Insanely Successful People Share Their Best Financial Advice
In today’s culture of advertising overload, instant gratification, and online shopping, living beyond one’s means is all too easy. In the words of the inimitable Ferris Bueller: “Life moves pretty fast. If you don’t stop to look around once and a while, you could miss it.” Or you could wake up with your savings running dry. It’s always a good time to set new goals and move forward with fresh spending habits, so keep scrolling for expert tips on saving a buck and thriving (even on a shoestring budget).
To quote best-selling financial author and radio host Dave Ramsey, “Everybody falls, everybody. [Empire builders] just didn’t quit, so now people call them a success.” Get a grip and be brutally honest with where your finances are. In order to move forward, you have to love your starting point. Ramsey adds, “The common theme that has run through people who have win, the thing I kept discovering, is this unbelievable sense of focused intensity. It can just be the conscious realization of 'What I am doing is not working. I have to change what I am doing.'” Be the change you wish to see in your bank account.
As the saying goes, there are two paths to abundance: acquire more or require less. Getting back to the bare necessities might just surprise you. Check your vanity at the door and resolve not to keep up with the Joneses for a month or two. Once you establish a routine of living simply, old extravagances won’t hold the same allure. As life coach and self-help author Tony Robins puts it, “Success is not about resources. It’s about how resourceful you are with what you have.” The trick is gaining momentum and creating new, healthier patterns that enable you to thrive within your means. This process takes time, but will eventually give rise to a new normal of financial stability.
“Personal finance is about 80 percent behavior. It is only about 20 percent head knowledge,” says Ramsey. “We struggle because managing behavior on a daily basis for an outside overall goal is tough for anyone.” Discipline is remembering what you want. Keep your eyes on the prize and train your brain to make small sacrifices. Studies show simple acts of routine such as making your bed every morning can establish patterns in the mind that lead to impulse control.
As a young entrepreneur, Elon Musk, CEO of Tesla Motors, willingly relegated himself to a daily food budget of $1 a day. The exercise reassured him that he would be able to forgo certain creature comforts in pursuit of his new business. Musk says of the technique, “I was like, 'Oh, okay. If I can live for a dollar a day—at least from a food cost standpoint—it's pretty easy to earn $30 dollars in a month, so I'll probably be ok." Feelings of self-reliance and well-being generate forward momentum and signal goal achievability. The knowledge of just how far your dollars can stretch is powerful stuff.
Ramsey points to Weight Watcher’s accountability program as a driving factor in the brand’s success with bringing about change. Having a partner to hold you accountable for irresponsible spending or to simply pat you on the back when you meet key goals is pure incentive. Lean on people you can trust and ask for their support.
Instead of waiting until the end of the month to see what’s left over and chuck it into savings, schedule an automated deposit at the beginning of each month. "If you're starting late and you begin your catch-up process with a budget, you may never get truly started," writes financial expert David Bach in his book, Start Late, Finish Rich "If budgeting worked, then everyone would be doing it and we'd all be rich. I've always believed that to be fair to yourself and your future, you should pay yourself first, at least one hour's worth of income every day.” Take money off the top and contribute it to your reserves. Live off what’s left after your savings accounts have been properly fed.
Entrepreneur Timothy Ferriss, author of best-seller The Four Hour Work Week, emphasizes the importance of breaking goals into tangible distinctions. No matter your goal, take the big picture and scale it into increments. “If you want to have a Lamborghini Gallardo race car, you want to go to Fiji, or you want to take two trips throughout the domestic U.S. per month, define what you want to do, what you want to have and then calculate the average monthly cost. That’s your TMI (target monthly income) and it’s surprisingly low.”
When taking stock of one’s budget, it’s easy to point out the little flaws—that daily cappuccino habit or extra fashion splurge. Ramit Sethi, author of I Will Teach You To Be Rich, takes a different approach, emphasizing the importance of cutting out major expenses rather than getting hung up on details. He states, “Too many people try to save money on 50 things and end up saving 5 percent on everything—and causing themselves a huge amount of stress that makes them give up entirely.” Sethi advocates honing in on big expenses and scaling way back. “I prefer focusing on my top two discretionary expenses (for me, eating out and going out), and cutting 25 percent to 33 percent off over a period of six months. This generates hundreds of dollars of extra cash flow that I re-route to investing and travel.”
Both Sethi and Ferriss are strong advocates for taking the guesswork out of financial planning. “It’s not about willpower,” Sethi says. “More than anything else, the psychology of automation is critical to successfully getting control of your finances.” He advocates getting all your monthly bills on the same schedule, setting up auto-payment, scheduled savings deposits and automatic transfers to your Roth IRA. Ferriss states, “The objective is really to automate income, so that your decisions are not financially driven, so that you can take a step back and really look at the larger picture of life and make decisions and invest your most non-renewable resource—time—in the most fulfilling way possible.”
You want to set goals, but also deal with reality. Robbins puts it simply: "Most people have a number that's so big that they never begin the journey." Calculate manageable breakdowns of how much money you need to achieve financial freedom. An incremental, achievable plan will make the process less daunting.
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