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How to implement a wealth strategy that will always succeed over the long-term
Everyone should have a philosophy towards money.
A philosophy is a theory or attitude that acts as a guiding principle for behaviour.
In other words, what is your plan for your money? A person without a plan is headed nowhere. Therefore, if you want wealth, you MUST have a wealth plan.
This must link back to your life’s goals and dreams. Do you want to be financially independent, a CEO, a whatever. How does money factor into your goals?
The key thing to remember is that money is a tool. A tool to create the life you want, a tool to help others in need, a tool to wield control. Like all tools, they can be used for good and bad.
What is your money philosophy?
The above graphic illustrates a particular philosophy for using the money you earn.
The worst of money users have a philosophy of spending 110%+ on living expenses. Going over 100% means credit card debt. I don’t think it’s a deliberate choice, it’s just a series of bad money habits.
Many people live paycheck to paycheck. That is, spending 100% of your income each pay cycle.
Smart people save. It may be 5 or 10%. It depends on what is left over after expenses.
Then there is the great minority. The people that pay themselves first and have superior delayed gratification skills.
To live for the now or for a greater future?
How you answer that question is how you will fare financially in life.
Those that practice delayed gratification will forgo the smaller things now in the promise of bigger things in the future.
For example, I will forgo spending $200 each weekend going out and getting drunk for the promise of doing whatever the hell I want in 20 years time when I have become financially independent.
Not everyone will stay the course. This is serious discipline for a payoff long into the future. That’s why so few people are financially independent.
What will your ratios be?
You can alter the numbers to what suits you best.
I would start off with how much you want to save and invest each pay. It could be anywhere from 70% to 10%. Pay yourself first. This is critical. The more you invest today, the more you will have in the future.
Second, know what your essential living expenses are (your needs). You will need to track your spending to know where your money goes. To be successful, treat yourself like a business. A successful business knows exactly where its money goes. What are your absolute essentials? What is the percentage of your income?
Finally, you have your play money (your wants). This is what’s leftover. You are allowed to spend it and NOT feel guilty. Make sure it’s worth it though.
The wrap
Your numbers depend on what you want from life.
Do you strive for financial independence or just a comfortable life? It’s entirely your choice.
However, everyone should strive for a “pay yourself first” attitude because having money makes life easier. Money stress is gone with good money habits.
Build your delayed gratification muscle for a financially stronger future.
Take action in your life.
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