Saving and Investment
Earning income, saving money and developing income earning investments are the foundation stones of financial prosperity.
Without the desire to earn and the discipline to save, investment will be non-existent and your prospects of financial prosperity will quickly dim and fade away.
On the other hand, if you can learn the basics of personal money management and understand the wealth cycle, you will be among the 5% of Australian adults who are well-off. This doesn’t mean being rich or outlandishly wealthy. It simply means being free of personal debt and doing the best with the money you’ve got.
Don’t be fooled. We live in a society of consumerism and instant satisfaction. The majority of so-called wealth that you see around you, and perhaps even envious of, is largely built on credit and debt. If you follow the pack you will be led into a fool’s paradise that will have you consigned to financial purgatory for decades.
To change your financial fortunes, you must first change your mind (the way you think); which really means learning new money habits. To start, you must break-off your love affair with instant gratification, a desire which so often ends in tears and puts you on a downward spiral of overspending and debt accumulation. Breaking this habit is not always easy to do because its probably something you’ve been been raised with, but moving your mindset to accept deferred gratification will open up the opportunity to save money and invest. This single change has the power to turn your life around.
Small steps, new learning and dogged persistence are required to form new habits. It usually takes at least 30 days to win the battle over the little voice in your head that wants you to slip back into your familiar and comfortable place; even though this place is anything but financially comfortable.
Here are 5 basic and very valuable wisdom bites to remember:
- When you earn money, earn it from more than one source (more sources = more income)
- When you save money, put saving ahead of everything; save a little, very regularly, and over a long time
- Before you invest, understand your own tolerance to risk and and the law of compounding returns
- Don’t confuse investment with speculation, gambling or games of chance; investment is a deliberate strategy of building quality income-earning growth assets
- When you invest, start small, plan, research, choose quality, diversify, and never invest in anything you don’t understand