A better tomorrow can start today
“We have two lives, and the second begins when we realize we only have one.” ~ Confucius
I know there are many nervous individuals out there, and it may seem challenging to concentrate on anything else while in social isolation. The lessons we can learn right now could drastically affect our lives for a better tomorrow.
What can we learn today as we head into a potentially fatal global recession?
For those that have amassed an emergency savings account that covers over six months of living expenses, the lessons may be minimal. For everyone else, some hard truths are ramming down our throats that financial security is one of the most important weapons to have in our arsenal.
When push comes to shove, it is becoming clear these days which transactions are necessary for our survival. The powerful ingredients that are essential to maintain our livelihood. Whereas everything else may eventually be considered a discretionary luxury (eating out, online impulse purchases), or financial inconveniences (interest charged from debt, subscriptions from unused services).
Right now, you may be broke and broken, and you may also feel helpless. As long as there is air in your lungs, there will be a tomorrow. So what are some things to start changing today to avoid financial turmoil tomorrow?
1. Outline which items in your budget will become a lower priority than your savings contributions
Whether you are currently employed or not, you should be keeping a budget. For those out of work, you will be working in the future, might as well have an ironclad plan before you receive your first paycheck. It is time for you to “Marie Kondo” your finances and remove any transaction that doesn’t bring you joy.
What’s great about knowing how much discretionary income you have is that you know how much control you have from month to month. If your budget is continuously tight with minimal flexibility, you may want to consider ways of generating more income. No point pinching pennies, if you are only holding one at the end of each month.
2. Accumulating wealth is a lifelong commitment of paying yourself first, before everyone else
One of the best customer discovery sessions I had was with a financial planner that shared his most inspiring client case. At the beginning of his practice, his network was young, new to the workforce, with limited wealth. He advised an individual to kick start his long-term investment strategy by contributing $25 per month.
After a few years, the contributions, although minimal, served as a very positive experience. The client landed a better paying career and increased his monthly contributions to $600 per month. You don’t train for a marathon by running the full distance, start small and build up your endurance.
3. Learn the difference between active and passive income sources
In the age of the internet, it is difficult to gain sympathy for not being financially literate. Everyone should take a personal finance course to learn how to generate wealth, whether it is by physical effort (active income) or by the assets/property you own generating income (passive income). There are universal laws to creating wealth; anyone telling you there is a shortcut may be scamming you.
During social isolation, it is time to educate yourself on investing. Ask for recommendations. Whether it is books, podcasts, or online courses, you are solely responsible for providing for yourself.
One of the hardest lessons to learn is that you may eventually reach an age where you are too old to work. That day comes at different times for everyone. It may be in 3 years; it may be in your 80s when that day comes, you should have your nest egg available to enjoy your twilight years. Take today off, get a good night’s rest, and start fresh in the morning with a plan to make your future less chaotic.