Financial illiteracy is a ‘disease’ that has crippled dreams of many, unfortunately this knowledge is not often taught from corridors of academic institutions. Financial literacy is an habit, a lifestyle everyone must develop. We live in a society of instant gratification, the incessant urge to spend on consumables have eaten so many like a cankerworm that it would take years of training and discipline to break free from. Many would have to pass through the school of 'Hard Knocks' to really understand the need of being financially intelligent. It's disheartening today, that many incurred on themselves debts even to the point of being blacklisted, all in the bid to put up an appearance that they are financially successful. There is a clear difference between looking financially successful and being truly successful. It’s not in the look, it’s in your assets and investments.
Your values and worth are not in the products you buy, they are in the problems you solved. Your worth is not measured by your wears, but in your intellectual capacity to solve worthwhile problems and getting rewarded for it.
Parkinson's law say that, your expenses will always rise to meet your income, Parkinson's Law explains the trap that most people fall into. This is the reason for debt, money worries and financial frustration. It is only when you develop sufficient willpower to resist the powerful urge to spend everything you make that you begin to accumulate money and move ahead of the crowd. An anonymous once said “Most people buy things with the money they don't have to impress people they don't even like.”
To break free from financial frustration and debt i have compiled list of principles you should live by, they are not robotic science, all it take is willpower, determination and discipline. If you put them to work, you will surely see an improvement in you financial life.
1. Increase Your Stream of Income: If the only stream of income that flows to your life is paid income, am sorry to say this, but it seems you are sitting on a time bomb. You can’t fully be financially independent on just one stream of income. Your financial worries will be reduced by at least 50% if you have 2, 3 or 4 sources through which income flows to you. How can you increase your streams? Start a company you can run part-time or take some part-time job. Get rid of your liabilities and use them as capital to start.
2. Hedge your fund: It is not how much you earn that matters, it is how much you save that count. The old rule of money teaches that you have to save and save, accumulate to be wealthy. However, while waiting for bank to give you a 5%, 10% or 20% return on your savings per year, i would recommend you trade with the money, and invest your profit on something else, If you save because you are afraid of losing, then you need to work on your entrepreneurial spirit. The point is, save, but save smart.
3. Avoid Debt. There are good debts and there are bad debts. Financially intelligent people use debt as leverage for investment not purchasing liabilities. If you are waiting to retire depending only on pension fund, that's not wise enough. Don't eat away tomorrow in the bid to satisfy today’s hunger. Many peoples name has been blacklisted just in the bid of taking credit to look rich. And when a sensible business opportunity arise and the loan is really needed the opportunity has been blocked. Don't enjoy today at the expense of tomorrow. Until you differentiate between what you need and what you want, your spending will be controlled by emotions.
4. Live on budget and be strict to it. Write out all your expenses, your airtime, DSTV subscription, your transportation to and from work, groceries, clothing, gifts, rents, mortgages and miscellaneous add all this expenses together and subtract it from your income. Many would realize after doing this that are actually spending more than they earn. Develop a strict saving and spending habit. No matter how small it is, have a reserve.
5. Pay your tithes: This is God’s command, to give back 10% of our income to our local church. The 10% represent a seed for other resources to flow into our life. The truth is God won't die if you don't pay it, every sensible farmers knows that when you harvest your crop, you need to keep the seed for the next year plantation. I know many preachers have abused this, but the truth is, it’s a divine instruction and it should be obeyed. However, what you do with the remaining 90% is also as important as the 10% you are giving back. Tithe works, if you stay committed and faithful to it.
Daniel Cole is an International Motivational Speaker, Inspirational writer, Columnist and a Published Authour.