Many people look toward starting their own business as a way to manage their own finances, debt, and income – and become more free to do the things they want to do.
There are reasons why more and more of the wealth of this country is passing from the average family to the wealthy few, and savings have decreased dramatically and debt has increased exponentially.
It’s because of the denial of certain basic principles by many Americans, and they are: living beyond our means and increasing what we owe to credit card companies and lenders.
Many people look toward starting a business of their own as a way to get write- offs, make profits, and become free to do the things they want to do.
Sure it’s easy to do this, and half of us don’t give it a thought until it’s too late.
I’d like to pass on 10 Basic Principles of Financial Intelligence – created by Orrin Woodward, (author of “Resolved: 13 Resolutions For Life”) that will most definitely change your financial picture, no matter what income you are making.
- Accurately identify your net income
- So many of us look at our commissions and say, “Wow, I’ve really made some money here” without bothering to subtract the expenses, subscriptions, refunds, and other outlays. This tendency leads to overspending and an out-of-control way of managing money.
2. Document All Expenses
1. This isn’t meant to make you feel bad; it’s the right way to get an honest picture of your income and spending habits, and how you can adjust things so that your net income can continue to grow.
2. Make a decision to track and organize your financials so you can make decisions accurately based on real data. One of the biggest mistakes I made early in my business was not understanding good financial systems and accounting controls.
- Spend No More Than 75% Of Your Net Income
- If more of us did this, there would be a lot less anxiety in many households.
- If you spend all of your money making $5,000 a month, you’ll spend it all making $50,000 a month, trust me. If you only spend 75% of your net income every four months you have another month of savings. You can do it right now.
- Never Finance Something That Depreciates
- In other words, pay cash for your car, or pay off the loan as soon as you can. Also, if you can’t afford to pay off your credit card bills at the end of the month, you can’t afford your spending. You’re giving money away at 14-20% monthly.
- Set A Price Limit On Spontaneous Spending
- This will help break the habit of bingeing with your credit card. If you set a limit and something is brought before you above that limit, sleep on it for a day or two. That will help cut down on impulsive purchases and get your financials back on an even keel.
- If Using A Credit Card Tends To Make You Spend More, Use Cash Whenever Possible
- I am definitely guilty of this one. Credit cards separate us emotionally from the fact that this is real money being spent. I’m now using cash for events, shopping and entertainment because I see where my money is going, and once my allotted cash is gone, it’s gone.
- Wipe Out Consumer Debt Before Saving
- If you don’t wipe out your debt before adding to your savings, you are giving money away in interest and thus your “savings” are negated. Best to cut down the debt and then start with a clean slate saving 25% of your net income every month.
- Learn The Difference Between Investments And Expenses
- This is especially true in your business, where you need education, products, training and to attend events in order to be mentored by successful entrepreneurs and improve your entrepreneurship acumen.
- You can invest in external assets that multiply existing wealth, and you can invest in yourself to multiply you and increase your power to create wealth.
9. Focus On Quality Of Life And Peace Of Mind When You Become Wealthy
- I’m sure you’ve heard about lottery winners who did nothing but spend, spend, spend, buying cars and houses and other possessions, and becoming broke inside of 5 years. It happens over and over again. By viewing money as a source of energy, you can handle your increased income safely so it will grow and continue to serve you as you continue to bring value to others with your business.
10. When You Become Wealthy Remember To Be A Blessing To Others
When you go into the world realizing that you are a beautiful creation, a human being with a mission placed into your heart and mind from a divine source and that you matter, you’re going to realize something I discovered years ago, and that’s this:
All Human Beings Are Meant To Be Beautiful
You are designed, created and evolved to create the dreams in your heart.
So are your children, your spouse, your neighbors.
If we can inspire the world and change it through changing ourselves…we will create a radiant transformation that will lift up the lives of the beautiful souls around us and change the world into a better place.