No matter your current situation, you need a good financial strategy if you want to build a long lasting wealth. The starting point is having a working budget. Aside this, there are ways to leverage your money and implement financial strategies. These strategies will ensure that you are on-track to achieving financial freedom.
Pay Yourself First
The quickest and easiest personal finance strategy is cultivate the habit of paying yourself first. Before taking care of your expenses, separate a certain percentage of every pay check or income to pay yourself first. Paying your bills and taking care of your expenses can then come after this. If you are still not convinced this is a good strategy, read our previous article on what it means to pay yourself first.
Implement The Joseph’s Principle
This principle simply means to take 20% of your income and save it without any compromise. So if you make $4,000 a month hypothetically, put $800 into your savings account. This principle teaches you to live off 80% of your income, by pretending 20% doesn’t even exist.
Consider The 50-30-20 Principle
A similar concept is the 50/30/20 plan. This concept was developed by Harvard economist, Elizabeth Warren. For every income that you have, apply the breakdown below:
- 50% towards necessities like accommodation (rent or mortgage payment), transportation, food and utilities
- 30% towards discretionary or variable items like clothes, eating out, entertainment.
- 20% towards savings.
This concept helps you to master the art of saving 20% of your income every month.
Try The 30 Day Challenges
The plan is to do something each month that will take you towards your financial goal. For instance, every month, you can come up with a different 30 day challenge that helps you save money, payoff your debt or even invest. Other options can include cutting out spending categories all together. For instance, you can implement “a no eating out month” or something along those lines.
Leverage Equity
If you are a home owner, this is something that you should consider. As a home owner, your number one asset is the equity in your home. However, while your equity is growing, it is not necessarily earning anything for you until it is time to sell. So, depending on your risk appetite, you can use the equity in your home to invest. While that is risky, a very simple form of leveraging equity would be to take a Home Equity Line Of Credit (HELOC). You can use this to payoff your high interest loans, credit cards and invest the rest.
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