Financial Habits
There are as many positive Financial Habits as there are negative ones, so for simplicity sake, Iâm going to list the top 3 Habits I suggest to everyone because these are the ones that made the biggest impact in my life.
1. Save 10% of whatever you make
If you donât save anything, youâll never change your financial reality. No savings means youâll have to go into debt to deal with any financial challenges or purchases you make over and above your monthly income.
Think of savings as the money you pay yourself in the future. By putting it aside now, you are making sure your future self has money when it needs it. If you have no savings, you have no safety net in case anything goes wrong.
The important thing with savings is that they actually happen! I know this might sound obvious, yet far too many of us go through the month paying everything and everyone else and find thereâs nothing left to pay ourselves in terms of saving. The only way to change this is to make a commitment to save the first 10% of whatever you earn and put it into a savings account that you do not touch. Avoid waiting until the end of the month because there wonât be anything left. By paying yourself first, you ensure it happens and even if youâre on a low income and canât conceive how to find an extra 10% money, youâll find, perhaps surprisingly, as the months go by youâll actually have enough money to save alongside all your other expenditure.
Watching your savings grow will build your sense of security. This leads to the justified belief that youâll be better able to cope with whatever life throws at you which in turns leads to increased confidence.
2. Get clarity on your finances
Get clear on what you have and what you donât. Far too many people have no idea of how much they have in monetary terms and also too little clarity on what they actually owe on that amount, such as mortgages, credit card debts, car loans etc.
Not knowing what you have means you donât know what level of security you have. For example, if everything went wrong and you suddenly needed a large amount of cash, such as to pay for an emergency operation, how much could you lay your hands on if you sold everything you have? Knowing this number lets you know how long you could survive for without income and if the worst case scenario happens. This is where confidence or fear comes from â knowing whether you could survive or not!
Add up the real value of everything you own. By real value I mean what you would get today if you sold it, not what you paid for it as this is probably a very different number!
Whatever this number is, now deduct from it the total amount of debt you have. For example, you house might be worth ÂŁ100,000 if you sold it. Yet if the mortgage is ÂŁ70,000 you personally only own ÂŁ30,000.
For some of you, deducting what you owe from what you have will produce a positive figure â congratulations! The larger this number, the longer you could survive without income for and the greater your confidence will be.
Some of you will come up with a negative or minus figure. I understand how depressing this can feel, yet the great thing is that you are now connected with your real financial reality and how important it is to change it fast!
Recognising my own levels of debt and that I was facing financial ruin was the first step towards changing it forever. Writing this chapter, 7 years after that heart-breaking realisation, after consistent and sometimes back-breaking effort, I am now in the position where I never have to work again and my family is looked after financially by what Iâve created no matter what happens.
Was it easy?
Hell no!
But it was definitely worth it and my mindset and confidence have improved exponentially!
3. Track your progress
Knowing what comes in and what goes out every month allows you know how quickly you are sinking or rising. Whilst this might sound dramatic, if you donât know what you make or spend each month, it leads to a lack of security and clarity. Most people operate on the basis that if thereâs money left in their account at the end of the month, then itâs ok. Yet this doesnât give any insight as to where the rest of the money has gone and whether itâs helped you increase or decrease your financial security.
First get clear on what you actually earn or make each month. If it fluctuates or varies every month, what is the average amount? Knowing this lets you know what you have to work with.
Now start tracking your expenses so you know what goes out each month. Write down everything you spend each day for an entire month. You can use pen and paper, or there are many free Apps that allow you to track expenses. Write down absolutely everything â no exceptions, no matter how small. This exercise is double edged as by writing down everything, youâll see where your money actually goes. And by having to write down and admit what you are spending your money on, it will automatically make you assess whether you want to spend that money or not, therefore helping you reduce any outgoings that are perhaps unnecessary.
Knowing what you have to play with each month and making conscious choices over what you spend your money on, will increase your financial security and massively boost your confidence.
Whilst some of the steps Iâve outlined above, might seem simplistic and easy to dismiss, recognise that any resistance to taking action could indicate an area you could massively benefit from working on. Improving your financial security by working on your Money Mindset and your Financial Habits is THE most effective way I know to create true and lasting confidence. Knowing you can survive financially and look after your loved ones no matter what life throws at you creates a level of self-belief and self-worth that most people unfortunately never experience. Put in the time and the effort to transform your financial reality and youâll develop unshakeable confidence.
If you’d like a free book (just cover the ÂŁ9.95 shipping and handling fee) along with some additional freebies valued at ÂŁ97, please click….
For more information please email hello@heartcentredbusiness.com
Wishing you every success!
