Goals. System. Follow Through.

Goals. System. Follow Through.

Money comes easy when you do two things

Simplify and organize. 

Allowing your money to  move beyond you and what you are able to control is a recipe for disaster. While life would be a lot better with a personal accountant who could just do all of that for us, majority of us don’t need that at all.  By knowing what you want to do with your money, with some simple planning and organization you’ll be able to get where you want in no time. Set Goals.  Make a System.  Follow through with your system.  Eventually, I’ll go deeper into this but until then eat, breathe, and sleep this statement. “Set Goals.  Make a System.  Follow through with the system.” Getting rid of the clutter, and clearing the path will make this journey a whole lot easier.

Rich Dad Poor Dad Takeways

Rich Dad Poor Dad Takeways

“Money is not the goal.  Money has no value.  The value comes from the dreams money helps you achieve” – Robert Kiyosaki

 

Rich Dad Poor Dad is one of my favorite books on personal finance. Scratch that, it is  THE book on personal finance. I am going to highlight what I think are the most important points of the book, I think it is worth going through and actually reading through the book for yourself.  I am a firm believer that your mindset dictates your net worth, not the money itself.  Robert Kiyosaki does an excellent job of pointing out limited beliefs and barriers you should be aware of and then points you in the right direction.

My 3 key takeaways from the book are

Stop Slaving for Money

Getting your finances under control begins with understanding the differences between your wants and your needs. Unfortunately, this step is overlooked repeatedly because of the simplicity of it.  I love this way the bible puts it: “the love of money is the root of evil”. Getting money for the sake of having money is unnecessary and foolish when you step back and look at the big picture.  Kiyosaki goes on to explain that money is not something you just have, it’s simply a tool to get something else. That something else could be rent money, a down payment on a home, or money being saved up to finally start the business you wanted.

For the next month, question everything you buy.  Honestly ask yourself whether you need it or not.  The line can get blurry because it’s easy to mistake our wants for things we believe we need.  Rich dad Poor Dad does a good job of helping you differentiate the two. By understanding the things that you need and spending less on the things that you want, you’ll be setting the foundation necessary to get set financially.

Understand where you are now and where you want to be on the matrix

When you start to work for money, you end up one part of the matrix Kiyosaki introduces in his book.  There are two ways you can earn money: Passively or Actively.  When you earn money actively, the amount you make depends on something you do.  An example of this is having a job.  When you earn money passively, you could take the whole year off in Mexico on vacation and still be earning money.  An example of this would be when an artist makes money earning royalties every time a radio station plays their song.  From there you have four different types of people.  You can be an employee, which means you work for your money at a job.  You can be self-employed, which means you have a business, but you’re the only that works it as well.  You can be a business owner, which means that you own a system which helps you leverage your own growth.  And the last step would be to become an investor, which is where your money does all the work for you.  Investors use their money, to invest in businesses or the stock market, which then makes money for you.

Develop your financial literacy

Financial worries can simply come from not understanding them.  There are different aspects to finances you can learn, such as: accounting, history, taxes etc. The main thing to understand is: like anything you want to master, you must continue to learn and practice to get better at handling your finances.  That’s the just the way it is.

One of the key takeaways from this book is the understanding of how the rich think about money and how the poor think about money.  The rich buy assets that make money for them therefore taking care of their liabilities.  The poor buy assets they “think” are assets (cars, houses, clothes) and those liabilities drain them of their main asset “cash”.  This process puts them in a never ending circle of working just for their liabilities, never to actually build their assets.

Financial Guidelines for your 20s

Financial Guidelines for your 20s

 

 

I recently made the move out of my parents after graduating from college.  When you first move out, you want responsibility and the ability to prove that you know what you’re doing.  I was the same way.  One of the biggest responsibilities you’ll have is financially.  Once the paychecks start to roll in, it’s easy to find ways to spend it on things that you don’t really need.  Too easy.  And while there are many lessons to be learned and life, you never want to know what happens when you can’t pay your rent for the month.  So for my guys starting out, here are some guidelines I followed (and am following) to keep myself on track.

Establish a Budget

Forget everything you learned about budgeting and simplify it to a simple science.  Many of us aren’t really good at the whole “make an excel chart with the pie chart with percentages” stuff.  I understand that was me too.  First understand the difference between a want and a need.  It’s really simple actually.  Wants are things that you want but don’t need.  Needs are things that you actually need.  Subtract your needs by the amount you make a month.  And then with the rest of the cash you have left, decide how much you want to spend on whatever.  Taking the time to think about it makes you think a lot more rationally.

Build an Emergency Fund

Most gurus agree that you should have at least 2-3 months of expenses saved up in an emergency fund.  A savings account that you have specifically for emergencies.  Sneakers are not an emergency.  Building an emergency fund will give you the peace of mind that you won’t have to stress about money in case don’t go the way you expected them to.

Focus on Retirement, Now — 401k

Retirement is not something you should be waiting until retirement to think about.  Experts say that you should aim for about 1 million dollars for retirement, however this number really does vary greatly.  What is certain however, is that you need to start saving now.  The power of compound interest deserves a post all in itself and because most regular americans don’t win the lottery or just fall into that much money; it’s a pretty good idea to have time on your side.

Build Credit History

One of my old mentors called credit “a necessary evil.”  I can’t stress enough how true that is.  Credit is necessary because regardless of what you’ve heard from people, you won’t be able to buy everything that you need out of pocket; especially when you’re starting out.  Education, Mortgages, Businesses, and cars are all examples of things that we need credit in order to obtain.  Which is why I listed this; building your credit history has tremendous benefits.

Pay That Debt

I talked about the necessary evil that is credit a couple bullets ago.  But I think that debt is so important I had to make sure I threw this in there. The bible says that the borrower is a slave to the lender; there is no other way to look at. As long as you stay in debt, you will continue to work for the person you’re in debt to.  So as much as it might hurt, just start paying it all back now.  It will be beyond worth it in the future.