Money is like human! Don't you think? Yes it is.As new year approaches,it is everybody's desire to be financially independent,but have you ever thought of where your spendings go? Do you track your monthly spending?
What is Draining your finances?
1. Buying stuffs that you want instead of those you need.Many people buy goods they can do without for example a new version of a phone, come on,that extra dollar can go along way to reduce you debt. Impulsive buying and the urge to keep up with new trends will not only plunge you into serious financial crisis, it will also rob you the investment that you have worked hard for many years to realize. Learn to differentiate between needs and wants. Needs are most pressing necessities that are inevitable for example food, shelter and clothing. Prioritize these on your list.
2. Living beyond your means.Your paycheck should enable you to save atleast 10% and set aside some cash to reduce your debt. Living beyond your means is catastrophic to financial well-being. For employees, spending 50% of salary on a single item is not advisable. Budgeting your expenditures eliminates this problem. However, the budget should be balanced.
3. Failure to budget. Scheduling priorities.it is easier to track your spendings when they are done according to budgets. Accounting for every single cent that goes out of the pocket. Even large well established corporations budget for their business.
4. Multiply your money by investing.Money is a seed and when sow it,you reap it. Do not spend everything earned. Save and spend what remains. The savings accumulated for along time can be used for investment. This is the best way of creating wealth. Uninvested capital especially at the bank though earns interest but cannot accrue more returns than the investment. Investing is taking risk and may require sourcing for financiers to help in start off an enterprise. This means that before such a decision is made, thorough consultation must have done to make sure that it is the best choice of investment. It's not wise to invest all the savings. Start ups require time to pick and run on their own cash flows.
Managing Debt while improving Financialy
It is a delicate balance. Do you know that most of the success stories in business world do not lack the word loan in them? It's true that there is fear of unknown that comes when debt is mentioned. People say "what if I fail to pay my loan?" Change this to what if this becomes my success story? Loans are stepping stones to achieving financial dreams.
Reasons why loans should be considered
- It may take a lifetime to build up capital by saving. For low income earners, the savings are little, as such, they also accrue little interest at the end of the year. To reduce the gap between saving and investing, loans are used to bridge the gap and help one to reach the financial goal in a short time while managing the debt as well.
- Inflation. The value of money may reduce with time. The projected amount for a given project becomes less and hence need for more cash to make it happen. Taking a loan now assists the investor to keep up with flactuations in the status of both local and global economy.
- Loans gives the investor ability to do things that they couldn't afford without them. Dreams are valid for every dreamer, loans bring to reality all the desires of individuals. They convert the impossible into possible.
How do I pay my debt and still remain in business?
This is big question that entrepreneurs ask. Here is how:
- Choose an investment with short period of returns. Before you think about long-term investment, start small. Returns are used to finance your debts. If they take too long to come, then you risk failing to meet your payment date for the loan. Defaulters lose their money as well as properties when they are auctioned. Investors who have diversified the income generating activities have no problem with returns that take long to come because they have other sources of money to take care of their debts.
- Let the financiers be part of the investment plan. They can take charge of a certain percentage of the initiative and run on your behalf until you get ready to take over the whole business. This way, it lessens the burden of paying for your loan.
- Have alternatives. The funds meant for running the enterprise should not be channeled to other expenses. If other sources such as job are kept for the time until the investment can run own its own then they come in handy at this point. Most investors tend to withdraw alot of cash from their business that are still premature and have not even broken even. This makes the enterprise weak and takes a long time to finally get to the level where it can sustain itself.
It's time to create wealth. One step at a time. Transforming your desire into reality by making the right decisions. To be successful and attain financial freedom should not sound like the hardest thing to do. It's not easy but it is possible.