It can often feel as if you are just floating through life, awash on the waves, with no control over what happens to you.
It isn’t true unless you allow it to be true.
Bad things, that are out of your control, do indeed happen; sudden death in the family, a car accident, an unexpected expense, or even bankruptcy.
However, they don’t have to be defining factors of your life.
Take Responsibility For Your Money
While you can’t always control what happens to you, you can control how you react.
You have the power to take control of your life.
If you want things to change for the better, you have to take control of your life.
That goes for your money too.
Stop being reactionary. Be proactive.
Rather than just reacting to things when they happen, trying to get by financially from month to month, you need to focus on limiting your spending.
I know, I suffer from this problem too… The Shiny Object Syndrome.
There is always something out there that catches my interest, and the more I think about it, the more I convince myself that I just have to have it.
The only problem is, even after I do purchase it, I soon learn that the item was not as good as I thought, or did not give me the benefits that I originally expected.
Only by taking responsibility for the financial mistakes we make, can we have a better future.
Take a hard look at the last twelve months of your life.
Did you have any financial goals? Did you reach them?
Did you save money? Did you spend too much and run up your credit card bill?
Did you make any unnecessary purchases? Did you buy things but then hardly used them?
What did you do right? Did you make some smart investments?
It is necessary to take a hard look at the past, to be honest with yourself in order to have a better future.
It is also not uncommon for someone to want to change their financial situation after going into debt, or even worse going through bankruptcy. Those can be powerful motivations for change.
I asked myself the questions above and I wasn’t satisfied with my answers.
To be honest, I spent too much money over the last year and lost sight of my financial goals. Surely, I’m not alone.
So many times we are just running around reacting to emergencies that we never accomplish what we desire.
Saving Is The Prerequisite To Investment
The best investors I know of, are also great savers. They have to be.
It takes money to invest. Without money, even the best investment idea will be of no use.
It also takes time to build up enough capital over the long term to recognize meaningful gains in the end.
For example, a 100% gain on a hundred dollars, which is a great return, by the way, is only going get you… a hundred dollars.
You doubled your money, for a total of two hundred dollars, but the initial investment was very small.
Actually, the gain will be less than a hundred dollars after fees and taxes are taken into consideration.
Let’s face it, that amount of money isn’t going to get you very far.
If you don’t make saving money part of your regular lifestyle, your investment portfolio will not significantly improve your financial security.
It is just that simple.
I admit I haven’t always been the best saver.
However, I’m trying to remedy that problem. I’ve now made saving and investing a part of my schedule.
It is on my calendar.
Here in Japan, I only get paid once a month. Budgeting has always been essential.
Now, every month immediately after I get paid, I take out five hundred dollars and set it aside to invest.
I decided to make regular saving and investing a top priority in my life, starting this year.
While I had always saved and invested before, sometimes quite a lot, in fact, this time it is different.
This time I have a monthly schedule. I have a set goals and I have a specific plan to achieve them.
I also review my goals, my progress (or lack thereof), and make sure I am leading my life in a manner that aligns with the goals that I have set for myself.
“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett
Goal Setting Is Empowering
You know, at first, I thought setting goals would feel really limiting.
I had previously set some goals and when I didn’t achieve them, I would get discouraged.
The problem was that I really wasn’t focused on my goals. I had them in the back of my mind, but I didn’t have a concrete plan on paper to achieve them.
It probably isn’t even right to call them goals. They were just dreams.
Now, a part of each day is dedicated to achieving my goals. I literally have the time marked off on my daily schedule and calendar. I actually find it quite liberating.
After breaking down my goals into daily actions, chunking them into more manageable actions that I can do each day, I find that I really enjoy checking them off my daily to-do list each day.
I know that my goals won’t always be easy to reach, things will get tough, but at least for now I am taking a step in the right direction.
I feel energized and empowered. I feel satisfied knowing that I am getting things done.
I like knowing that I am being an active participant in my life and not just floating wherever the sea takes me.
Breaking Financial Goals Down
Big financial goals don’t have to seem so big.
I realized that if I saved just $17 a day, that at the end of the month (17 x 30), I would have $510. That is a much easier to understand and it is an achievable number.
To be honest, my mind can’t comprehend a large number like saving $6,000 a year. However, small numbers my mind can relate to.
If I just pack a lunch or eat at home more often, I can easily save that amount of money.
I know that many people say to go for big wins, like refinancing your house, and I’m not saying you shouldn’t.
However, small wins, like not buying something to munch on in a convenience store, can also go a long way.
As for me, I’m middle-aged. I really shouldn’t be eating snacks anyway. Sweets will go straight to my waistline.
The fact is that I’m just not capable of burning as many calories as I could when I was younger.
Small wins, like avoiding snacks, are not only for my wallet but also for my health.
My heart will be healthier and I’ll more likely live longer because of those many small financial decisions.
I am also applying the same goal setting to my financial knowledge.
I have also set aside time each week to learn more about investing and immediately apply what I learn.
That makes the most sense me. Learning is great, but if you never apply what you learn, then there is really no point.
In the past, I would often learn something, but life would get in the way and I would not take action on it.
The result was that I would soon forget what I had learned, and my life would not be better for it.
An active approach to learning should help improve my retention of the lessons learned.
Time To Take Action
No matter what has happened in the past, don’t let it define you. Let it be a part of the narrative of how you turned your life around.
Take control of your life. You only have one life to live, so make the most of it.
It is time to take responsibility for your money.
Set some goals for saving and investing. Literally, put them on your calendar. I can’t stress this enough.
Just by writing your goals down and reviewing them regularly, you are much more likely to achieve them.
Don’t just float through life, being pushed and pulled around by the waves. If you don’t focus on your financial future, you risk crashing on the rocks of reality in old age.
Lao Tsu, the famous Chinese philosopher, once said that the journey of a thousand miles begins with a single step.
Are you ready to take that step?
Don’t put it off. Begin today. Your future self will thank you for it.
Take a hard look at your financial situation over the last year.
You have the power to change your life.
Before you can invest, it is necessary to save money.
Goals can be met by goal setting, scheduling, taking action, and properly reviewing of those goals.
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Goals Research Summary (PDF)
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