Why is it that some people start life with nothing and eventually become successful financially while others start with something and ended up with nothing.
The simple answer is the level of financial independence of each individual.
There is no independence quite so important as FINANCIAL INDEPENDENCE.
In achieving this there is need to determine your level of financial independence which is your individual net worth.
The first step is to know your NET WORTH i.e what you own and what you owe at a point in time. Birthday, End of year etc.
ASSETS are what you own.
- Liquid Assets e.g cash at hand, cash in the bank fixed deposit, treasury bills etc
- Investment Assets e.g Shares, Real estate, govt bonds, commercial papers.
- Personal Assets e.g Clothes, shoes, houses in the village and the one you live in, cars except for commercial purposes.
Passive incomes are assets working for you while you work for yourself and they are are Liquid and Investment assets.
Sources are interest rates on fixed deposit, dividend, royalties, rents paid to you.
Active income is what you earn from working everyday e.g employment, trading
LIABILITIES are what you owe third party.
Usually what you are owing that is due within one year.
e.g Rent, School fees, association dues
NET WORTH.
Net worth is Assets minus Liabilities.
The result is the level of your financial independence.
This should be calculated yearly to form the basis for financial planning.
Financial independence is achieved by paying attention to Liquid assets and Investment.
Personal assets do not contribute to your net worth but they form the bedrock for investment and liquid asset.
STRATEGIES FOR INCREASE OF NET WORTH
- Control Expenditure and block leakages.
- Save
- Seek financial advises
- Invest wisely
FIVE HABITS FOR LIVING WITHIN YOUR MEANS
- Make it a habit to save before spending or pay yourself first and develop a habit of saving regularly.
- Make it a habit to keep a daily money log; to write it down anytime you spend or receive money.
- Make it a habit to prepare a monthly budget or spending plan and stick to it.
- Make it a habit to have a funding plan for your main (infrequent) expenses by setting apart the required money from your income.
- Make it a habit to spend money wisely by prioritizing your expenses into necessities, niceties and superfluities.
What I learnt in life was that in order to achieve great success you must become a special kind of person. To rise above majority, you must develop qualities and discipline that the average person lacks.
The most important factor in achieving great financial success is not money but the kind of person you have to become to earn that money and then hold on to it.
The good news is that many people start with nothing . Today, there are many ten hundred and million millionaires even billionaires who started with nothing. In fact it is put at 90 %.
Also many of them fail many times before they find their feet. According to Brian Tracy there are about 21 secrets of financial independence
CAUSE AND EFFECT
When you learnt what those who are successful do you will get the same result.
1. Dream Big Dreams
You must have a dream before you can make your dream come true. If you want to make a dream come true, then you must dream first.
This is the beginning of financial independence, Create a vision for yourself for a long term future. Fantasize about the kind of life you will want to live.
The clearer your vision of health, happiness and prosperity the faster you will move towards it, and the faster it will move towards you.
2. Develop a clear sense of direction
According to Thomas Carlyle: A person with a clear purpose will make progress on even the roughest road. A person with no purpose will make no progress even on the smoothest road.
What ever you think about most of the time grows and increases in your life, also talking about it, visualizing your goals -you tend to accomplish it far more than the average person who is usually thinking and talking about his or her worries and problems most of the time.
Plans are never realized because of procrastination and delay. Write the goals down and break them down into actions.
Do something everyday that moves you at least one step closer to your most important goal.
3. See self as Self Employed
According to William Henley ‘’ I am the captain of my soul ‘’ I am the master of my fate.
Accept 100% responsibility for everything you are and everything you will ever be. Refuse to make excuses or to blame other people for your problems or shortcomings.
Stop complaining about things in your life that you are not happy about, instead redefine your goals and move towards it.
4. Do What You Love To Do
This is one of the great secrets of Financial Success , you have to find out what you love doing.
What you have a natural talent for and then throw your whole heart into doing it.
Self made millionaires are those who have found a field where their natural strengths and abilities are exactly what is required to do a job and achieve desired result.
Here is a question to assess yourself , ‘’If you win a million dollars tax free tomorrow’’ , would you continue to do what you are currently doing?
