Came across a valuable piece of golden financial advice in Yahoo pages. It can be accessed with this link : http://finance.yahoo.com/retirement/article/106000/10-Steps-to-Retire-a-Millionaire.
Most of us obsess over money and know its important. We strive to study hard and then work hard at our jobs to earn it. And as we earn more, we desire better things: a comfortable home we can be proud of, a comfortable car we can be proud of, holidays we can remember for life. Oh wait bankruptcy! Hey I shouldn't be bankrupt?! I'm well educated, have a decent job, am smart as hell etc. Yaddah yaddah. As mentioned in the advice prescribed within the Yahoo page link, it is a lack of planning, a lack of patience and a lack of savings.
Planning isn't just laying out the goals: Condo, car,holidays. It is how to achieve all these step by step without going into an oversized debt and having enough emergency funds to tide one and family through sickness/unemployment.
Economy function in cycles, there will be booms and recessions. One can expect to meet 1 recession at least once during their lifetime. Money should be saved during economic booms,purchases/travel trips made during recessions and investments performed on the upcurve of the recession. That's how assets grow.
Never ever invest in something we do not understand about. If you only understand property invest in properties and rent out. Equities are good if you can understand the country and the companies its being invested in. Shares are great if you possess a keen awareness of that particular industry and know about the latest developments, major government projects or blockbuster products. Never trust others with your life savings, do that homework and understand the investment. Consult 2nd or 3rd opinions with people who are experienced in that field. Do not take out a loan over an investment, that's akin to gambling. Invest a substantial amount of your savings but never all of it. Keep an emergency fund that will last you half a year.If you can't do that it means you have affordability issues and your financial state is brittle. Fludity is important it allows transfer of funds to investment, to pay for that stay in hospital etc. Cash is king.
An asset in my opinion is something you own/pay >50% of. A liability is something you can manage to own 10-20% of and strive to service a loan for. Liabilities get you into debt. Debt is the best way to ensure one's stay in poverty. Financial freedom is about getting away from debt. A small loan is better than a large one. Affordability should be a huge consideration in purchasing. Think about it why do companies like Courts offer installments, its because it lulls the customer into thinking he/she can afford 10 items when in fact his/her financials may allow for much less.
When friends or relatives approach for loans, issue an IOU. Loans are easy to make out but if you ever intended to recover that sum, make sure you know that debt recovery is one of the worst jobs one can find. Just look at the amount of bad debts banks chalk up.
Credit cards are one of the worst temptations ever in my book. If you lack discipline just take out 1 visa and 1 masters and that should be enough. When you issue sub cards, make sure you understand the person well. If that person is prone to spending spree and has responsibility issues, put a low limit on that card. Similarly if you have no financial discipline, rein yourself by setting a low credit limit on that credit card.
There's a difference in spending on what we need, spending on what we want and frivolous spending. Have a expenditure budget and challenge yourself to find out that minimal sum you can survive on. You'll find that you don't require much to survive. Remind yourself daily that money doesn't come easy and financial falls are difficult to recover from, it may possibly break your marriage, estrange you from your family/friends, cause your death because of the inability to pay for that crucial medical procedure. Now we don't want that do we?
Be patient, save, work hard and afford what you can. One step at a time. Start small. We all learnt to crawl, walk and then run. True there are those who start running faster but make sure you're utterly convinced that you're that special running baby, otherwise you may just cripple yourself for life.
