In the same way that building a house starts with the foundation and not the framing…
Your money is the same way.
Putting a proper foundation in place first helps assure future success.
I like to simplify money into three categories.
These three items are a necessary foundation for your finances.
Step 1 – Understanding your Spending
I don’t like budgeting.
In fact, I feel like it is the stumbling block that prevents most people from progressing with their money.
When we are told we can’t do something, it creates a scarcity mindset that feels like punishment.
Instead, we are better served by understanding our spending.
To do this, I recommend a monthly spending review.
Go through your monthly statement and get a good idea of where your money is going.
As you do so, you can determine which items are hurting your progress.
The other necessary part of this process is to know what your money goals are.
These goals should be the reward you reap from smart financial decisions.
As you review your spending, you now have a lens to compare it through.
Instead of telling yourself “no” you can’t buy that, you can now ask: Is this helping me reach my financial goals?
The difference is subtle but powerful.
Step 2 – Growing Your Income
I cannot stress this enough.
Income growth has to be a top three component of your financial growth.
You are already at work, might as well maximize that time with the highest return possible.
Too many of us just coast through our jobs and perform a task instead of growing our careers.
We need to have goals of how and in what timeframe we will grow our income.
Don’t be passive on this issue.
Let your employer know your intentions so you are both accountable to each other.
If you don’t set these expectations, you’ll be frustrated when they don’t respond in the way you had hoped.
Make income growth a priority!
Step 3 – Compound your Money
We have talked about this point many times in past emails.
Opportunity cost is a large part of money growth.
If you are spending all of your money on stuff, there is nothing left to invest.
If we invest poorly, we are not maximizing our growth.
Both must be managed carefully.
Think of your money as your little workers.
Its job is to increase and bring you value EVERY DAY.
If your money is sitting idle, it is like a bad employee who isn’t doing their work for you.
Also, the more employees (money working for you) you have the more value that will come back to you.
After all, who wouldn’t want many workers out making them money each day?
This is how you should view your money.
This is a simple 3 step process that will help you make progress with your money.
One of the worst things we can do is be passive with our wealth building.
It won’t fall into place without us giving it very specific directions.
Look at these three areas TODAY and ask yourself: What can I do to make progress right now.
You’ll be glad you did!
Thanks for reading,
Founder of 1911 Apparel
Disclosure: This is not financial advice. Make sure you contact a licensed professional when making investment decisions.