Mindstate Motivation Blog

Make Financial Crises Disappear

b2ap3_thumbnail_00341909Let’s face it!  Who needs the pressure?  Life is tough enough without having to deal with one or more financial crises.  Follow the guidelines suggested below to either stop financial crisis before it happens or make it disappear if it already has occurred to you.

It is all about exercising financial discipline.  When you know you either have or are progressing toward true financial independence it offers a level of peace of mind that is indescribable.  Financial peace of mind does not come through crisis…it is born of a disciplined plan.

So, how do you get there?  I like the “Rule of Thirds” concerning financial discipline.  It states a third of your income goes to some form of investments.  It can be in your own business, real estate, and other financial products, whatever.  The point is to build equity in yourself through investing a third of what you earn.  If you don’t defer some of what you earn today, financial crisis is inevitable tomorrow.

Another third goes to funding your current personal lifestyle.  Obviously, you can’t only live for tomorrow.  You must enjoy the moment and that requires financial resources.  The key here is to make sure that whatever your current lifestyle is it has to be paid for through only one-third of your current income.  By the way, included in current lifestyle costs should be setting aside short-term savings to pay for unexpected expenses or to escrow for the large expenses the come up from time to time.  Things like your car insurance premiums that may be due on an annual basis or the like.

The final third goes to funding the community’s lifestyle… otherwise known as taxes.  As they say, there is no free lunch and freedom isn’t free.  The most avoidable financial crisis of all is the paying of your annual income tax bill; property taxes or whatever.  You know those bills are going to come due so avoid any crisis by disciplining yourself in a plan to have the money available when you need it.

All this sound impossible?  It’s not!  Even if you have to grow into living by the rule over a period of time, it’s better than not exercising any financial discipline.  Contrast financial piece of mind with the empty, stabbing, sinking feeling of frequent financial crises.  Make it disappear in three simple steps!

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