The first lesson relates to how you manage your own finances. This lesson is the basis of all the other actions. Bringing in extra money alone is no cure for financial difficulties. It is really just a sticking plaster.
You have to deal with the root cause. For example for Joan the root course is lack of proper education, she left a high school when she was 16, she is 23 now and still doesn’t have a high school diploma.
It limits her earning potential tremendously. Luckily for Joan there are opportunities to correct this mistake, she can take the GED test and if she passes, she will receive a GED certificate.
This certificate is the equivalent of high school diploma. This is a first step she needs to fix it in order to have a better future, with the GED she will make at least $9,000 more per year.
Getting GED is not a lengthy process, it might take Joan 2-4 months to get ready if she will follow intensive online classes for the GED. But what do you do in between. Play on the lottery?
There is a reason why you never see wealthy people as lottery winners. Quite simply they never play the lottery. Their mindset would be to take that $1 you put on the lottery and put it in the bank. Assume you pay the lottery twice a week that would be $2 a week or $104 a year.
Now how many people who play the lottery receive a guaranteed $104 plus interest a year? Add to that the fact that 95% of all lottery winners are back at the level of income they had before winning, this shows more money alone is not the long term solution. It’s what you do with your extra money that counts.
So the first of the cures to your poor finances is to improve your bank balance. Then you can then find ways to make extra money. The easiest way to do this is the 10% solution. Aim to spend just $1 less for every 10 you spend in a day. What this means is when you think about buying something ask two questions:
- Do I really NEED this?
- Can I buy the same thing 1 brand lower?
In one month of following this approach I saved $150 and my wife and I noticed no difference in lifestyle. All wealthy people have followed this path. To gain long term extra income you must first be able to invest. That means paying yourself first.
The last part of the process requires discipline, take the amount you save and put it into a cash based savings account. When you get used to this lower level of expenditure set up a regular payment to your savings account from your bank.
The Richest Man In Babylon (G.S. Clason). Control your expenditure.
You may be forgiven for thinking that controlling your expenditure is different from earning extra money. However, indulge me a while and read on.
As my Blog is about home Internet businesses it’s reasonable to assume you are here because you are looking for ways to earn extra money. The above book was written 3 years before The Great Depression and the author could see the signs coming.
Controlling your expenditure is about living within your means. Robert Kiyosaki, a great financial educator, refused to incur unnecessary debt even when he went out of business. He lived with his wife Kim in friend’s basements, because he believed he would become successful again.
Many of us faced with say a cut in salary or one partner losing a job carry on spending at the same level, adding to existing credit card debts etc. What we forget to consider is simply re-examining our budget and living within our income.
If you are looking to earn extra money to simply service credit card debts then you will never reach financial freedom. If your expenditure is seriously out of control you will be swapping one form of boss for another, the new boss will be called THE BANK.
Yes getting extra income will help you pay off those debts or make up for a drop in income. However, avoid making the situation worse. As they say, if you are in a hole and you want to get out, ’stop digging’.
Notice I said ‘pay off’ the debts as opposed to getting into more debt. The banks would love to give you more credit as long as you can service it. However, as soon as there is a bad month just see how quickly they slap the charges on you! The only person who will look out for you is – you.
In conclusion, consider this one saving I achieved with minimal impact on my lifestyle. I like a coffee from a well-known franchise and thought nothing of the $2.50p (approx.) a day I paid. After I read this book and actually added up the annual cost I was shocked, $600 – on coffee!
Now I make my own, add coffee essence, and get two mugs for 70 ct (as opposed to one mug before) – annual cost $138. I’ve just earned an extra $472 per year tax-free. And that’s just a start!
Make thy gold multiply’ – seems simple enough. Where most people fail is they follow bad advice and make poor investments. Even worse some people make no investments/savings at all. They always put off until tomorrow what they should start today.
Let’s take the example of running home Internet businesses, you may find that you get a tax refund one year. Question what do you do with the money? Remember this is extra money you were not expecting. The wise thing to do would be to invest the money. Unless you are an experienced investor you should take a low-risk opportunity to start with. The vital thing is you keep the original capital you invest.
In the book, there is the story of a man who decided to make a first investment that broke this rule. He loaned money to a brick-maker who said he could get a good deal on jewelry. The end result was the man lost all his money because the brick-maker knew nothing about jewelry. His next investment was with a shield-maker who needed investors to buy his metal. This type there was a good return on the investment.
What this shows is that if someone tells you to invest in a sure-fire thing and they have no experience, or access to experienced people, how can they claim your investment will be safe?
So the two fundamental rules to, ‘make thy gold multiply’, are to ensure your initial capital is as safe as possible and that you get appropriate advice on as good an investment return as possible.