Allow me to introduce you to Drew. When Drew receives a monthly income, first thing Drew does is to pay bills and any other financial obligations he is committed to. Drew uses the rest of the money for necessities and upkeep, hoping to have some left to save at the end of the month. Most months he doesn’t save, sometimes he does, especially when he is determined to buy something he likes (he likes his gadgets) or wants to go on vacation.
I don’t know about you, but to me it looks like Drew does not work for himself, but rather works for others.
Why do I think so? Because he always pays everyone else but himself. He earns an income but never gets paid. What did you say? He uses the money to pay for things he likes and wants to have? Are you talking about when;
- He pays for his rent on his modern apartment? He gives the money to his landlord, who uses the money to pay off HIS mortgage and probably makes a profit at the end of the month. Drew makes no profit.
- He pays for his phone contract bill? A phone manufacturer sold the phone to his network provider who in turn sold the phone and some air time to Drew as a monthly payment package deal. Both phone manufacturer and network provider most likely made a profit at the end EACH year. Drew makes no profit.
- He bought the gadgets he always wanted? Yeah sure, but the gadget manufacturers also makes a profit. Drew, no profit.
- He used it to pay for the finance on his nice car. Again, Manufacture, Profit. Drew, zilch.
See a pattern? Everyone in this story, including Drew, is selling a good, service or time in exchange for money. Yet everyone, except Drew is making a profit (check their end of year financial statement if you don’t believe me). The sad thing is, Drew is helping everyone else but himself. Although every month Drew receives an income, Drew never gets paid.
Here are 6 things to consider in order to stop or avoid living like Drew;
You are a business
As long as you are working and receiving an income, think of yourself as running a business, even if you get paid doing what you love doing. You may be selling something, offering up your skills or your time in exchange for money to your employee. This is irrespective of you job or your qualification.
You need financial goals and a plan
Everyone else you are giving your money to has a financial goal and a plan and you are part of the plan to help them reach their goals. Good for them, but remember,you are not working for them. You are working for you and your future. So set yourself a financial goal and plan towards it. If they do it, so can you.
Pay yourself by Posting a Profit
When you receive your income, the first person that should be paid for their hard work is YOU. NOT your network provider, NOT a phone or car manufacturer, NOT your cable provider,NOT a bank or credit card company. YOU. Everyone else is posting a profit at your expense. At the end of the day it doesn’t matter how much income you receive or how much you can potentially earn, what matters is if you are actually keeping some of it. If you are paying yourself. No matter how small, start from there and aim to increase you payments. Form the habit. If you can be trusted with little you can be trusted with much. Learn to keep money.
Invest in yourself
If you cannot think of anything to use your money for, Keep it! its yours! you earned it! Put it in the bank until an idea of how to invest in yourself comes to you.
Increase your capacity to earn more
The organizations you help make a profit do it all the time. They invest the profits they have made on themselves in order to increase their capacity to earn more. Remember you are running a business and you are your best asset. Invest in yourself. Learn a new skill. Buy assets that will generate you more income (long term and short term). Start a business. Do something that will improve YOU.
Whatever you do, Do NOT forget the foundation
We all want to live in the nice apartment, drive the best cars, own the latest gadgets, and wear the latest designer clothes, go on holidays. But most of us skip the important part of building a house, the foundation, yet somehow we expect the house to stand when the waves come testing. My point? A lifestyle built on a weak financial structure WILL crumble, eventually. It’s okay to start from the bottom. You don’t have to buy a brand new car if you need a car, you don’t have to live in an apartment, to go shopping every week, go out every night, go on holiday every year, buy the best gadgets. Not yet anyway. And by no means am I saying these things are bad. But having those things on a solid financial foundation will do you a tone of good. It will take sacrifice and time (especially in this economic climate), it may be unpleasant, it may go unnoticed, but in the end it will be worth it. Just ask the house with the strong foundation.
Remember pay yourself. Not them! You! You absolutely earned it!
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