Quick Thoughts on Becoming Wealthly
Net worth – I think it is a must to track your net worth on a monthly basis, I use Excel for its flexibility. Think of yourself / your family as a business.
Planning and comparison – At the end of each year I update my rolling five year net worth plan. The coming year is in detail with years 2-5 planned at a high level. I then track my actual net worth against this.
Budget – I’ve always thought these suck, as they are no fun and to me a real negative, depriving approach. I prefer retrospective analysis and making decisions based on that, e.g. how much did I spend on alcohol in the last six months…woops better buy less champagne and maybe even some clean skin wine. Most financial planners will tell you budgets are essential. I find that seeing every month how much my net worth varied from the last is more motivating than a budget.
Credit cards – never have an outstanding balance
Savings – it’s that bloody simple. Spend less than you earn then invest what you save in the most efficient rewarding manner possible.
Mortgage – is not a big credit card and the balance should only go one way…down. (There are exceptions to this based on clever tax planning, but not based on consumption.)
Think long term – I was told back in 1994 that once you start thinking about retirement it takes at least 15 years to achieve it. That became my long term goal and by thinking long term all of the above becomes automatic and easy. Though remember you still want to enjoy the path along the way. Most of my friends still haven’t started thinking about retirement, it’s a shame as I’d really like them to be free to hang out and enjoy life with me; whether that be in café or making sandwiches for the homeless or too many other things to list.
It’s a game – some people hate this attitude and you might too. I view life as a game, it has rules, winners and it should be fun. You’re playing and should be in control. So many people seem to plod along rolling the dice, drawing a card without a strategy or a plan. Putting thought in to my game has reaped fantastic rewards. My first recollection of thinking this way was when I started high school and I’ve enjoyed playing the game ever since.
Give – in whatever way you can and in any amount of time, effort or money you think appropriate. Giving has huge rewards.
Financially educate yourself – probably no-one reading this or other financial blogs needs prompting on education, but once again my friends drive me insane on this point. They are prepared to work stupid hours for someone else and yet they are not prepared to put in a little work for themselves and their future. This does not mean learning how to analyse a company, it means having a rough understanding of tax law, financial planning, wealth creation, compounding etc etc.
Manage you own money – this flows from the point above. This does not mean investing in individual shares, it does mean knowing enough about the financial world to know how to invest what you save in the most efficient and rewarding manner possible.
Learn from others - whether in books, online forums, your friends, family, colleagues. Listen to what others say and see if you can learn something from it. Being the smartest person in the room isn’t smart, unless you are Giving (see above). My best game moves have come from asking advice of others.
This list could go on an on – anyone else want to share some tips or view?
Needless to say there is so much more to life than money. So very much more.
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