Everyone hopes to reach a wealthy and money-worry free life that financial freedom can bring. The problem is that most of us are not raised with a basic understanding of how to manage our money.
Personal Finance, especially at a young age, is the last thing we want to preoccupy our minds with. But for those of us pushing 40, we know how valuable and scarce our Time is.
Starting adulthood with good money habits can seed an entirely different outcome to the headaches life will inevitably throw our way.
If I could grab myself by the shirt as young man and shake some good old common money sense into that hard head of mine…
These are the money laws I would have drilled into me to build a sound foundation in dealing with money throughout my young adult life and beyond…
1. Knowledge Is Power, But Thine Action Shall Make Thy Difference
To quote one of my all time idols: “Knowing is Not Enough, You Must Apply” by Bruce Lee. It doesn’t matter how educated in money and finance you may be. If your actions do not reflect what you are learning then what’s the point!
It is impossible to reach that promised land of financial freedom without putting our lessons into action!
Another great lesson from Dave Ramsey , the finance guru himself, said, “Personal Finance Is 20% Knowledge and 80% Behavior.” It is the difference between knowledge and wisdom.
But unfortunately, while growing up, we somehow think we can outsmart life. We don’t heed the lessons handed down to us from generations past… until we feel the burn for ourselves!
2. Thy Time Is Limited
Depending on how old you are while reading this, you may think you have all the time in the world to start saving for retirement. Or perhaps you believe that by some miracle, in the future you will be able to get out of all that credit card debt which keeps accumulating!
The most important lesson here is the tremendous benefit of Compound Interest and Time. The earlier you start putting money aside for your future needs, the more interest it can accumulate and compound by re-investing your earnings. For example starting in your early 20’s-30’s versus your 40’s-50’s will be a difference of $Millions when it comes time for you to retire.
And for those of us in our 40’s+ know just how quick Time passes you by!
3. Thou Shall Save For A Rainy Day
In the short term, you should always have an “Emergency Fund” ready at will for whatever life will throw at you. Emergencies do and will happen. It is not a matter of if… it is a matter of when.
Getting in the habit of saving money for your future goals, whether it be retirement or just planning a nice vacation, can alleviate the unforeseen problems and responsibilities tomorrow will bring.
If not prepared you will be forced to delay your goals or worse yet, lose site of them all together!
4. Thou Shall Create A Budget
The “Financial Poison” for most of us is making spontaneous and emotion purchases. Creating a budget to account for every penny coming in and going out will help stop these momentary episodes of insanity 😉
Being able to see how your are spending your hard earned money will n help you stop spending your money unwisely, and helps you plan for future purchases.
For example: Start a monthly saving plan for that once in a lifetime vacation, or save to buy that newer vehicle you’ll need before your clunker falls apart and leaves you stranded on the side of the highway.
When you can account for ever penny earned and track how it is being spent, you will be surprised how much you can save!
5. Thou Money Problems Are Thy Own
Our parent may have loved spoiling us rotten.. but unfortunately, that is exactly what happened. Some of us were spoiled into thinking there was not need to worry about money. Now we are faced with the consequences of not learning and earning it for ourselves, at an early stage in life.
Once we are out on our own, we soon realized all the hard work that goes into keeping a roof over our heads. Our hard earned paycheck quickly dissolves into thin air after all the bills are paid.
We can get easy get ourselves into debt wanting instant gratification, and it is our responsibility to work our way out of it. The responsibility of handling your money lays squarely upon your shoulders, not your parents!
They have put up with us for 18 years if not more… Its time for us to own our mistakes and build our way out of them.
6. Thou Shall Spend Less Than Thy Earn
May seem like common sense, but you will be surprised. How easily we go chasing that next shinny object knowing damn well we can’t afford it just because we have plastic in our back pockets!
This is how most of us fall deep into debt and creating a Budget is a great way to help stop these bad spending habits.
But like I mentioned before, creating one is not enough. We must put it into action and stick to our budget!
If there is something you would like to purchase, then plan and save for it. Once you have saved up for it, then purchase.
If not, then move on to what matters more in your future plans… and save for that!
7. Thy Income Does Not Determine Thy Wealth
Income and Wealth are two entirely different things.
For example: On one hand you have Billy. He makes $60,000 in earned income a year but is in debt for $75,000 (credit card and student loan debt), and rents an apartment.
While on the other hand, you have Susan. Now, she only makes $45,000 in earned income a year and is also in debt for $75,0000. But her debt is due to having a mortgage loan for her home, which has grown to $100,000 in equity.
Now which of the two would you say is Wealthier?
Although Billy is earning more income, he owns no assets to surpass the amount of credit card and student loan debt (BAD DEBT) he is in.
Susan on the other hand, being the savvy investor that she is, understands the meaning of Wealth and has purchased a home that will continue to grow in value while she continues to pay down her mortgage debt (GOOD DEBT).
So as you can see, just because you have a decent income it does not make you wealthy. Invest in things that will make you money in the long run (Good Debt) and stay away from spending money on things that will lose value (Bad Debt).
8. Thou Shall Not Covet Thy Neighbor
Stop trying to compare your standard of living to what your neighbors have. Chances are, they can’t afford all the luxury they keep trying to flaunt, and are one bad accident away from losing it all.
Mind your own finances and determine your of self worth. If you create your plan and stick to it there is nothing you can not accomplish in due time!
In the meantime… Sacrifice, Grind and Save now so you can reach the point to where your money builds more money and allows you to relax and enjoy the fruits of your hard work.
9. Thou Shall Payoff Thou Smallest Debt First
There a varying opinions on how to go about paying off debt.
Some financial experts say you should first pay-off debt with the highest interest because if you don’t, it will just continue to accumulate interest over time.
And Yes, this is true.
But what happens when you have multiple debts and not enough income to barely pay the monthly minimums on each account?
If the highest interest baring account also happens to be the smallest total balance owed, then its a no-brainer… Of course you should focus on paying that debt first.
In most cases, it’s not that simple. We tend to have larger balances on the higher interest bearing accounts.
That is why I prefer the strategy of paying-off the smallest debt first and then continue using that amount to add-on to the next larger debt.
Dave Ramsey calls it the Debt-Snowball Strategy.
As you can see in the image above, you slowly and methodically pay down your smaller debts first.
Then add-on the amounts you were paying to the next larger debt, which creates that snowball affect. Before you know it, you have knocked out most of your debt… if not all!
10. Thou Shall Be Fruitful and Multiply
If you were to interview some of the wealthiest people in the world, they would all tell you that the Secret to Building Wealth is through Generating Multiple Streams Of Income!
Besides you never want to depend on only one way of making money. What if God forbid something happens to you and you can no longer physically work?
You need to generate multiple ways of making money. It does not have to be large amounts of income, from side hustles at first.
If you put the time in to nurture theses different streams of income, they will slowly start to produce more and more income!
To Learn More, check out my article on 9 Easy Business Ideas To Start From Home With No Money In 2019.
But the more you educate yourself and time you can put into implementing them, you can steady begin to outgrow and out earn that 9 to 5 job you dread rolling out of bed for.
In my book “Fist Full Of Freedom“, I reveal 7 different proven streams of income to make money and start building wealth today!
If you would like a Free copy of my book, then please sign up to our mailing list by CLICKING HERE … and learn about some more cool insider secrets to start building your wealth Today!!!
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Remember, money does not buy happiness…. but it sure does help free up the time to achieve it 😉 !
I hope this can help serve you on your financial journey moving forward.
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As always, wishing you blessing along your path to success!
