For most of us, caring for our finances is not an easy task! Easy availability of credit, high interest rates and a lack of understanding basic financial principals causing us to fall into bad money habits, which end up leaving the majority of us living deep in debt and way beyond our means. To better understand our money habits, we have to look past our personal biases about money. To some, the pursuit of money is regarded as a drawback…that it’s wrong or bad, or at best it’s a necessary evil! It’s not until we change how we view money that we can change our money habits. In all truth, money is neither good nor bad. Money is a tool and like any other tool, if we don’t use a tool the right way, it can make the job harder. But, if we do use the tool in the right way, it will make the job much easier. So, just like handling a tool the right way to get the best results, handling our money the right way will also give us the best results when it comes to our financial health.
Understanding Basic Financial Principles
Chances are that the level of debt that you have is in direct proportion to your earnings which is exactly where your comfort levels lie – not so much debt to keep you awake every night, but just enough to appreciate life and your hobbies at your maximum level of income. Living your life on the financial edge where an unexpected expense can put you in financial ruin. It’s at that point that you’ll find yourself walking on a tightrope – and if you don’t change your path, you’re going to wind up coming up short in your financial goals. This is when you need to make sure that you have more money coming in than is going out. That simple rule will either make you or break you financially, depending on whether or not you follow it.
Your earnings have to be greater than all of your expenses. Once you find yourself at the point of realizing that you’re living above your means, you have two strategies to work with that can get you back on track. One strategy is to reduce your expenses as much as you possibly can and the other is to increase your income. If you just can’t see yourself living below a certain lifestyle, then your only real option is to increase your income. Whether you choose to reduce expenses or increase income, or both, the result needs to be that you end up with money left over after all of your expenses are paid.
“Money is a guarantee that we may have what we want in the future. Though we need nothing at the moment it ensures the possibility of satisfying a new desire when it arises.” — Aristotle
Increasing your income doesn’t necessarily have to be a significant increase. You don’t need to get too caught up in how much you’re able to increase your income at first, but more about using that extra income toward paying off debt or putting it toward savings or investing goals. There are so many different ways to increase your income from picking up part time work to selling products or services online. The ideas and opportunities are almost limitless. Get resourceful…get creative, the main thing is to find the niche that works for you and fits within your lifestyle that can be monetized. No matter how small the amount may seem, any little bit will add up.
To have an extra $20, $30 or $50 per month may not seem like much, but when you take that little bit extra and consistently put it toward paying off that credit card balance or into that savings account, you’ll start to see how that small amount will make a big impact over time. Of course, the more you’re able to increase your income the quicker you’ll reach your goals. Regardless of how much or how little you’re able to increase your income, the greatest impact will come from instilling the good money habits you acquire from implementing the strategy of increasing your income, which will allow you to reach your financial goals and serve you well throughout your journey to financial freedom!
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