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How to achieve financial stability within half a year
By Mike Wang | August 30, 2007
Author: Mike Wang
In the previous article talking about the fourth levels of wealth, we mentioned that the first level of wealth should be financial stability. This means that we should have cash saving equivalent to 3 months of our monthly salary and we should have insurance coverage that can provide for our family in case of disabilities that prevent us from working or in the event of our demise.
In this article, i will share with you how i managed to saved up 3 months equivalents of my monthly salary and going to achieve financial stability within the next month. Also, i will share with you how i am helping my room mate achieve his goal of financial stability within the next 4 months.
The most important step to achieve financial freedom fast is to control your expenses. Do you know where do your money go to? How much to food, transport, mortgage, etc… To have a very clear idea how your money is being spent, i actually come up with an excel spreadsheet to track my daily expenses and i do a daily update of my expenses at the end of the day. You might think that this is quite a chore and not worth the effort. But trust me, it really works. After tracking my expenditure, i realised where i am spending most of my money and learnt how to save on unnecessary stuffs.
The second step is to save up a portion of your salary at the start of the month and survive on the remainder. What i did was i transfer about 30-40% of my monthly income at the start of the month to another bank account that did not have credit card, debit card and atm card. The only way i could get out the money from this account is via interbank transfer which prevents me from withdrawing money from this account easily. I would then survive on the remainder of my income. This could be quite hard for the first few months as we are used to spending all our income but trust me, by sticking to this strict routine for 3 months, you would see the effects and be amazed. If you really find it difficult to save such a large amount, you could choose to save about 10-15% every month instead.
By following this strict routine for about half a year, i am now well to achieving financial stability next month and i will also be able to start up on my investing plans. I shared my success with my room mate and got him to seat down to plan how he could achieved financial stability within 4 months. His plan was to save about 30% of his monthly income for the next 4 months until he achieved a savings equivalent to 3 months of his income. Prior to this he had only less than a month of his salary in his bank account. I will be encouraging him and also making sure that he stick to his plan.
By adopting a strict and disciplinary approach to saving up a portion of your salary is absolutely very crucial to achieving higher levels of financial wealth. Bite the bullet and do it! Delay gratification for a better future for your family and all your loved ones. That is the driving force for me to start saving up even though i just start working for less than a year
Topics: Finance |