Cont’d… The 4 Simple Steps to Financial Freedom(3 and 4)

Cont’d… The 4 Simple Steps to Financial Freedom(3 and 4)

03. Increase your ability to earn

Increase your ability to earn

In other words, develop multiple streams of regular income.

What ever you do: 8-5, Freelancing, own a business, Sales agent, etc. What ever you do, it is not sufficient to rely on just one source of income.

You cannot afford to put all your eggs in one basket. A single or very few sources of income puts a limit on how much money you can make. Imagine getting paid only 12 times in a year (most of us know this story).

Firstly, if you don’t earn enough to cater for your needs, you can’t even “pay yourself”. If you try to, you’ll end up breaking it.

Secondly,

what happens when your one stream of income dries up?

You get the gist.

Learn as many new skills as you can; in today’s world, you can learn virtually anything and start a side hustle with little or no capital at all.

Research has shown that- the average millionaire has up to 7 streams of income.

I believe the business term for this concept is “diversification”.

Having multiple streams of income exposes you to lesser financial risks and puts you in control of your finances.

Essentially, income earning opportunities are of two categories; active and passive.

a. Active Income

This is the case where you’re physically involved in the activities that generate income for you. It mostly is centred around paid employment; where you work for an entity and get paid “wages” or “salary” (you know they’re are different right?) after a certain period; examples include working in a: bank, an NGO, an Oil and Gas firm (oye money 😉), a Telco, etc. Here, you’re an employee.

Also in this category, you could go as far as being self employed- you still engage in the physical activities, but you do it for yourself, not an entity; you are your own boss (C.E.O 😁), you call the shots. This is where you’ll find Consultants, Freelancers, E-commerce people, etc.

While there’s good money to be made in this category especially since you’re your own boss, the major downside could range from being overworked, excessive stress and inadequate relaxation time.

b. Passive Income

In this case, you’re not actively involved in the running of the business. Mostly, what you do is make decisions and give direction.
You could be a business owner, who hires people to do the physical job, and then pay them periodically. This is where you become the employer.

Another way of earning passive income is to be an investor. You can invest in financial securities: shares, bonds, bills, etc. You could also invest in real estate, or be a Venture capitalist.

The highlight of earning passively is that you get to have enough time to live life and do other stuff that matter to you; I mean, who doesn’t wanna travel the world?

04. Put your money to work

So you’ve paid yourself regularly for a while, your budget is shrinking by the day, and you’re constantly maintaining a surplus balance. You have multiple sources of income, and this money just keeps trooping in (I love the sound of that, 😀).

Basically, you have money!

What then do you do?

Put your money to work!!!

This is the part where you make money while sleeping (exciting huh, lol)

You can’t afford to stack those Bills and just watch them. You have to make em grow,

You know how they say a 100 bucks 5 years ago, is not the same as a 100 bucks today? It’s true! Mostly, it’s worth lesser than it did some years ago, in some cases, even in months; yeah! I’m saying you your 100 bucks could buy you X,Y and Z a few months ago, and today you can only afford X and Y with the same 100 bucks (Or X and a Y without the tail 😂). This whole situation is described by a concept referred to as inflation, which is a consistent rise in the general prices of goods and services in an economy (ECO101🙂)

Beyond inflation, having idle funds exposes your finances to jeopardy; as you might end up spending frivolously.

So, how do you ensure; that the value of your money does not get eroded by inflation or you don’t set your self up to spend like a prodigal child and end up regretting…

LET YOUR MONEY WORK FOR YOU!

How…? INVESTMENTS!

You see, as long as we’re talking about financial independence, the need to invest cannot be overemphasised.

Don’t make the mistake of thinking you need to have a whole lot of money before investing; it’s a wrong mindset. Investments are very versatile, and there’s a host of options available
depending on your principal (basically, the amount of money you want to invest), and your risk appetite. From treasury bills, bonds, fixed deposits, stock, to mobile farms and real estate. I’ll dedicate an entire post to these available investment options later.

Most of these investments are sources of passive income, you don’t really have to engage in any work, hence “putting your money to work” (Think about it… 😁). You might have to do some research though, and some form of risk analysis, but that’s not a biggie at all, and it doesn’t require any special skills. Moreover, The Money Guy™️ is always here to make recommendations for you.

There you go- the 4 simple steps to financial freedom; albeit they’re simple, this stuff is ancient wisdom that has been proven to work, over and over again.

Sometimes later I’ll be glad to know how well these steps have worked out for you. Do not hesitate to share.

Do you have any thoughts you want me to write about? Please fell free to share in the comments section.

The 4 Simple Steps to Financial Freedom

The 4 Simple Steps to Financial Freedom

Hi guys, now that we’ve agreed that the name of the blog is perfect, let’s get straight to business. You’ll love this thing. Together, we’re embarking on a journey that would benefit us all, for the rest of our lives. Let’s do this!!!

