Never Underestimate the spirit of Money management.
I guess @steemychicken1 opened a floor of the topic,having talked about the important of "money management". I'll be back to that in a jiffy. What if I told you that making money is easy, but managing money is the difficult or rather, technical part.
You’re probably thinking, how can making money be described as easy when people have to work so hard to make it. Some people do crazy jobs, work for most of their lives, some people become criminals, deal drugs or even rob banks for money. Then how can making money be described as easy.
On the grand scheme of things, managing the money that you earned by whichever means is a determining factor if one can lead a life of wealth or be merely a one season wonder.
There’s a difference between being rich and being wealthy. You see, wealth is measured through time.
Okay! How long will the money you have keep you sustained if you stop earning more money?
Let’s say your monthly expenses are a thousand dollars, and you’ve save up seven thousand dollars. Then for some reason you stopped earning, at this point, your wealth is measured in seven months. That is, unless you reduce the cost of your monthly expenses or before the end of the seven month period a miracle happens to your finance.
Will you sit there and wait for a miracle? You have to take matters into your own hands. You need to understand basic things like cash flow, your assets and liabilities.
If you’re in business, managing money the right way is a must. It has been statically proven that 90% of business fail in their first year. One major reason why these business have failed is due to lack of proper money management and book keeping methods.
“A business should be treated as a separate entity from the owner”
Many business owners make the mistake of running the business as an extension of themselves rather than treating the business as a separate entity.
The money in that business is not your money, even though the initial capital came from you.
In business management, a structure ought to be setup where the business can pay you as a manager and in turn pay back the initial startup cost over a certain period of time, while keeping note of the day to day business dealings which would include records of sales, expenditures and general day to day activities.
One application that is strongly recommended is the kippa app. This app is designed to help businesses record sales and expenses, track profits, generate professional invoices, manage expenses as well as for bookkeeping and finance management.
In money management, you need to know where the money is coming from, how the money is coming, where it is going and why it is going there. To know these things, you need the right tools. Bearing this in mind, you’ll likely spend less money on a whim but rather stick to a financial plan that will lead to your long term goals.
On the journey to becoming wealthy, you begin by becoming financially free. The key to become financially free is through your passive income.
Passive income is money you earn by not working actively. You earn passively from investments, rentals from real estate, dividends from shares you have amongst others.
To become financially free, your passive income has to exceed your expenses. For example, if your monthly expenses are a thousand dollars, and you’re earning a thousand dollars passively then you’re a foot in been financially free. It gets better when your passive income is over or way more than a thousand dollars which counts as your monthly expense.
Managing your money the right way is essential if you’re ever going to become financially free and wealthy.
In reality, you won’t magically climb up the ladder, it’s easier said than done. No!
Nonetheless, you have to be intentional, you have to look at the level which you are currently on, then you think, plan and work towards moving from one point to the other.
You may begin by having to work hard and earn actively, then you can save up for investments, buy certain stocks or properties that will bring money back into your pocket. The key to this is managing money.
I strongly recommend you get a financial advisor for your personal and business finance.
Always remember that by discipline and consistency all your long-term goals are only a short distance away.
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