#2 – Save 10% of what you earn. Another way of saying this is to Spend Less Than You Earn. If you follow this rule – you will automatically be doing a lot of things right: You will not need credit cards. You will have emergency funds. You will be building funds for financial independence. If you can learn to follow this one rule, you will be well on your way to living a successful financial life. Everything else is icing on the cake. If you do not follow this rule – anything else you do is almost wasted. I did not invent this rule. It has been around for a long time and goes by many names: – live within your means – save 10% of what you make – pay yourself first – etc., etc., etc. When I say “spend less than you earn”, I mean live on 10% less than your total income. This will allow you to save at least 10% of all money that you receive during the year for your future security and financial independence. Four Hints:
1. Make a commitment to yourself Commit that you will spend at least 10% less than you earn and manage the money you save reasonably. Once you make the commitment, the details of how to do it will fall into place.
2. Make the savings automatic Having to write a check to savings each month significantly decreases your chances of success. Find a way to automatically take the savings out of your paycheck before you see it: used automatic withdrawals, make automatic contributions to your savings plans (401Ks, IRAs, etc.). Do whatever it takes.
3. Forget the Joneses Most of our problems stem from trying to keep up with the “Joneses” – comparing ourselves to others – what we earn, what we have, etc. The Joneses have done far more harm to us than any of us know. This subject is addressed in great and interesting detail at: http://www.forgetthejoneses.com
4. Learn to enjoy the simple life We make life too complicated. Learn to enjoy the simple pleasures of life. Vacation locally, cook more, and go out to eat less.
What to do with that 10% you save: You should be doing three things with money you save: Build a liquid cash reserve so that you have money set aside for emergencies If you don’t already own a home, start setting money aside for a down payment on a home Begin investing money for your financial independence After a few years, you will own a home and your cash reserves will be in place. From that point on, the entire amount you save will go toward building for your financial independence.
14 Ideas for a Great 2009 –
Over the next 14 days I will be posting 14 hints (one each day) to help you make 2009 a great year.
Here is the first:
#1 – Have Vivid Dreams
Be sure that your dreams (goals) are clear and written down.
The things that you want to achieve in life should be written down in clear and precise language and in a place where you can easily see and review them regularly.
Our dreams are what keep us going. Dream Big. As the song says in the musical, South Pacific, “If you don’t have a dream … how you gonna have a dream come true?” Pay attention to what makes your heart sing and your spirit soar. And then go for it.
If you have not read “The last Lecture” by Randy Pausch, get a copy and read it. You might want to buy a copy and make it part of your permanent library When he wrote the book, Randy was a 48-year-old professor at Carnegie Mellon University who was dying of pancreatic cancer. The book is based on a presentation he gave to 500 of his students, colleagues and friends just before he left the University for the last time. The topic of the lecture is “Achieving your Childhood Dreams.” It talks about his life experience and the importance of having and following your dreams.
You can see the original presentation on YouTube at the following link: http://www.youtube.com/watch?v=ji5_MqicxSo . It’s well worth he 76 minutes it takes to watch.
Unfortunately, Randy Pausch passed away in late 2008. His legacy, however, lives on through is book and his life.
Napoleon Hill says that “A goal is a dream with a deadline.” Make sure that your dreams have time frames attached. A simple way to do this is to use the SMART goal system which tells you to make sure your goals are Specific, Measurable, Achievable, Realistic and have a Timeframe attached to them.
If your goals are not clearly documented, spend some time doing getting them down in writing.
I wish you all a very Happy New Year and a wonderful 2009!
May this be the year of your dreams!
John Noe once said “A person does not get old until regrets take the place of dreams.”
Are you young or old? Are your dreams vivid, alive and brilliant? Or is you life anchored in the past? 2008 is gone and 2009 is just getting started. This is a wonderful time to let go of the past and focus on your dreams for the future. Some of the most powerful and useful advice that I have found comes from Ralph Waldo Emerson, who said: “Finish each day and be done with it. You have done what you could; some blunders and absurdities have crept in; forget them as soon as you can. Tomorrow is a new day; you shall begin it serenely and with too high a spirit to be encumbered with your old nonsense.”
This message includes a set of “New Year’s Questions to help you complete 2008 and begin 2009. I encourage you to spend 15 or 20 minutes doing this exercise.
I hope you enjoy this issue and find some of these tools useful. If you have any questions or comments, please send me an email at email@example.com.
New Year’s Questions
I picked these questions up at a wonderful workshop I attended a few years ago and found them very useful.
Before beginning a new year in full force, it can be supportive to complete and acknowledge the previous year. I hope that spending a few minutes with the following questions will help you complete 2008 and start 2009 on a strong note!
Completing and Remembering 2008
- What was your biggest triumph in 2008?
- What was the smartest decision you made in 2008?
- What one word best sums up and describes your 2008 experience?
- What was the greatest lesson you learned in 2008?
- What was the most loving service you performed in 2008?
- What is your biggest piece of unfinished business in 2008?
- What are you most happy about completing in 2008?
- Who were the three people that had the greatest impact on your life in 2008?
- What was the biggest risk you took in 2008?
- What was the biggest surprise in 2008?
- What important relationship improved the most in 2008?
- What compliment would you liked to have received in 2008?
- What compliment would you liked to have given in 2008?
- What else do you need to do or say to be complete with 2008?
- How will you acknowledge those who most impacted your life last year?
- What would you like to be your biggest triumph in 2009?
- What advice would you like to give yourself in 2009?
- What is the major effort you are planning to improve your financial results in 2009?
- What would you be most happy about completing in 2009?
- What major indulgence are you willing to experience in 2009?
- What would you most like to change about yourself in 2009?
- What are you looking forward to learning in 2009?
- What do you think your biggest risk will be in 2009?
- What about your work are you most committed to changing and improving in 2009?
- What is one as yet undeveloped talent you are willing to explore in 2009?
- What brings you the most joy and how are you going to do or have more of that in 2009?
- Who or what, other than yourself, are you most committed to loving and serving in 2009?
- What one word would you like to have as your theme in 2009?