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THE FIRST STEP ON HOW TO BECOME RICH - FIND OUT WHERE YOUR MONEY GOES
Who wants to be money rich? I am sure everyone will raise their hands (me included)
There are so many ways to be money rich just search the internet and you will come up with super easy ways, some outright scams, then there are those requiring from a little to a lot of hard work.
Before we go into the ways of how to get rich which will be discussed in future articles. Let me tell you what I learned as the basic truths of becoming rich...drumroll please - A person on his way or has become rich was able to master their money, their mind and have a totally different perspective from the rest of us.
We have all heard about the classic story of people who won the lottery and end up poorer than where they started or this very common scenario - "dumaan lang sa kamay ko ang pera" (money just passed through my fingers) or "di ko na naman alam saan napunta ang pera ko" (I don't know where my money went).
Why because if you have little or even millions...without money mastery, mind mastery and a different perspective you will be surprised that the money is gone.
Let's start with the basic principles of money mastery
1. Know what you spend on (expenses)
2. Subtract what you spend on from what you earn from (income/subsidy)
3. Adjust according to the results
Here are some guidelines and steps on the how to implement the principles in action.
1. Knowing what you spend on (expenses)
- the easiest way is to make approximations but the more accurate way is to track down as much expense as you can
- this can be done daily or weekly or monthly
- identify expenses that are fixed (ex. rent, tuition fees for the year) and variable (ex. grocery, electricity bills)
Tips and suggestions:
- Tracking the details of your actual expenses is highly recommended because the closer you are to the truth it will be a lot easier to make the necessary adjustments along the way.
- Download budgeting or money management apps there are a lot for both Android/IOS to make tracking easier. I recommend the free money monitor app for individuals because it’s easy to use and has a lot of features available especially when you are ready to go full scale. There are other apps of this kind that can be shared with your partner or to anyone.
- 2 months worth of expense history is workable for you to get a picture of where your money goes.
2. Subtract your monthly expenses from your monthly subsidy or income
- this is straightforward just subtract all your expenses from step 1 to your monthly income/s or subsidies
Tips and suggestions:
- Many of the budgeting and money management apps allow you to input your income so this would be really easy
3. Adjust accordingly
- So after doing step 1 and 2 the results will determine if we need to make adjustments
- If you come up with a positive result yes congratulations!
- If you come up with zero or a negative result then let's see if adjustments can be done
There are two types of adjustments that can be done
Adjust expenses - Check your variable and fixed expenses see if there are any expenses that can be reduced or eliminated at all. However, there comes a point where we can only adjust and reduce so much.
Adjust income - This usually means increasing existing income (ex. promotions, getting a higher paying salary) or finding other ethical income sources.
So there we have the 3 basic principles of money mastery. I know some will say that they have been doing this in the past. I congratulate these people because they are on their way to the next step of the journey which is money mindset. To those that have not done this or have done this in the past and stopped I encourage you to go through this exercise again.
If you liked this article let me know please comment, or share your results. If you want to receive next steps, want to get instructions on the tools or want to receive more money related advice email me at [email protected]