I would like to share with you the foundation of financial success. According to Multiple Streams of Income book, we need to understand the building of financial stage of financial freedom.
If you will find a 5 peso cents on the floor, are you going to pick it?
Most of you will answer "No", because the value will not help you buy a dream house, a dream car or not even a candy.The first foundation in the triangle of money skills is value. You need to value "Money",whether small or large amount. If you can manage the pennies in your life,then you’ll be ready to manage the millions that will soon be flowing into your life. If you can’t manage the pennies, even though millions may come, you won’t be able to hang onto them.
A good example are those lottery winners, many of them went bankrupt after few years of continuous spending. According to study almost 95% of them went bankrupt. The main reason is because they don't know how to value and control it. Learn to value money.
If you will learn how to value money, then you will think twice where you going to spend it. Sometimes we treat money as the root of all evil, so our mindset is to spend them and there is no reason to have more of it.Why not twist that mindset "Money is the root of goodness", it can help pay your bills, you can support charities, you can help those family members in need, you can help build a church or a free school, etc. If you will understand the value of money , it could give you a secure and brighter future of your family.
Control is the next foundation. Don't let money control your life. You are the one that will control the money not the opposite. Think about where you spend your last salary pay? Did you went out with your friends in an expensive restaurant or bar? Did you pay yourself with a new Iphone 6?
If you are controlled by the money, then the possibility is becoming materialistic and spend the money to worldly ambitions. At the end of the day, you will be in debt because of overspending.
Save it. A very popular word in financial world. If I will ask you how much is your savings? Is that amount equivalent to more than 20% of your total salary in year 2013? If the answer is YES, then you are in a right track but if NO, time for you to retrack and study your saving habits. Another question is, what if you will be terminated today in your current employment, will you survive for the next 6 months without working? Let me answer it, since I received my dismissal letter today from my current job and my answer to the question is "Yes". The first thing to do before we move to the next foundation is to establish your emergency funds.
I will discuss the other three levels on my next post, but first check your own financial standing and money skills. In addition, reflect with this famous quote of Sir Warren Buffet: