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Are you ready for a breakthrough in your finances and creating a whole new relationship to money and finances for less stress, freedom and happiness?
I have found a common theme working with my clients to create a breakthrough in their finances and that is they do not have a clear picture of what is coming in and what is going out and what is left over at the end of the month. They just do not pay attention to their financial situation however they want to be in a better financial position. Here's the question. If something that they want is a better financial position, why are they not focused on their finances?
My take on it is that most people have made money a part of their self identity. Having a lot of money is good, having a little money is bad. Since there is never enough money their default feeling is that there is something lacking within themselves. Rather than deal with it they bury their head in the sand and just hope that if they work harder and make more money they will have more and everything will be great. That rarely is that fact because typically the more money people make the more they spend. There is an old saying "a gold fish always grows to the size of its bowl" What happens if the gold fish has to get into a smaller bowl? I will give you a hint: It is not a good thing.
The same rings true for us humans. Typically the more money people make, the more they spend. Bigger house, fancier car, more cable channels, better cell phone, nicer clothes. The challenge is that these come with cost. That cost is usually higher debt and less freedom due to the obligations of this debt. So the bigger question is?
What do you want your finances to do for you?
I am going to go with a typical answer that I hear from my clients.
1. More Money!
First off what will more money get you and why is this important to you?
Getting to the source of why you want more money will help identify how much money you will need and whether it is something that money can buy.
Secondly, what does having more money really mean?
More could me more income, more savings, more investments, ect...
The most accurate way to track what money you actually have is through your net worth. Net worth is your:
Your Assets less Your liabilities = Net worth
Easier said...
The value of what you OWN less what you OWE = Net Worth
If you were to sell everything and pay off all of your debt obligations you would be left with a sum of cash that would be your net worth. Regardless of how much you make if what you owe is greater than what you own you have nothing or less than nothing, you are insolvent. This means that if you were to sell off everything you would have nothing and still owe money.
To work that back a bit if what you earn is less than what you spend you are going to continually decrease your net worth.
Now this is not where my clients typically want to be with their finances and I doubt you do if you are reading this far. What they want is financial freedom. They want to be able to do what they love in life and not have to worry about money. My interpretation of financial freedom is simple. Your passive income is greater than your expenses. Passive income is where you have income without being actively involved in creating that income. An example would be interest income from your savings. You are sleeping at night and your money is working for you. Now imagine that you had enough of that passive income to cover all of your expenses. You would be free to do what you want with your time. Is this a powerful place to stand with your finances?
Now if you are thinking that financial freedom would be great then this is where you get to work.
Disclaimer: This is not a get rich quick scheme or a secret. This is simple fundamentals of creating what you want from money, a system to measure where you are at and where you are going with money.
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