Rerouting your wealth creation
Sometimes we are ignorant when we make emotional decisions on the left side of the axis, where we do not consider the impact of debts or we take unnecessary financial risk, when you do this you are creating your own financial volatility. Staying on the right side of the axis is not always easy, but you have to make an active decision to be Finsmart. Wealth is created over a long period of making smart investment choices and sticking to your investment strategy. In our view there are two things you can do with money: you can either invest it or spend it.
Where do you find money so you can start investing? The only real way to do this is to follow a budget and change your spending behaviour.
We believe there are three types of budget: a spending budget, a debt management budget and an investment budget or wealth-creation budget. If yours is a spending budget, you write down what you earn and what you spend but you don’t really stick to it and you do not include saving for the future. If you have a debt-management budget, you are on the right track. You have realised you have overspent so you keep to a budget, pay down your debts and manage your spending. The goal is to get out of debt, but once you have done this you don’t change your thinking or behaviour and you still don’t plan for future investment. In other words you go back to the spending budget. If you have a wealth-creation budget, you have changed your thinking about money and you have set out investment goals. This kind of budget changes your financial future. For more information on how to manage your budget go to our YouTube channel.