Have you ever wondered why sometimes, people who earn less than some other people eventually become more successful financially? or how some people literally started from the bottom and now they’re here 😎👌🎉? God’s plan eh! (drops mic) LOL. Amongst a host of other reasons (that cannot be discussed here), the underlying factors for most people’s financial success are discipline, and delayed gratification.

While both terms (discipline and delayed gratification) might seem “tough”, it’s usually not that deep; because, very simple and subtle steps can be taken towards achieving them.

Check out My 4 simple steps to financial freedom. Again, it’s not that deep.

01. Pay Yourself

Financial freedom (pay yourself)

Let us look at spending from a different perspective; think about it; when you spend, you’re actually paying other people; seems pretty obvious right? Maybe not so much, if I add that while paying everybody, we mostly forget to pay ourselves. Yes! ourselves. We pay DSTV, we pay MTN/GLO… (multiple times in a month), we pay Shoprite, we pay Dominos, we pay Taxify, we pay Jumia, we pay the Government, even Dino Melaye (is our tax money na!). We pay everybody there is to pay, EXCEPT ourselves.

Don’t get me wrong, i’m not saying it’s wrong to pay all these people; I could definitely use some slices of Pizza as I type this (lol), if i don’t pay GLO, how can i even begin to blog? But you should pay yourself too. You deserve to be rewarded for the services rendered to yourself. You wake up early, you get stuck in traffic (Lagos people, how far?), you work your ass off, you get frustrated, you sleep late; and when the money comes, you still miss out, because you’re busy paying everybody.

Everybody deserves to get paid, likewise YOU.

Now, i’m being careful not to mention the word “savings”; the popular understanding of the word has become painfully delusional. Truth is you don’t have to set aside half, or quarter of your salary in the name of providing for the rainy days. In paying yourself, you decide how much, and it shouldn’t be so much so, that it deprives you of living a comfortable life.

Usually, Setting aside 20% of your regular income is standard (but who standard epp?). I dare you to start with 10% of your regular income! Nothing can be more convenient and appropriate at the same time. Feel free to pay the entire 90% to others, for your living expenses (i think, that’s as fair as you can be to yourself). Setting aside 10% of your regular income can almost make no significant differences that would cause any inconveniences (see that alliteration? hehe); and if you think it’s to small, then why haven’t you paid yourself more, all this while?

So, when that alert drops, when you make that sale, when you get that commission, make it a habit to pay yourself FIRST, before you think of any other person.

02. Control Your Expenditure

Financial freedom (control your expenditure)

Now that we’ve agreed to set aside 10% of our regular income as payments to ourselves, don’t be a “buje budanu (wasteful spender)“; it is important that we protect it (our 10%) and ensure that it doesn’t get eroded; because, as small as it is, it could easily be stolen by our insatiable desires (They are bullies).

How do we protect it…?

We BUDGET!

Yes! A budget is one of the most overlooked POWERFUL financial tools today. We have no idea what that list could achieve for us. For a start, it can save our 10% from the bullies
that might kidnap it.

We need to budget our expenditure in such a way that, the remaining 90% of our income, is enough to cater for our needs and our substantial wants; and while at it, we also need to track our spendings; keep a record of every expense you incure and compare it with your budget at the end of the month/week. Before you buy a thing, or include an expenditure in your budget, ask yourself this one question,

“If I don’t buy it, what would happen?”

If we are honest enough with ourselves, more often than not, we’ll end up cutting down on frivolous spendings.

All that being said, you can have what ever you like (Remember T.I? LOL); as long as you don’t have to expend the 10% we have set aside.

So, you’ve paid yourself; you’ve controlled your expenditure; what do you do next? Find out in my next post. Let me know if you’re Keen. Also, subscribe to the mailing list for future updates.

Do you pay yourself already? is 10% too small? Do you budget? How has it been, keeping up with your budget? Let’s discuss…

Have a great week guys!

As seen on lifewithtwotees.

What would you call it?

What would you call it?

Ok! So, I decided to start a blog about how to attain financial independence and achieve financial goals.

Now, I’m not the best guy out here to give you financial advise. But if you want to hear from someone who has made a lot of “money mistakes“, and has learned the hard way; the dos and don’ts of managing your personal finances, you might want to stick around longer.

And, after several days of brainstorming, I finally came up with “The Money Gist” as the title for the blog. I think it’s pretty much straight forward, and doesn’t require any further explanations, as to what it means. Plus, TMG sounds cool as an acronym (lol).

Even as I have figured out what to call the blog, I’m still very curious as to what other titles it could have had.

So, let’s do a quick one. If you were to start a blog about personal finance, what would you call it? Let’s see how creative y’all can get. Albeit, I don’t think there’s anything out there that can beat TMG; See how cool it sounds huh? Beat that! (you would ask if the sound can be seen, lol)

While you’re at it, please follow the blog, and subscribe to the mailing list for updates. This is one journey you don’t wanna miss.