The simplest financial success mantra

Monday, May 5, 2014 23:22
Posted in category Jeet Victor, Success Tips

Most of us crave financial success, by which I mean a sense of contentment that we have enough to take care of our immediate needs and wants for a reasonable length of time should circumstances go against us. Note that I am not referring to being “rich” here- which,of course, is another legitimate aspiration. However, being financially well-off is a step in the climb to becoming rich and so here I will highlight that simple mantra for achieving this initial level of financial comfort. This is such a simple and obvious mantra that you might question why it is so important, but I am confident that it is effective.

If you want to be financially successful and become rich at some stage, the most fundamental thing you can do is to live within your means. Whether you are fresh out of college, a salaried employee at an organisation or even running a business, this simple lesson can stand you in good stead. The success coach, Brian Tracy has written about this in his newsletters and books related to tips for financial success and I couldn’t agree more.

How to live within your means
Living within one’s means requires discipline, especially when there are so many temptations in the form of numerous credit instruments to lure you away into spending more. This discipline can be developed and reinforced with constant practice. To do so, mentally “forego” or “eliminate” at least 25% of your income. For example, if your monthly income is $3000, believe that your income is only $2250. That is your “means” within which you decide to live. Control all your expenses within this upper limit that you have set yourself. Within 3 months, you would have created a full-month’s buffer for yourself! You can then choose to invest the savings you make each month to increase your income and building up your reserves. Depending on your risk appetite, you can determine how much liquidity you wish to have and how much you will allocate to what type of investment vehicle. The important thing to remember is that you will have this freedom and flexibility to think about investing your assets only if you have built these assets over a period of time.

Very often, I find a lot of people live well beyond their means. In fact, they claim to have an income that is 30-40% more than their actual income by taking into account cash value of various perks or by ‘internalising’ the gross compensation/ “cost to company” figures that companies give them. I feel that certainly gives a temporary ego boost, but doesn’t add much to your asset balance. And you can’t achieve financial success and freedom without continuously increasing your asset base!

- By Jeet Victor

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