This is the second part of our two-part series on breaking out of the cycle of little or no money focuses on the steps we can take, to gain control of our finances and begin developing wealth. As with any change we want to make we must first acknowledge that there is a problem and that problem needs to be resolved. Once we are at this stage then the rest is all about sticking to that decision and seeing it through. If you have made the decision to take control of your finances, then these following steps will help you do so.
Step 1: Stop all excess spending on unnecessary goods and services
The first step is to stop spending money on things we do not need. If you find that cutting all excess spending on unnecessary goods and services is too difficult for you then the best thing you can do is to let, go of things one by one. For example, if one of the things you like to spend money on is fast food then cut off that expense completely from your budget and after a couple weeks once you have become used to it then you can move on to the next thing and remove it from your budget. If you do this correctly after a while you will notice that you have more money available to you.
Step 2: Invest the extra money you now have
I say invest because when people think of saving money negative thoughts usually follow but, if you think of it as investing money to be used later you will be more positive about it and more inclined to do so. You can move place this money into a basic savings account, a tax-free savings account, if you have a large amount then you can invest in mutual funds, index funds etc. For this to be more effective you need to discipline yourself never to withdraw anything from this investment until you have reached your goal, even if something comes up that you feel is an emergency this money is not to be touched. To avoid using this invested money I do not think of it as my money but as the bank’s money that way I do not touch it, once I reach my financial goal then I start to think of it as my money.
Step 3: Set achievable goals
The first rule of investing is to have goals set up these goals are what keep you motivated to invest more and more money. When you start investing money the most important thing you can do is set goals, these goals can be short-term and they can be long-term goals. Long-term goals, of course, will take longer to achieve but the reward is usually worth the wait. You should always keep in mind that goals need to have a time frame setting a goal without a time frame is the biggest mistake you can make because it can make you lazy and unmotivated since there is no time limit for it to be accomplished. Setting unrealistic goals is also another problem that causes discouragement. For example, you have a net worth of $0.00 and set a goal of being worth 1 million dollars. This will most likely not happen, not that it is impossible but highly unlikely. A more realistic goal would be, to have invested $50,000 by this time next year.
There are more things you can do to save more money but these 3 steps are the simplest and easiest to follow. You might come across more steps that are more personalized to you which you can employ in your journey to being wealthier. Always remember to keep an open mind when you come across new ways/ideas on how you can save, earn or invest more money. But, these 3 steps will help you break free from the vicious cycle of saving less money.