MONEY MANAGEMENT 101
The first step on Your Road To Financial freedom is mastering your money management. It is not the most exciting topic in the world but it is essential if you ever want to free yourself from the shackles of a J.O.B and create financial freedom for yourself and your loved ones.
The key to money management 101 is the basic principle of Spend less than you earn and invest the difference, While in theory this is a simple concept, in the real world, “life” often gets in the way and it is not so easy!
THE STEPPING STONES OF WEALTH
So where do you start?
Well what has worked well for me on My Road To Financial Freedom is a simple 5 step process that I have broken down into what I call The Stepping Stones Of Wealth.
The five steps are:
- Know your numbers
- Create a money management system
- Build your foundations
- Educate yourself
- Invest for both cash flow and growth
KNOW YOUR NUMBERS
The first step is to know your numbers, so grab some paper and a pen and write down these things:
- What assets do you have and what are they worth? What is your home worth? Do you have any Investment Properties? What are they worth? Write it down.
- How much Cash do you have in the bank?
- Do you have any shares or stocks?
- Any other investments?
Add all that up and draw a line under it.
Now lets make a list of your liabilities.
- How much do you owe on your mortgages?
- What do you owe on any personal loans?
- Any credit card debt?
- Any other debts?
Now add all that up and then subtract your liabilities from your assets.
And now you know your NET WORTH!!!
YOUR NET WORTH
Now you know your Net Worth the best thing for you to do is to put your numbers into a simple spread sheet and to go over your figures every 30 days, or at the very least quarterly. Download a free template here. (coming soon)
Just doing this simple step will keep you focussed on what you want, rather than what you don’t want.
Remember what you focus on expands!!
THE NEXT STEP
The next step we will look at in part 2, will be our money management system.
In the meantime however I want you to try a little exercise and for the next 30 days I want you to track your spending.
Carry a little notebook and pen with you and every expense for the next 30 days write it down.
Whether it’s a car or mortgage payment, a bottle of wine, a new pair of jeans or a cup of coffee just write it down for the next 30 days.
You see most people actually do not even know where most of there money goes! With this simple exercise it is written down in black and white. You might find areas you can cut back on or eliminate altogether, you will never know until you actually do it!! Just try it for 30 days!
So start your first step on your road to financial freedom and feel free to leave any questions or comments below I will be happy to help.
Again I am John Newman and always remember, Dream It… Believe It… Then Achieve It!!