While there is no shortage of books, DVDs, courses, coaching and live seminars on wealth-building, they are all based on an assumption that you have the basic foundation you need to increase the amount of money flowing into your life. A wealth-building program you buy may focus on themes like getting ahead in your career, building your own business, or creating a robust investment portfolio.
Although you may be incentivized to sign up for a program because there are numerous testimonials of past students who have done well, you may not succeed as well. If you do fail, you may attribute it to one of two things: either you did not learn and apply the techniques or the techniques themselves are not as effective as promised.
However, there is another alternative. You don’t have the basic foundation to become financially empowered. For instance, if you’re taking a course on how to start a home-based internet marketing business but don’t understand the financial relevance of a simple question like, “how much does wifi cost a month?” then learning sophisticated marketing techniques will not help you prosper. This is because if you don’t know how to manage your overheads, you are unlike to turn a profit.
Reasons Why People Are Often Broke
If you’re like most people, you may assume that wealth or poverty is due to circumstances. The economy is bad. You didn’t get the right technical education. You’re working for the wrong corporation. While these reasons may be true, there are actually 3 common reasons why you may be broke:
1.You may not have sufficient education to apply for a well-paying job. Consequently, you find it difficult to acquire the skillsets to escape the cycle of low-paying entry level jobs.
2.You may never have had the career breaks that you needed. Although you may have the education and skillsets to do well in your field, you may not have been able to advance in your career. Perhaps, you chose the wrong field or have always worked in corporations that didn’t offer many chances for career advancements.
3.You may lack the ambition, drive, grit and determination to make the best use of the opportunities that you have been given.
There is also a fourth reason, which is often overlooked – you may not lack earning ability, but the ability to manage your money. Once you build the basic foundations, then you will be able to prosper.
Let’s take a closer look at how to build a foundation for financial empowerment.
7 Foundations of Wealth
The reason why you may not be making the money that you need to improve your standard of living is not because you have failed to pick the right line of work to get ahead but because you are missing the following 7 foundations of wealth:
1. Setting goals and making plans.
Everything starts with a clear goal. Without a goal, you have no sense of direction. So, it’s important to create a financial reset goal to change your financial future. Once you have a goal, then the next thing is to create a plan to realize your goal. While your plan may not work the first time, by continually revising your plan to adjust to reality, you will eventually be able to achieve your goal. Both your goals and your plans have to be written down and tracked.
2. Creating a budget.
A budget will let you manage the money coming into your life much better. If you only have a vague idea of your fixed and variable costs, relying on guesswork to get you through to the end of each month, then you are probably spending money on things that you don’t need while depriving yourself of things that you do need.
3. Paying off debt.
We live in a debt-creating society. The ability to use credit cards and pay high ticket items through small installments encourages almost everyone to get into debt. It takes discipline to avoid spending more than you earn and stay on top of paying your current expenses. We are surrounded by temptations.
4. Building up savings.
Few people save for two reasons. One, the cost of living is constantly rising. This inflationary trend means that the money you put into a bank account will dwindle in purchasing power the longer you leave it in there. Second, the interest a saving account will give you is less than the rising cost of making a living. However, despite these good reasons not to save, savings are still important. If you have extra money in the bank, you don’t have to borrow if you experience a financial emergency. Another good reason to save is that you might be able to take advantage of an investment opportunity that comes your way.
5. Creating new income streams.
The best way to create new income streams is to add an income stream that fits in with your current line of work. This way you are building on established skillsets. Ideally, focus on earning this additional income through some passive income stream rather than working more hours.
It’s a huge leap to expect to improve your financial situation without first mastering these 7 foundational ideas. However, once you have mastered these principles, the financial opportunities that you try will stick.