Once you experience financial freedom, you’re less stressed, you have peace of mind, and you’re in more control of your life. It’s not an easy path to get there, or is it?
I’ve struggled with money my entire life. When you grow up young, black, and broke, the deck is stacked against you financially. So you attempt any and everything to get ahead. Unfortunately some of those things may put you in bad situations.
There were a variety of reasons why I’ve made so many financial mistakes. The majority of it was due to a lack of education, misinformation, bad advice or no guidance. I bought real estate, stocks, bonds, and options. I invested in CDs, mutual funds, 401Ks and IRAs. And I even invested in the educational courses to learn how to buy all of those things. I used credit, tried different savings plans, and I even started investment groups with family and friends. Some things worked, but most didn’t and ended up causing me stress, pain and anxiety for years.
Regardless of all the mistakes I made, I did try and those losses created lessons that shape my financial outlook today. I now understand that getting ahead financially is not needing to worry about money. Money dominates our decisions in both our personal or professional life. I always believed as a kid that I would one day be in a position to do things without money ruling my thoughts and actions. This would allow me to focus more on traveling, creating and spending time doing the things I love.
I’m sure you may feel stuck in your financial situation. Here is a list of ways to finally get financially ahead. It takes time to get there, but with a plan and a little patience, you can improve your financial situation sooner versus later.
Change your mindset about credit
Credit is a tool, and if used correctly can help you pay for big ticket items like a home or car. But using credit makes it too easy to spend money. The dependency on credit is what prevents us from getting ahead because we believe we need it to get ahead.
Put a plan in place to save and pay things without it. It’s not easy, so start slow and begin to shift your mindset to be less dependent on credit, even for things like buying a home. Our minds are powerful and alternative solutions are in abundance.
Pay yourself first
I assume you work hard so when payday comes around, reward yourself first. Before you pay your bills, put 5 – 10% into your savings account. Think of this as a bill that you have to pay each month and never veer off course. This will help you build up wealth over time and create the mentality to always look out for yourself before you look out for everyone else. Paying yourself first sets the right priorities (it is your money), it creates discipline, it expands your opportunities, and offers a level of freedom.
Invest in who and what you know
Sure if you invested in Google’s IPO in 2004 and held on until now you would be very wealthy. And of course if you bought real estate in Washington, DC the 60s and kept it until 2018 you could be financially free. But if you don’t know stocks or real estate, stay away. Invest your money is you. Take online classes, go to conferences, take risks and realize the best return on investment (ROA) is investing within. The fastest way to lose money is put your money into something you don’t understand.
Credit is so easy and accessible to use. And because of it, we spend more than what we should until we build up so much debt where we can’t pay off the balance. Just insert the chip and it’s yours. It’s much more difficult to pay for things with your hard earned cash. It’s purely psychological and using cash will help develop the mindset to only buy things you can afford. Plus cash is not traceable just in case you’re on the run.
Start a Business
One of the best ways to get ahead financially is to create passive income streams and you can do that by starting a business. People who come into large sums of money go broke because they don’t have regular cash flowing coming into their bank account while they are spending large amounts of money at the same time. Eventually the money runs out!
The goal is to have cash flow coming in without trading your time for it. An example of active income streams is working a job where you are spending time in exchange for money. Get your money to work for you while your sleep or traveling the world.
If you are not ready to take the leap to leave your job and start your own business, start a side business. The purpose is to set up passive income opportunities while receiving lump sum payments. It’s much easier to save with lump sum amounts versus scraping funds from your paycheck.
Stay in contact with the IRS
If you receive a notice from the Internal Revenue Service, just open it and respond. I know taxes are confusing and that can sometimes make you frustrated and ignore them. But one of the worst thing you can do regarding your personal finances is to ignore the IRS. If you get on their bad side, it can be painful over the long run. You can lose wages, incur interest and penalties, and most importantly it will not go away. Just contact them and make payment arrangements if you owe and don’t have the funds available.
Have a BHAG with a big pay day
Getting ahead financially has to be personal for you. Why do you want it and what does it look like? A BHAG stands for a big hairy audacious goal and it’s a target you set so big that you may not believe it’s possible at first. A BHAG can be to grow your business and sell it for $5mm. That may appear out of reach if you are only doing $200k a year. Another one can be to retire by the time you are 40 years old. The big goal drives your daily motivation and provides the foundation towards your dedication to improving your personal finance goals. All the sacrifices and efforts that you are making should lead to a big payday one day.