6 Wise Money Decisions That Can Help You Embrace an Intentional Life This Year
Wise financial decisions might not be “sexy” as James Swanwick, co-founder of Swanwick, described it on The Edge Podcast with Caleb Guilliams, founder, and CEO of BetterWealth. But it sure as heck forms an integral part if you want to live an intentional life.
Unfortunately, most people allow their money to control them and according to Caleb they get stuck in the following common financial pitfalls:
- Thinking only with the end in mind
- Focusing more on retirement than how money can be used as an asset today
- Not thinking about yourself as the greatest asset
- Buying things you can’t afford
- Lack of education
Now let’s put on our finance thinking caps, shall we?
Here are 6 wise money tips to help you control your money and achieve maximum financial success this year.
Tip #1 Be Goal Specific & Strategize
As much you need a healthy mindset as a driving force to set yourself up for success, you also need healthy finances.
How do you define financial success? Get clarity on that first before you go on to focus on the metrics that will push you to achieve your new year goals. For example, if your life goal is to have more freedom or become location independent, consider the following personal finance tips:
- Create and stick to a personal budget
- Put your savings on autopilot
- Cut back on expenses
- Spend less than what you earn
- Cancel recurring charges for services you don’t use
- Save your end-of-year bonus
- Purge your possessions
- Purchase used wheels
- Prioritize debt repayment
- Protect yourself from fraud
Tip #2 Audit Your Money
While personal finance plays an important role in achieving success, auditing your company plays an equally important role – if not bigger. As scary as it might be, this crucial step provides credibility and can improve the internal controls and systems of your business.
Ask yourself: How will you know the state of your finances if you skip this important step?
Here are 3 ways auditing your company can help you take back control of your money:
- Keep tabs on your cash flow
- Prioritize assets that can generate future cash flows
- Strategize to knock off any toxic debt
This brings me to the following essential money tip.
Tip #3 Understand Good vs Bad Debt
There is a clear distinction between good and bad debt and it’s essential for the health of your finances that you understand the difference. For example, if something, such as real estate, is going to give you a return on your investment, it classifies as good debt. But if it’s a Mazda MX-5 or Samsung’s flagship Q95T QLED TV, it classifies as bad debt.
As Warren Buffett said, “If you buy things you don’t need, soon you will have to sell things you do need.”
If that left a sour taste in your mouth, the next money tip might be cordially received.
Tip #4 Think Non-Traditionally
Chances are great you were told to build a good-standing credit score. Similarly, you were encouraged all your life to focus on saving for retirement sooner than later. Not that it’s a bad idea to save for retirement, but should it really be a priority?
Caleb encourages people to think non-traditionally with regard to finances. “Question what you’ve been told all your life,” he said in this episode on The Edge Podcast.
Find ways to make your money work for you!
And if you find yourself too overwhelmed to figure it out, find an expert that can help you make wise financial decisions.
That’s where consistency comes into view.
Tip #5 Work Towards Consistency
“Consistency is everything!” Caleb said.
What this means is that you’ll need to adopt a certain accounting method and stick with it in the future. This principle ensures the consistency of information given to users of your financial statements, such as creditors and investors.
The goal here is to ensure that your financial statements are reliable and comparable.
Tip #6 Expand Your Financial Education
While the consistency principle provides reliability, financial literacy builds wealth that works for you. This brings me to a story James shared on The Edge Podcast. When Warren Buffett, known as one of the most successful investors in the world, was interviewed on CNN during the 2008/9 financial crisis, he was asked what the best investment is. His answer was profound:
“The best investment is always in yourself.”
Consider investing in your education to expand your financial awareness because “Investing in yourself will always give you the best rate of return,” James added on The Edge Podcast while interviewing Caleb.
Caleb’s best advice to you is this: Take responsibility and make decisions based on YOU being the most important asset. Your time, abilities, and resources are key variables that can help you take control of your life.
If you can master these three components, you can maximize your future wealth potential and knock your new year goals out of the park.
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