Before we go any further, first ask yourself is this question: “who do I make a living for?” Maybe there are variations of answers from this question like: for my mom, for my family, for my girl, for a car, for a brighter future, etc. Now, if your answer is “for myself,” your money is at risk. Knowing that you earn for yourself will surely tempt you into buying anything you want. So the first thing you should do is to – never earn money just to satisfy yourself and instead have a more profound or noble reason for doing it.
But what if you are alone in this life (assuming) or you have no close relatives, then, earn for yourself but, always keep an eye out for the biggest threat to your earnings. Never earn for friends – teach them how to earn their own money.
Set Specific Goals
The next thing you need to do is to set your goals – specific goals like a house, car, education or a wife (just kidding, You can’t earn a wife) or even buying a new set of undergarments. You have to write all the things that you need (and also the things that you want) in a list of goals – this is one way of keeping an eye on the enemy. This is also an example of monitoring your personal finance.
This list should have deadlines and milestones for you to accomplish otherwise it will be less interesting to keep and it defeats the entire purpose of having a list of things you want to do or have at some point in time. For example, you wrote that you wish to have a car in the near future; it is not considered as goal if there is no definite time of accomplishing it. You have to time it. For example, you could say “I need to have a car within 5 years.” Now isn’t that better?
Timing is Everything
But timing your goals is not just about how early or how late do you want a goal to be accomplished – it also depends on the capacity of the money you earn. The actual reason why you wrote these things is to estimate the ability of the money you earn versus the things you want to buy. In this manner, you may see that some of these goals are too expensive and some are “wants” not “needs.” That’s why you have the next step – trimming the list.
You have to trim the list to bring this goals into reality. First, trim the list base on the ability of your money to accomplish it, then trim your goals according to necessity. This is because there are some goals that are too costly to work on but nevertheless necessary. For example, a car, your earnings may not be able to buy you your own brand new car in 5 years, it’s necessary in order for you to cut down on your daily transportation expenses and will surely save you a little bit of money on buying gas per month versus paying taxi fares per month. You can call this an indirect investment.
Streamline your Dreams
You trim your goal like this. Does it have to be brand new? (Yes, they say: if you hate a person, convince him to buy a second hand one) then, do I really need to have one in 5 years? If your answer is no, then adjust your timing. If your answer is yes, then work harder!
You have to be wiser enough to beat the enemy.
Always keep your money away from its biggest threat – yourself.