Let’s be honest, How can we reach a “Friday state of mind” while being anxious, not sleeping well and having a bunch of pending bills to pay in due date?
It is not a secret: Happiness goes hand in hand with abundance and prosperity, and you deserve to be happy. You deserve to be wealthy and have abundance in order to have a Friday state of mind every day.
Since emptiness is like having a thorn in the shoe, the more time you have the less you feel it. I want to introduce you to a Road to prosperity post series so you become a Friday state minded person!
Here is the first step
Before start, allow me to make a disclaimer: I’m not a psychologist, a professional finance advisor or an economist. I’m just a person who had mentally changed my relationship with prosperity and the way of thinking regarding abundance. I had read tons of books, had studied and listened to a lot of methods that helped me become wealthier. After slipping many times, clean the mess, and stand up, trial and error, taking ideas from here and there, as a result of seeking, I finally changed course. I’m not only have improved my wealth 650% in less than 4 years, but what’s more important: I’m on my way to be where I want to be.
So I’m about to share with you what worked and what is working for me so far as to become wealthier, step by step. Remember, this road is a marathon not a sprint. However, the first thing and the key aspect is, you have to be 100% committed to the objective of becoming a wealthier person.
Take a snapshot:
I mean, take a snapshot of the current condition of your personal finances. That is the first topic I would like to address, but not the only one -as prosperity not only includes money aspects. The rationale in taking that snapshot is to take a closer look at how you distribute your income as well as the income-expense relationship.
In the past, when something caught my eye, I checked my account and should I have enough money after a fast mental calculation, then I would buy it. Then I started building up unnecessary things and spending money I did not have (as when using the credit cards). That way, and gradually I started digging a hole until one day I found myself highly indebted. It required a tremendous effort to get out of that hole I dug myself. And if you find yourself in the same hole I used to be, toss that shovel and get out of there as soon as possible.
Debts are emergencies that you ought to address right now, and I mean it. The way I recommend that is dealt with is by start analyzing where is your income going and to reduce your monthly expenses in 30%. We will see in this post how to monitor your cashflow and in a further post we will go deeper in how to plan strategies to reduce your income in 30%.
Any ordinary employee works for 3 bosses: The Owner or Shareholders of the place where he/she works (the employee make them richer with his/her efforts); for the State or the Government taking part of the employee’s incomes as taxes; and the Bank owning the debts from the mortgage or the car or the credit cards. It is time to stop working for too many bosses or at least, to work just for two of them (at least for now that is).
Now, going back to the snapshot. The best way to do it is by using a monthly budget, which is not as simple as using pencil and paper, as to see how the money is allocated based on the responsibilities for the month. You need to organize yourself as to be attentive how much you have to allocate by area or line item. I started by using a spreadsheet in my computer and organized that this way like this example:
Everything was going perfect until I started having more responsibilities and less time to update the spreadsheet. (It was also very uncomfortable to do so using my mobile and to do so in one single device and the rest of the devices were updated at the same time). Also, it was very complicated to track all and every transaction.
Here are the pros of carrying a budget using a spreadhseet:
Dataentry is fast. Easily tailored to everyone’s needs (customized.) It is cost-effective (considering that usually computers have a spreadsheet software deployed; otherwise this is a link for a free spreadsheet program that runs very well )
Here are the cons of carrying a budget using a spreadhseet:
They don’t sync automatically (you can use a spreadsheet and use an online document service.) You need to know the basics for using a spreadhseet. It takes serious time to record each transaction. You need to backup your information in the event of data loss. (It happened once to me and I lost almost a year of data.)
Ultimately, for a snapshot of your financial outlook a spreadsheet works pretty fine. However I do not advise using it to manage your finances and your budget everyday.
Later I found another free tool. That is Mint. Moving from using a spreadsheet to using Mint was a major step. It was not necessary anymore to manually enter transactions and Mint can sync different accounts from banks, credit cards, etc. However something very interesting happened. While I was budgeting monthly expenses faster thanks to its easy access, I stopped tracking the transactions because it was done automatically. Then many times I found myself exceeding the budget without realizing it. You can download Mint here.
Pros of carrying a budget using Mint:
It is free. Your expenses are organized utomatically. It connects automatically to banks Synch your accounts and credita cards. Recommends a budget based on your pattern of expenses.
Cons of carrying a budget using Mint:
Too many ads offering credit cards that match your profile or spending behavior, that is, in any way your behavior pattern can be monitored. I personally do not like the idea of having all my banking information and passwords automatically managed by a software (while acknowledging that is very safe, but you never too much sure). You lose focus on your spending as it is done automatically.
Again in my case I needed some middle ground, something comfortable but that would also allow me to be focused on spending vs budget. Then I found YNAB. I think that this is a very comprehensive tool: Allows for sycnh between different devices and can be updated using file imports or just updating data manually, not automatically. This is an intentional feature as to keep you on your toes and aware of your spending. For me this is the most important feature is the as it keeps me aware of my expenses in a easy and convenient way.
Pros of carrying a budget using YNAB:
Easy to use. Allow you be aware of your spending habits while improving your decision making. Highly interactive and flexible. Comes with live training (Webinars) so you can max out the use of the tools. Ease to set saving goals.
Cons of carrying a budget using YNAB:
It is not a free tool. You can download a 30 trial here
Any of the three choices meets the need when taking a snapshot of your financial status while tracking your monthly budget, which are the first steps I recommend as to embark in this road to prosperity.
Translated by flowingwordxlation.com