Anything worth pursuing in life has rules or principles to abide by. I am reminded of an instructive article I wrote in June 2021 titled 8 Rules You Can Live By. You should check it out. Not knowing and violating rules dents your chances of success. This is of utmost importance to the field of finances. Most of the problems people encounter in life can be directly or indirectly attributed to financial issues. There are money rules for financial success you should adhere to. Here are some of those money rules central to financial success.
Budget Your Finances
This may sound cliché, but it is the first step. It serves as a plan of action for achieving quantified objectives. For example, you can stipulate that you will spend such an amount on food, transport, and so on. It is also a standard for measuring performance. It also helps you to cope with foreseeable adverse situations. You cannot set out on a journey without planning. In personal financial management, it is a rule of thumb to start off with a budget. As John C Maxwell once said, “A budget is telling your money where to go instead of wondering where it went”.
Prioritize Clearing Debts
Those without any outstanding debts are good to go. However, most people tend to have outstanding debts. Financial success can be elusive if you are weighed down by debt. Make it a priority to clear up all your debts. You might not necessarily have to clear it up at once. At the very least, determine a monthly amount that you channel towards clearing debts. Not having debts will enable you to start building your finances smoothly. Once you are debt-free, make sure you desist from borrowing. Nathan W Morris summed it all up when he said, “Every time you borrow money, you are robbing your future self”.
Track Your Spending
Once you have a budget in place (which should factor in debt, if applicable), you must stick to it. This calls on you to track your spending. Does what you are about to buy or pay for aligning with your budget? This is a tracking function you must incorporate into your daily life. As much as possible, note down your expenditure and keep receipts where possible. This will make it easier to track where your money is going. According to Benjamin Franklin, ‘Beware of little expenses. A small leak will sink a great ship’. You can do reconciliations daily, weekly, or monthly. Never get to a place where you cannot recall where you spent your money. This will instil discipline and restraint in how you spend money.
Control Unbudgeted Expenditure
Of course, you can budget and strive to stick to a budget, but things do not always go according to plan. There will be times when unbudgeted expenditure becomes inevitable. Maybe it could be an emergency or some unavoidable circumstances. It is understandable at times, but it tries to put a cap on your unbudgeted expenditure. This means in your budgeting; there must be an allowance for that which you should stick to. This will also put a lid on impulse buying, which tends to ruin most people’s budgets. You have got to tell your money what to do, or it will leave – Dave Ramsey.
Lower Your Monthly Spending
There are a number of fixed monthly expenses. These can be transport, energy, food, rentals, and so on. Figure out ways of lowering those expenses where possible. For instance, commuting using public transport could be cheaper than always driving to and fro work. Buying in bulk or meal prepping can help lower expenses and help you save more. You could consider using gas for cooking instead of electricity. You can also consider moving to a cheaper place to stay. These are just examples to show you that you can and should lower your monthly spending.
Saving Is Paramount
I always find it funny when I hear some people say saving is a scam. They say so because they feel that saving is irrelevant when you already do not get much. They also feel it is irrelevant because it does not necessarily reproduce the money. Those are all myopic ways of looking at the subject of saving. Saving mostly serves as a precursor to important things. For instance, in order to have money available for emergencies, you must save it. In order to have money to invest, you have to save it. In order to purchase big or pricey items, you must save over time. Clearly, there is no way you can downplay saving as irrelevant. It is integral to building financial success. Warren Buffet emphasises this approach to saving, “Do not save what is left after spending, but spend what is left after savings”.
Study Or Listen To Finance Material Often
The foundation of financial success is in one’s mindset. You cannot attain something for which you have not developed the right mindset. That is why it is vital that you deliberately and consciously expose yourself to wholesome financial information. Find out reputable sources of financial information, e.g. books, podcasts, blogs, and the like. Make it a point to study and or listen to such material daily. This will create in you the right mindset for financial success. After all, ‘An investment in knowledge pays the best interest – Benjamin Franklin. It will also keep reminding you and keeping you in check. Transformation comes by renewing your mind.
These are the 7 fundamental money rules you need to adhere to for financial success. No one is going to do it for you; you have to make a choice and take the necessary steps. The road to financial success is always under construction; keep building!