When it comes to gaining financial freedom, it isn’t just about getting more money coming in, it’s also about ensuring that money is put to better use. There are investments and so on that we can discuss later but in this post I want to discuss something more fundamental. A majority of us human beings are terrible with saving and I feel like the reason for this is that we were told to budget. Which for most, just doesn’t work. As such, you need to first think about setting up a Money system. In this post we will briefly discuss the idea of how to automate your money. However if you do want a more in dept look, then its worth getting this book to learn more.
Leaving Survival Mode
In order to become successful you need to first get yourself out of Survival mode which most of us are in, meaning we are just going from payday to payday and hoping to survive in between. The key milestones you need to focus on are $1,000 for emergencies, preferably held in cash, and then putting 6-months worth of expenses away so that if you lose your job or your business goes sideways. Once you’ve achieved these two milestones, you will feel financially free and be able to look at the longer term. I’m going to now quickly go through how to do this simply and then you can apply this to any other savings goal you have.
Pay Yourself First
Now when it comes to putting this into action, do not try with budgets, these rarely work. They also become confusing and take more of your time than you will be willing to put in over the long term. Also, if you’re reading this then chances are you could also be in a position where you don’t have enough to get by or are close to that limit as it is. Therefore the idea of saving can be a struggle. This is why paying yourself first is key. When it comes to how to automate your money the only method is to pay yourself first. What this means is to take 5%, 10%, 20% or whatever you can feasibly take out of your income and put it away FIRST. Think about it, how many times have you taken a pay cut, had an unexpected bill, etc. You dealt with it, and your still here. Could you take a 10% paycut for the next 24 months and still live if it meant financial freedom afterwards? If so, then select a percentage and whenever you get paid, take that out first. If you can get your bank to do this so you never see it, even better!
Next week I will be doing a follow up post on how to automate outgoing expenses and to ensure your money is always being dealt with perfectly without the hassle of checking it yourself!