My idea today is to share some of my thoughts in how to be financially independent and comfortable and the key points I identify in how to achieve it.
Solely from my experience and IMHO:
Classify all your possessions as one of two things: ASSET or LIABILITY.
For most of you, your principal ASSET may be your job and one of your major LIABILITIES may be your house rent. For those items in which you have doubts, try look this way: your assets supply you with money and your liabilities consume money.
The sum of your liabilities is your "live-style", the sum of your assets is your "job".
Know for every time you spend money if it is an EXPENSE or if it is an INVESTMENT.
When I go to the supermarket and buy my dairies (basic, not superfluous) it is clearly an INVESTMENT as you need it to keep alive. The same for your house rent, gas for your car, electrical bills, etc.
For other hand, if you buy a new TV, expensive caribbean vacations or a new piece of clothing, it is an EXPENSE.
Trace objectives in short, medium and in the long term
Everyone makes plans for their lives but not everyone accomplishes them. One of the reasons I guess most plans don't work is that we get bored or loose the gas along the way. For me it works better if I set several plans with different time-frames in a way that I'm constantly receiving feedback.
Make regular savings
If you receive your salary monthly, try to put into a savings account at least 8% of what you receive. If you analyse your expenses you will manage to make your life putting aside this amount.
If you receive 12 times a year (one for each month), every year you'll be saving almost 1 month of salary every year.
Know your expenses and incomes and work with them
The best way to be able to trace a good plan for your financial life is to know yourself and your cashflows. For each month classify your expenses (and incomes) and as the months build up, you will start to see where you are spending more money and what you can do to optimize / reduce each category. Try to compare one month with the previous and with the average of every month. If you do that try to make a "game" with yourself by setting a budget and make some forecasts about the following month.
The challenge here is that, for every month you reduce your expenses comparing with the average expenses, put that difference into a savings account and turn it into an income.
Be faithful to yourself
If for any reason you withdraw money from a savings account, see it as a debt to yourself. Pay yourself as soon as possible and put it in from of all your other objectives. If you control your expenditures, classify all your cash flows in a agile and truthful way.
Solely from my experience and IMHO:
Classify all your possessions as one of two things: ASSET or LIABILITY.
For most of you, your principal ASSET may be your job and one of your major LIABILITIES may be your house rent. For those items in which you have doubts, try look this way: your assets supply you with money and your liabilities consume money.
The sum of your liabilities is your "live-style", the sum of your assets is your "job".
Know for every time you spend money if it is an EXPENSE or if it is an INVESTMENT.
When I go to the supermarket and buy my dairies (basic, not superfluous) it is clearly an INVESTMENT as you need it to keep alive. The same for your house rent, gas for your car, electrical bills, etc.
For other hand, if you buy a new TV, expensive caribbean vacations or a new piece of clothing, it is an EXPENSE.
Trace objectives in short, medium and in the long term
Everyone makes plans for their lives but not everyone accomplishes them. One of the reasons I guess most plans don't work is that we get bored or loose the gas along the way. For me it works better if I set several plans with different time-frames in a way that I'm constantly receiving feedback.
Make regular savings
If you receive your salary monthly, try to put into a savings account at least 8% of what you receive. If you analyse your expenses you will manage to make your life putting aside this amount.
If you receive 12 times a year (one for each month), every year you'll be saving almost 1 month of salary every year.
Know your expenses and incomes and work with them
The best way to be able to trace a good plan for your financial life is to know yourself and your cashflows. For each month classify your expenses (and incomes) and as the months build up, you will start to see where you are spending more money and what you can do to optimize / reduce each category. Try to compare one month with the previous and with the average of every month. If you do that try to make a "game" with yourself by setting a budget and make some forecasts about the following month.
The challenge here is that, for every month you reduce your expenses comparing with the average expenses, put that difference into a savings account and turn it into an income.
Be faithful to yourself
If for any reason you withdraw money from a savings account, see it as a debt to yourself. Pay yourself as soon as possible and put it in from of all your other objectives. If you control your expenditures, classify all your cash flows in a agile and truthful way.
