving yourself will make yourself more valuable for any economy. Money is the expression of value. Bingo.
Great Craig, congratulations on that turnaround! Revealing how changing your awareness of where your money goes started to change the results you had in your financial situation.
I added your book suggestion to the list of books above. Thanks for your input!
Brilliant post Myrko
Definitely agree that getting control of your money starts with your mindset.
Mine changed dramatically when I discovered Rich Dad Poor Dad, and was improved further last year by Secrets of the millionaire mind by T Harv Eker. Eker’s book and Jars system has helped turn my finances around to a point where I am in credit all month, when I used to spend most of it living from my overdraft. I turned it around by using the same amount of income, I just have more awareness of where it’s going.
To quote from Eker „If you want to change the fruits you have to change the roots“
@Farouk, yes these are general strategies to get on the right track. Making a reality check if we really are in line with them is always worthwhile.
While most of those points are ones that we all already know, the way you present it definitely makes one have more insight. Money money money.