• make sure you start saving money monthly
• keep away from irresponsible friends
• stay away from women of easy virtue
• obey God first, and have a plan
• and form an excellent money-saving habit
This advice usually fell on deaf ears because you would feel that they want to control you.
Also, this topic suggests that I was broke but have overcome this pain, and I am now a role model for others who like me wasted their earnings due to youthful exuberance and wrong decisions.
That is true. Though initially like you, I did not accept that useful advice, which was for my good, like you and I know, the suggestions all fell on deaf ears. Please, you should pay attention now. We are about to start the real stuff.
In this post, you will learn how not to be broke again by following these simple steps.
1) How to Form a Savings Habit and pay yourself first
2) Why you must save
3) How to make financial plans
4) Live on a budget.
5) Do it consistently for a long time
6) Invest what you have saved
Let us begin.
Step 1: How to form a Savings Habit
There is a survey that claims that you can develop any habit you want by substitution. Because you are human, you do a lot of things by default. Have you ever thought about this?For example, from the time you wake up in the morning till the time you go to bed, you follow a specific pattern. You brush your teeth in a way, you eat in a certain way, walk, and speak in one method.
• What is a Habit?
Habit is what you do without any conscious thought. Over the years, these habits harden. That is where the mindset comes in. A pattern of behavior is untouchable, yet it manifests in the way you behave.
You do all things by habit. Changing anything you have done for years to something different is a battle. But it is possible to alter your behavior to a better one if you know it will lead you to live a better life and have enough savings for the rainy day.
You can form a new savings habit by deciding to save and act immediately. What you need to do is open an account and set up a direct debit instruction with your banker.
For example, you can open a salary account with any local bank near your home or place of work and instruct them to debit 10 to 30 percent of your salary every month and transfer the money to your Savings account.
You will notice three things here. First, you decided and acted on it. Thirdly, you used a third party to complete the transaction. You will also notice that you have committed to reduce the amount you earn by 10 to 30%, to pay yourself first.
Step 2: Why should you save?
Hello! I asked you a simple question, and I deserve an answer, don't I? Well, I know you feel this is obvious to everyone. Okay on a more serious note you save money because of the following:• to keep yourself from going broke.
• because it is the right thing to do
• it gives you confidence
• to enable you to carry out projects with certainty
• you can plan better
• to secure your future at old age
• as insurance for uncertainties
• it feels good to have savings
Step 3: Make a financial plan.
I know that your old wasteful habit of spending all you earn will kick in at this moment. It will tell you that you are the one that made money, and so, you could take any amount you want for a little enjoyment.Eliminate that thought and instead break that behavior and write a budget.
• What is the Budget?
It is a list of your monthly expenses matched against your earnings. Remember that first, you have reduced what you have available for spending by 10-30% and automatically saved it in a savings account.
So, plan what you have left to spend on food, accommodation, telephone, data, entertainment, transport, clothes, shoes, education, gift, God, medicine, etc. But make sure you keep another 20% for contingency, and that puts the money available for spending to 50%.
Step 4: Learn to live on this Budget
Learning to live within the Budget is a hard battle, but this is a fight you must win if you wish to stay from being broke again. Let that be your motivation as you struggle to cut your expenses to fit the amount you have allocated for each expense heading.You must stay within the boundary you have set. Yes, I know sometimes, you may want to break your rules. That could happen, but always bring yourself back to your goal of learning how not to be broke again.
Every day you will face a fierce battle of wits as your crave for things will pull you on one side, while the new habit that will keep you from poverty will tug at your heart another way.
But if you let rational decision to do what is right win the day, you will succeed at last against the desire to spend without any controls.
Step 5: Do it consistently
As people usually say, "this is where the rubber meets the road." How long can you keep this up? Remember, some studies say that those who plan with a long-time view of 20 to 30 years succeed more than people who have short term plans or goals.Well, if your desire to beat poverty is more potent than you need to satisfy the temporary cravings of your body, you will defeat the tug on your heart to break your promise to kick poverty and stop being broke again forever.
• What is consistency?
It is a steady, persistent, pulsating strong will to win, and great determination to keep a simple promise to yourself. If you break your new habit, you have joined those that tell themselves lies. Just look at the sun, the moon, and the seasons.
They never fail. Can you imitate these natural heavenly bodies? If yes, then you will win the battle against everything that pushes you to shun savings and live a life without any financial boundaries.
Step 6: Invest what you have saved
You have kept your promise and saved 30 percent of your salary for a full year. Congratulations! Now is the time to take your goal not to be broke again a step higher.Consult your financial adviser in a bank, mutual fund, or finance house and ask for the best way to invest your savings. To invest this money, think of safety, for your initial capital and not just significant returns. So, shun any advice to invest the money on any investment scheme you do not understand.
You could consider the following investment products. They include a certificate of deposit, stocks and bonds, real estate investment trusts (REITs), IRA, and Government Securities-Treasury bills, and so on.
What you must keep in mind is that in investments, the riskier the venture, the more money you could make with the potential of losing all your money too. Have a mild risk appetite and invest wisely and keep growing your money gradually while you gain more financial education.
Conclusion
You can harness your will to be financially self-sufficient than waste your resources. You now know how not to be broke again by forming a savings habit and paying yourself first, understanding why you must save, and making long term financial plans.
Other things you learned is to live within your Budget and, do it consistently for a long time and to invest your savings prudently.
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