Pay attention to the comings and goings of your money. The big amounts and the little amounts. Keep a budget. Loose or exact but have one.
Understand your cashflows. Know when and what amounts are coming in and out for the days, weeks and months ahead.
The more money you have, the better your plans had better be. The better your plans are, the more money you are likely to have.
You should have a plan for every penny. That would be ideal. Get as close as you can to this idea. Direct 10% to your savings and investments pot. Get it out of your account with an automatic payment, as soon as your income goes in.
If you have any money left over at the end of the month, pay down your personal debt more aggressively.
You need to spend one or the other. Which will it be?
Do you value your time more than money? Or money more than time? Will you stand in a long queue to buy a cheaper item? Or do you just say no or pick it up elsewhere?
The economy is not rigged. The world is not run by 30 all-powerful people. Think this through folks. You need to provide value to receive money.
Now there are a lot of other things you could receive. However, the main culture around the world is to give money to those providing a valuable product or service.
The greater the perceived value for the item in question, the greater the amount of money to change hands. No one forces you at gun-point to buy your groceries from Ocado or Tesco. Neither do people force you to use Amazon to buy books, gifts or tech equipment.
However, the natural flow of things means that if you do use a certain company to fulfil your desires, it will receive your money. So, if lots of people do this, the company will receive lots of money. No conspiracy or rigged system.
If you have a problem with your money going to Amazon employees, suppliers and shareholders, then stop using their services. It really is that simple. However, you are unlikely to stop the millions of other consumers from using their service. But if they did, they would shrink out of existence like Blockbuster and Kodak.
You need to provide value to receive money. What value are you creating for others?
I would do things differently. Have you ever heard someone say this? Maybe you’ve even said it. If I had his money I would do x,y,z.
Now it could be his or hers, but the idea behind the phrase strikes me as the speaker thinks they would do better with it. In my experience, hearing people say this, it tends to involve the speaker spending more cash on luxury items. Holidays, clothes, better meals out and cars seem to high on the list of improvements.
The irony seems to be, once again, that those who develop good cash management habits have more cash to manage. And those that don’t put effort into good cash management habits, don’t tend to have much money to manage. Though they are not short of observational skills and have a fine knowledge of how to improve the millionaire’s suboptimal lifestyle.
With just a few flourishes of a debit or credit card, the speaker can resolve your unfortunate circumstances.
This may be one of the reasons why the speaker might not have enough money of their own to mess about with. With their unique money mindset and a propensity to spend rather than save, we can better understand why the speaker is in this predicament.
The good news is that great money management habits can be learned. Then you can turn, if I had his money, on its head.
Make sure you only buy things that are essential to your life or for true happiness. Remember that when you spend, your money pays for their vacation, not yours.
Think about that for a minute. You buy two large pizzas for £25 and that is a fair exchange. You receive two large pizzas with toppings of your choice and they receive the payment they wanted. However, think one level deeper.
When you buy the pizzas, your bank account goes down and their bank account goes up. You have less cash for your vacation and they have more cash for theirs.
Quit giving your money to everyone else so they can have your vacation.
You could buy two large pizzas at the shops for £10. Then put the £15 of saved money into two other accounts. The first £7.50 could go into your vacation fund. The other £7.50 could go into your long term strategic investment fund.
You get to eat the pizzas and you build up your vacation and investment fund accounts. Sure the pizzas may not be quite as delicious from the fridge. And there would be some effort in cooking them. However, you would still have the nutrients and additional funds in your core accounts.
From one simple example, you would have almost £800 across your accounts in one year.
When you’re about to spend, remember, your money pays for their vacation.
When you have a hole in your clothes or a button pops off, do you mend it, have it mended, recycle it or bin it? Do you save time or the environment?
We have a skateboard which has stiff wheels. Maybe the ball bearings need replacing. Or maybe it is the wheels. More lubricant does not seem to do the trick. The options are to get rid of the skateboard and buy a new one for £30, or keep it and try to fix it.
If we keep it and fix it, we need to spend time on finding and ordering new parts. Then we need to go collect the parts or have them delivered. Once we have them, we need to get tools out and spend time replacing the parts. Hopefully that solves the problem.
The parts might cost £10 and then there is delivery or pick up costs, such as petrol. Then it depends on what you consider your time is worth. You may see it as a monetary value per hour or simply the value of having an hour of time to yourself in a busy week. Either way, there is a cost to you.
So whether it is mending a shirt or a skateboard, we all make these assessments about our time, money and the environment.
Do you save time or the environment?
There is always a list we want to get on. It could be Santa’s list or the shortlist for a sports team or promotion. There is always a list to strive for.
On that note, I found a list which I found interesting. It made me think, of all the lists you could be on, this would be a good one. Particularly if you were speaking in terms of wealth and influence.
The list was of the “Greatest philanthropists by amount of USD”. Now you may argue over the term “Greatest” so perhaps the people would be better described as the “Highest donating”.
Anyway, rather than the Sunday Times Rich List or the Forbes Billionaire list, perhaps more attention should be brought to the philanthropist list. We could even use the metric, ’donation as a percentage of assets or income’ to put the whole thing in context and allow less wealthy people to get on it.
Someone with a £200,000 net worth that donates £100,000 (50%) should be valued for their relative donation. This should take nothing away from people that donate several billion USD as those sums are hugely beneficial. Although, few people will amass that level of wealth. However, they may wish to give a disproportionate amount of what they have.
That might be a list to strive for.
Do you even know what you think about yourself? It’s time to give this some thought. You are what you think, so you had better being thinking some good and useful things.
One reason people are not achieving what they want in life is their mismatched mindset. They know what they want, which is great. However, they can’t see themselves in that picture.
This can be the problem for people who want to lose weight and keep it off. Rather than think of themselves as a slim person, they see themselves as overweight or heavy, etc. So they tend to do what many heavier people do. They tend to move less and eat more.
Although if they saw themselves as a slim person, their mind would adopt the habits of a slim person. They would eat less and move more. In addition, if they saw themselves as a slim and athletic person, they may even develop greater muscle mass or at least stronger muscles.
The same can be said for people and money. If you want to be wealthier, but can’t see yourself as wealthy, you are likely to struggle to build a prosperous financial future. You must take on the role of being wealthy. This means acting appropriately with your money, not just spending it to look wealthier than you currently are.
You are what you think. Make sure your thoughts are working for you.
Now, you may be the type that is curious as to how to do it or seething that becoming a billionaire is even allowed. Either way, or somewhere in between, it seems everyone has a view on billionaires.
Your reaction to the idea of a billionaire will say a lot about you and your relationship with money. That may or may not be a good thing. You will have to think it through. Be brutally honest about how money makes you feel.
There are generally two roads you can take if you are intent on becoming a billionaire. The first is to have the money given to you. This can be from inheritance, divorce, donation, charity or a very good friend. Alternatively, you can earn the money through providing a product or service for a very large number of people (c. 87% of billionaires).
Bill Gates sold software. Many estimates suggest that there are over one billion PC’s running a version of Windows. If it cost $100 each to have that software on the PC’s, the company’s revenues would be $100 billion from that one software alone. Not only has he provided a valuable service to many people, hundreds of thousands of people have earned their livelihood with his company.
I’ve willingly given more than $100 to Microsoft, from which Mr Gates has benefitted. It has definitely been worth it and then some.
