Several months ago I was talking to a client and she said something that really struck a chord with me. She said, “You know Dave, being poor isn’t about how much money you have. My definition of being poor is having a lack of choices.”
Wow.
I absorbed the truth of that statement over the next couple of days and have come to realize that it is very relevant to our work at Custom Built Life(TM).
Having the ability to custom build your life is all about making choices – making choices that work for you even if others disagree with them. It’s about setting aside the rules that everyone else tells you to play by and creating your own rule book.
Part of being able to set your own rules is to having the money to invest in yourself and invest in the life you are creating. Here are three guidelines to follow to help you make confident financial choices:
Establish a 6 Month Emergency Fund
Life happens. As much as we’d like to think that everything goes perfectly all the time, it doesn’t. Pipes burst, cars break down and sometimes you or a family member needs to take a trip to the emergency room. For most Americans, this type of event can be a financial disaster because they have little or no savings to draw from.
According to a 2013 survey by Bankrate.com, 76% of Americans do not have enough money to cover six months of living expenses. If you are in this group and a large, unexpected expense comes your way, it severely limits your ability to invest in yourself and create a balanced, happy life.
There are many great resources out there to help you establish an emergency fund and live within your means. You can do this with an App such as mint.com, by reading books written by experts like Dave Ramsey, or by hiring a professional money coach.
Once you establish your emergency fund, you’ll be better able to handle the curveballs that life throws your way and have more options available to create the life you have always wanted.
Save 10% of What You Make
You’ve heard this a million times so we don’t need to dwell on it. It’s simple really. Look at your income and your expenses. Plan to live on 90% of what you take home after taxes, and bank the rest. If taxes and expenses consume more than 90% of what you make, then either find a way to reduce your expenses or to increase your income. The more money you have in savings, the more you can invest in yourself and spend money on the things that matter most to you.
Spend Less on “Stuff” and More on Life Balance
Throughout most of the world, we are blessed with abundance. One of the dangers of this abundance is that we become obsessed with our “stuff” to the point that it begins to control too much of our money, too much of our thinking, and too much of our time.
Spend less money and time on the latest iPhone, a daily $4.00 cup of coffee or stuffing your closets to the point of overflowing, and spend more money on the experiences and actions that will create a better life balance.
Set aside money to take vacations to connect with your family, take a class to open the door to a career change, or have some seed money for the business you plan to open. Spending money to achieve personal goals is always more rewarding than filling your closets, your garage and your basement.
Your Assignment:
Get out a pad of paper and pencil and take stock of where you are financially. If you don’t have a six month emergency fund, make a plan to put one in place and get the help you need to make it happen.
Save 10% of what you earn after taxes and spend a portion of that money on the achievement of your personal goals. Getting into the habit now of making smart financial choices will enable you to invest in yourself, create your own rules, and build a balanced, happy life!
